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Market intelligence ver1.0

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  • 1. Market Intelligence:TESCO reassessed value and productacross its apparel range18 April 2012Tescos strategy to expand its basics offer and provide more products in the "good" start of the pricespectrum is reflected in other markets. In the US, Walmart closed its New York fashion office lastyear, stating that its apparel emphasis would shift to basics. Since then it has added more product atopening price pointsTescos move to expand the F&F online assortment is sound, enabling it to brand build and reachcustomers who are not regular visitors to stores, as well as better serve loyal shoppers with a full-line clothing offerPrice cuts & price architecture reviewTesco has cut prices on its most basic clothing for spring/summer 2012 and broadened itsoffer at entry price points across its ranges. In addition, the supermarket has introduced a newsub brand, F&F Basics, to replace its previous lowest-price range, Tesco Value.Jill Easterbrook, clothing director, says the new brand was introduced after extensivecustomer research. Price was an important consideration. Easterbrook says: “When we didmarket research, nearly all of the customers said they had cut down the amount they spent onclothes because they needed to make savings. This is a genuine response to that, to make suretheir money goes further.”The new F&F Basics collection will consist of 70 items, making it 40% bigger than theformer Tesco Value clothing range it replaces. The expansion of the basics range is part of awider move to raise the proportion of lower priced or "good" clothing in the offer.The F&F Basics range has an average price of £3.30, with 40% of kidswear priced under £5for spring/summer 2012 compared to 25% last season.Quality & product focus for broader appealAlthough its price cuts may be grabbing the headlines, Tesco maintains it is simultaneouslyattempting to improve quality in a bid to secure more full-price customers.The company has lowered hem lengths, raised the waist height on jeans and is offering morelong and short-sleeved options alongside straps to give its clothing "broad appeal".Easterbrook says she is aiming to protect profit margins by enticing more customers to buyitems at full price. She says: “We are trying to get the product right first time so that we don’thave to mark-down.”
  • 2. She says that, rather than putting pressure on suppliers to lower their prices, Tesco hassimplified ranges and, on some categories, reduced the frequency of new collections. Mens’suit designs, for example, used to change every eight weeks and now will only change every20 weeks.Tesco has also switched some production closer to the UK, including Turkey and Morocco,so that it can minimise risk and judge fashions more securely. Easterbrook says: “Suppliersare not hit, it is about changing the way we do things.”Six global retailers seek to set up in India14 August 2012The Indian government has received six proposals from global single-brand retailers keen onsetting up operations through 51% joint ventures with domestic partners, commerce andindustry minister Anand Sharma said on Monday.Tommy Hilfiger, Brooks Brother Group, Damiani International, Promod SAS, FapaCompany and NA Pali Europe, an arm of sportswear retailer Quiksilver, are the six globalretailers wanting to establish operations in Asias third-largest economy.The government has also received two other proposals, by UK footwear firm Pavers Englandand IKEA Group, to set shop in India through wholly-owned subsidiaries (100% FDI),Sharma said in a written reply to the Lok Sabha. "No decision has been taken on theseproposals."The government is understood to be readying plans to ease FDI rules for single-brand retailincluding the condition that global firms will have to source 30% of their merchandiserequirements from local small firms and artisans, The Hindustan Times reported.Tommy Hilfiger to add 500 stores in Indiaover five years20 June 2012Tommy Hilfiger aims to add 500 stores in India over the next five years, with its joint venturein the country investing INR60cr. in 45 new company-owned stores.A significant number of the new stores will be opened through franchises, according to aforeign investment application filed by the company and seen by the Economic Times.Currently, Tommy Hilfiger operates 58 franchise outlets and over 60 shop-in-shops in otherdepartment stores.The expansion will take Tommy Hilfigers presence to 631 points of sale by 2016-17.
  • 3. US retailers fight back against Europe’sfast-fashion firms24 April 2012US apparel retailers are fighting back against successful European fast-fashion chains such asZara and H&M.While still a small presence in the US, H&M and Zara have doubled their footprint to 1% ofthe fragmented US marketplace, according to Euromonitor International.The gains have come at the expense of US brands such as Gap and American Eagle, whichhave also struggled with tight margins and consumer resistance to high prices. Both Zara andH&M have overtaken Gap as the biggest clothes retailers in the world.Over the past few years, US clothing firms have reduced their concept-to-store times from 12months to about six to nine months.Industry experts told Reuters that Gap, American Eagle and department store group Macysare placing smaller orders in more factories, and waiting until the last minute to say whatcolours and cuts the fabric should take. They are also slashing the time clothes spend inwarehouses.Robert Hanson, American Eagles new chief executive, is seeking ways to cut down ondelivery times and respond faster to trends. He would rather have fewer items in stores, butsell everything, he told the newswire.Macys said it was planning to speed up decision making on buying and stocking clothes itoffers to shoppers aged 13-30."We today are quicker to respond to trends in brands such as INC and Bar III so that ourmerchandise is current and fresh for the customer," Macys spokesman Jim Sluzewski toldReuters.Retail experts say companies such as Ralph Lauren, Ann Inc, Tommy Hilfiger and LimitedBrands have made progress as they build relationships with their manufacturers andexperiment with newer ways of getting products to their stores.The sheer distance of China and other Asian manufacturing hubs is a big hurdle thatAmerican brands have to overcome. But low margins on many items make it hard to considermore expensive sources closer to home.Amit Miglani of Nahar Industrial Enterprises, a leading manufacturer for American brands aswell as companies such as Topshop, Zara, Esprit and H&M, said US retailers now askmanufacturers to keep stock of more unfinished fabric, and wait for the shopper to tell themwhich styles and colours the cloth should take.
  • 4. US firms are also spreading out their orders, so each factory can turn in their smallerallotment more quickly.Lands End up for sale for around $2bn30 March 2012Lands’ End, the apparel mail-order catalogue giant, is up for sale, according to the New YorkPost.Eddie Lampert, hedge-fund tycoon and chairman of struggling retail giant Sears Holdings,has been sounding out potential buyers for the brand he inherited when he took control ofSears in 2005 by merging it with Kmart.Lampert has approached a handful of private-equity firms as he looks to raise as much as$2bn in cash, sources told the newspaper.He is looking to find a buyer who will license Lands End to Sears while pursuing growthelsewhere, possibly in Europe, according to a source."The idea is that Lands End would become something like Tommy Hilfiger," according tothe source, noting that the global brands clothing is licensed exclusively to Macys in the US.While its early in the process, sources said that Lampert is likely to tap Goldman Sachs torun the sale.