Blog: Michelle RussellTesco and Arcadia tie-up highlights growing trend

Michelle Russell | 28 October 2015

Tesco's deal with Arcadia to sell some of the apparel group's largest brands in its supermarkets is a style of collaboration we are increasingly seeing more of as retailers secure a ready-made customer base and guaranteed footfall.

The UK supermarket retailer this week announced a deal that will see Arcadia open versions of its Dorothy Perkins, Burtons and Evans outlets in select Tesco stores across the UK. In a separate deal, Tesco will also provide space for Claire’s Accessories, Sock Shop and Pavers.

The outlets are expected to compliment the retailer's F&F own-label apparel line and comes as CEO Dave Lewis attempts to turn the fortunes of the retail group around. The company faced a GBP263m accounting error last year, and has seen an erosion of its competitiveness in recent years, and a significant drop in UK trading profit in its last fiscal. In its first-half, operating profits were down 55% and like-for-like sales fell 1.1%.

Rupal Karia, managing director of retail and hospitality UK and Ireland at Fujitsu, believes collaboration between non-competitors is becoming increasingly popular, with Tesco and Arcadia’s partnership the latest example.

“We have already seen success with Argos and eBay in doing this,” he noted. “With increasing competition from their high-street counterparts, this type of partnership has become a priority for online retailers who are looking to establish a physical presence with a partner that has a ready-made customer base and guaranteed footfall.

"For the ‘high street’ retailer, working with an online counterpart offers an added convenience to their customers. Presenting customers with a viable alternative to simply shopping online, there is an expectation of a wider customer base, which will in turn result in more sales.”

Sectors: Apparel, Retail

Companies: Tesco, Arcadia

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