Otto UK mulls stores to add to core offer

It is understood that the home shopping group would consider buying a chain without a strong multichannel presence that would benefit from Otto’s infrastructure and logistics capabilities.

Parent Otto Group has considered developing a UK high street presence in the past. It mulled bringing its US furniture chain, Crate and Barrel, to the UK and mooted making a bid for furniture chain Ilva.

However, industry sources believe that the type of deal being considered would most likely involve a clothing retailer.

In July, Otto launched its younger fashion offer, Oli, which the group said might have potential as a high street chain.

Otto UK chief executive Mike Hancox would not comment about whether an acquisition of stores was on the cards. He said: “The next year will be about growing our established portfolio through our online and catalogue shopping channels.”

He said that Oli was performing well online and believed it would be as big as e-tailer Asos by its first birthday in July 2008.

Oli, which was expected to generate 50 per cent of sales online, now achieves upwards of 60 per cent most weeks via its web site.

In the Christmas run-up Otto UK has bucked the gloomy trend. Across the group, online sales have been up 16 per cent year on year for the past four weeks.

Home shopping retailers generally are showing interest in running stores alongside their established businesses. Asos, for instance, has raised the possibility of stores in future (Retail Week, November 23).

Kaupthing analyst Matthew McEachran said. “Home shopping is growing, particularly online, but it’s still a small proportion of retail sales. There’s a limited amount you can do from a virtual perspective.”

However, he warned that stores should only be considered by home shopping companies “on a limited and selective basis” because of the cost implications.