Tesco has reassessed the value and product range of its apparel, cutting prices on basics and expanding its lowest-price brand F&F Basics. It aims to appeal to more customers by improving quality while protecting margins. Six global retailers including Tommy Hilfiger and Brooks Brothers have proposed setting up operations in India through joint ventures. Tommy Hilfiger plans to add 500 stores in India over five years. US retailers are fighting back against fast fashion chains like Zara and H&M by speeding up their design to retail times. Lands' End, owned by Sears, may be put up for sale for around $2 billion.

1. Market Intelligence:
TESCO reassessed value and product
across its apparel range
18 April 2012
Tesco's strategy to expand its basics offer and provide more products in the "good" start of the price
spectrum is reflected in other markets. In the US, Walmart closed its New York fashion office last
year, stating that its apparel emphasis would shift to basics. Since then it has added more product at
opening price points
Tesco's move to expand the F&F online assortment is sound, enabling it to brand build and reach
customers who are not regular visitors to stores, as well as better serve loyal shoppers with a full-
line clothing offer
Price cuts & price architecture review
Tesco has cut prices on its most basic clothing for spring/summer 2012 and broadened its
offer at entry price points across its ranges. In addition, the supermarket has introduced a new
sub brand, F&F Basics, to replace its previous lowest-price range, Tesco Value.
Jill Easterbrook, clothing director, says the new brand was introduced after extensive
customer research. Price was an important consideration. Easterbrook says: “When we did
market research, nearly all of the customers said they had cut down the amount they spent on
clothes because they needed to make savings. This is a genuine response to that, to make sure
their money goes further.”
The new F&F Basics collection will consist of 70 items, making it 40% bigger than the
former Tesco Value clothing range it replaces. The expansion of the basics range is part of a
wider 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 £5
for spring/summer 2012 compared to 25% last season.
Quality & product focus for broader appeal
Although its price cuts may be grabbing the headlines, Tesco maintains it is simultaneously
attempting 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 more
long 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 buy
items at full price. She says: “We are trying to get the product right first time so that we don’t
have to mark-down.”

2. She says that, rather than putting pressure on suppliers to lower their prices, Tesco has
simplified 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 every
20 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: “Suppliers
are not hit, it is about changing the way we do things.”
Six global retailers seek to set up in India
14 August 2012
The Indian government has received six proposals from global single-brand retailers keen on
setting up operations through 51% joint ventures with domestic partners, commerce and
industry minister Anand Sharma said on Monday.
Tommy Hilfiger, Brooks Brother Group, Damiani International, Promod SAS, Fapa
Company and NA Pali Europe, an arm of sportswear retailer Quiksilver, are the six global
retailers wanting to establish operations in Asia's third-largest economy.
The government has also received two other proposals, by UK footwear firm Pavers England
and 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 these
proposals."
The government is understood to be readying plans to ease FDI rules for single-brand retail
including the condition that global firms will have to source 30% of their merchandise
requirements from local small firms and artisans, The Hindustan Times reported.
Tommy Hilfiger to add 500 stores in India
over five years
20 June 2012
Tommy Hilfiger aims to add 500 stores in India over the next five years, with its joint venture
in the country investing INR60cr. in 45 new company-owned stores.
A significant number of the new stores will be opened through franchises, according to a
foreign 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 other
department stores.
The expansion will take Tommy Hilfiger's presence to 631 points of sale by 2016-17.

3. US retailers fight back against Europe’s
fast-fashion firms
24 April 2012
US apparel retailers are fighting back against successful European fast-fashion chains such as
Zara and H&M.
While still a small presence in the US, H&M and Zara have doubled their footprint to 1% of
the fragmented US marketplace, according to Euromonitor International.
The gains have come at the expense of US brands such as Gap and American Eagle, which
have also struggled with tight margins and consumer resistance to high prices. Both Zara and
H&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 12
months to about six to nine months.
Industry experts told Reuters that Gap, American Eagle and department store group Macy's
are placing smaller orders in more factories, and waiting until the last minute to say what
colours and cuts the fabric should take. They are also slashing the time clothes spend in
warehouses.
Robert Hanson, American Eagle's new chief executive, is seeking ways to cut down on
delivery times and respond faster to trends. He would rather have fewer items in stores, but
sell everything, he told the newswire.
Macy's said it was planning to speed up decision making on buying and stocking clothes it
offers to shoppers aged 13-30.
"We today are quicker to respond to trends in brands such as INC and Bar III so that our
merchandise is current and fresh for the customer," Macy's spokesman Jim Sluzewski told
Reuters.
Retail experts say companies such as Ralph Lauren, Ann Inc, Tommy Hilfiger and Limited
Brands have made progress as they build relationships with their manufacturers and
experiment with newer ways of getting products to their stores.
The sheer distance of China and other Asian manufacturing hubs is a big hurdle that
American brands have to overcome. But low margins on many items make it hard to consider
more expensive sources closer to home.
Amit Miglani of Nahar Industrial Enterprises, a leading manufacturer for American brands as
well as companies such as Topshop, Zara, Esprit and H&M, said US retailers now ask
manufacturers to keep stock of more unfinished fabric, and wait for the shopper to tell them
which styles and colours the cloth should take.

4. US firms are also spreading out their orders, so each factory can turn in their smaller
allotment more quickly.
Lands' End up for sale for around $2bn
30 March 2012
Lands’ End, the apparel mail-order catalogue giant, is up for sale, according to the New York
Post.
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 of
Sears 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 growth
elsewhere, possibly in Europe, according to a source.
"The idea is that Lands' End would become something like Tommy Hilfiger," according to
the source, noting that the global brand's clothing is licensed exclusively to Macy's in the US.
While it's early in the process, sources said that Lampert is likely to tap Goldman Sachs to
run the sale.