As news of the supermarket mega-merger between Sainsbury’s and Asda emerged this week, Drapers speaks to Sainsbury’s CEO Mike Coupe, head of womenswear buying Anna Clarke and Sainsbury’s Argos CEO John Rogers, about how the grocer is evolving its clothing division, Tu, and gaining market share in a tough trading environment.
What are the core focus areas for Sainsbury’s?
Mike Coupe Customers have never had so much choice. There are more discount retailers, convenience shops and etailers, as well as the existing supermarkets that have been around for many years. Meanwhile, the rise of digital means customers can order products and have them delivered on the same day using their mobile. These are key drivers within our industry. Retailers that are not well invested in those customer offers will fail. Our key strategy is to provide great products and services at fair prices. We put a lot of focus on the products we sell – and that applies to Tu.
What changes is Sainsbury’s making in terms of clothing?
MC One of our key objectives is to grow our general merchandising and clothing business, as we believe there is a big opportunity in that. The market will continue to consolidate and we believe we will benefit. We see growth happening in the clothing sector, so we will be rolling out more square footage for clothing across our stores such as the Redhill location.
We will be rolling out more square footage for clothing across our stores
Mike Coupe, CEO, Sainsbury’s
How is the Tu fashion line trading?
Anna Clarke: We are 10th in the market by value and sixth for volume. It is a declining market and we are trying to establish how we are going to win. Being part of a supermarket we get a good amount of footfall because of the 25 million customers that visit Sainsbury’s stores. Becoming a credible fashion retailer is [embracing] the fact that we have broad appeal and, above all, we know our customer.
Are tough trading and discounting on the high street affecting business?
MC The biggest drivers of our industry are supermarket competition and discounters. Those that haven’t adapted to market changes are going out of business, but we think we are very well placed [to withstand the changing environment].
As far as our clothing business is concerned, we have products that are at least as good as high street operators, consistently priced at a discount of 15%-20%. Combine that with the broader online offer, and we do not believe there is any reason why we should not continue to grow our business as we have done over the last 15 years.
Tu did not exist 14 years ago. Now it is not far from a making £1bn a year in sales. There is no reason why that should not grow in future.
How do you compare yourselves against other high street retailers?
John Rogers Very few fashion retailers today have grown in volume. The two key examples are ourselves and Primark. Look at Next, seen as a forerunner in the market. If you compare our performance, we are beating it on growth year on year quite significantly.
Our aim is to maintain that newness but also to become more seasonless
Anna Clarke, head of womenswear buying, Sainsbury’s
What are your aims for the future of Tu Clothing?
JR It is a competitive market but we believe there is a growth opportunity for the sector. By doing the best job possible week in, week out, we believe we will grow and expand our retail proposition with Tu. The launch of the Tu range at Argos is a key milestone.
What factors are important to your Tu customers?
AC We have a frequent customer coming in, so giving them newness is really key. Our aim is to maintain that newness but also to become more seasonless.
How is the Tu premium offer working?
AC Premium is something we invested in in womenswear two years ago and menswear this year. We are not yet sure of the ceiling price, but to be able to sell leather jackets for £99 for instance, in a supermarket, is pretty amazing.