Supermarkets compete for fashion pound

Supermarkets are vying for the discount fashion pound. With a 30 percent rise in clothing sales in supermarkets

between 2008 and 2013, the square footage that is being allocated in stores is becoming increasingly important.

With the launch of Lidl's new fashion range last week, UK supermarkets are feeling the pressure to offer considered collections at low prices.

Clothing, interestingly, has higher profit margins for supermarkets than food. Non-food typically makes up only 20-30 percent of a supermarket’s sales per square foot, but the gross profit margin of 40-50 percent can be double that on groceries, reported the Financial Times.

Retailers like Tesco are already feeling the pressure. “One reason Tesco has found it difficult to compete on price overall has been because it has been inhibited by the underperformance of its non-food offering,” says Tony Shiret, analyst at Espirito Santo. “Its clothing offer has not moved on to match developments in that market.”

As we reported last week, Lidl launched a faux leather jacket for 14.99 pounds and jeans for 6.99. Both of which were reportedly sold out within three days. Ian Mitchell, head of fashion at Kantar Worldpanel, says Lidl’s approach to fashion is not so much a threat to high street clothing retailers operating at the low-cost end of the market, such as Primark, as it is to other supermarket groups.

Anita Balchandani, head of retail at OC&C, a consultancy, says competition in the clothing market is broader than one waged on price. “Price is one dimension but innovation, product development, store trends and online offerings are all important to gaining share in this market,” she told the FT.