UK grocery's online fashion battle becomes a four-way affair

The UK’s fourth largest supermarket, Morrisons, is to launch its Nutmeg clothing line online later this year thanks to a new partnership with Ireland-based cloud commerce platform Kooomo.

Each of Morrisons’ major UK supermarket rivals already sells its own fashion ranges via the web, and the Yorkshire-based grocer is aiming to open up Nutmeg to a wider audience by joining the digital fray.

Set for a September unveiling, Nutmeg online will offer customers direct home delivery, the option of click & collect in-store, as well as the chance to receive rewards online through the Morrisons loyalty programme.

Similar to the way Morrisons has recruited Ocado to run its core grocery online business, Nutmeg will task Kooomo with undertaking management of its entire digital operations – providing both the platform across multiple devices and the consulting services to take care of online store management and merchandising, as well as search engine optimisation and social media marketing.

It fits the Morrisons senior team’s mantra of focusing on the business’s strengths, and outsourcing or finding suitable partnerships where it does not have the dedicated in-built expertise.

Christine Bryce, category director for Nutmeg at Morrisons, said: “We have served customers better by introducing Nutmeg womenswear into nearly 100 stores and extending our baby range to every Morrisons store.

“This agreement with Kooomo will enable us to offer our affordable, quality clothing – with real attention to detail – to more people.”

So, what demand has there been for grocery fashion via the web since it first went online ten years ago? It’s certainly been a high-growth area.

The story so far

Asda stole a march on great rival Tesco by becoming the first UK supermarket to launch a clothing range online back in 2008, under the leadership of then global managing director for its George business, and now N Brown CEO, Angela Spindler.

At the time, Tesco had been testing selling clothing online but did not make its full F&F range available on the web until 2009.

The remaining member of the ‘Big Four’ UK supermarkets, Sainsbury’s, waited until 2015 to launch its Tu clothing range online due to initial concerns about how profitable it could make the process of selling fashion items over the internet.

But as the wider online fashion sector has continued to grow, with Mintel estimating Britons spent £16.2 billion on online sales of clothing, fashion accessories and footwear in 2017 at a year-on-year increase of 17.2%, the supermarkets have taken advantage. Developing non-food own-brand lines helps with margin management too – something each of the major grocers is particularly focused on today.

The supermarket clothing labels have risen up the rankings in terms of UK multichannel sales volumes, with Morrisons’ Nutmeg hitting Kantar Worldpanel’s top 20 clothing brands in for the first time in 2016. George at Asda, Tesco and Sainsbury’s – in that order – have all been top ten incumbents on that list for some time, but Morrisons will be looking to move closer to them once its clothing ranges are available on the web.

Gurdev Mattu, managing director of Fashion UK, a designer and manufacturer of licensed childrenswear apparel and footwear which works with Asda and Tesco, says: “Grocery retailers have really started to take fashion seriously in recent years, recognising the growing desire consumers have for fast fashion.

“Gone are the days where consumers expected supermarket fashion to be untailored, basic and simple. Now consumers expect specialist collections, trend savvy designs and high-quality finishes, all for a reasonable price. Supermarkets are adapting to this shift by ensuring they offer their consumers competitively priced, trend reflective garments, that are still effectively disposable.”

Market opportunities

Figures released by Sainsbury’s show that its Tu range saw sales jump by 6.8% year on year in the 28 weeks to 23 September 2017 – this compares to 1.9% total sales growth across its wider business. Online sales of Tu clothing during that period were up by 54% year on year.

In a nod to how quickly fashion growth is outpacing other areas of the business, the supermarket has prioritised general merchandising and clothing development. Sainsbury’s is rolling out click & collect services for Tu clothing to 100 Sainsbury’s Local stores across the UK too.

GlobalData survey of 10,000 online clothing and footwear shoppers found that Sainsbury’s and Tesco both grew their fashion market “purchaser share” between 2016 and 2017 - the former by 2.2% to reach 3.8%, and the latter by 1.7% to reach 7.3%. Purchaser share in this case is the percentage of fashion shoppers that bought something from the supermarkets in question. 

Conversely, the data showed that Asda’s share dropped from 10.4% to 7.1% over the 12-month period. Despite the various ups and downs described here, Kantar Worldpanel data indicates that, since 2014, grocers have added an extra £118 million in sales of clothing and accessories. Their fashion ranges are outperforming the wider market, growing at an average of 5% versus the total fashion market sales growth of 2.5%.

Stephanie Keller, Kantar Worldpanel client manager for fashion & lifestyle, says there are multiple reasons why grocers are becoming more important in the fashion market. “Value for money is key for shoppers as they continue to watch their spend in the current economic climate,” she explains.

“The grocers are not only providing value, but also building their style credentials to compete with more established high street retailers. Footfall is also an asset to the grocers who pick up incremental spend from shoppers already in store for their grocery shop.”