By Elizabeth Broomhall
Britain’s second largest retailer plans to launch budget clothing brand in first half of 2011
Asda, the UK supermarket chain owned by retail giant Wal-Mart, plans to launch its discount fashion label George in a series of stores across the Middle East, the company said Monday.
Britain’s second largest retailer said it will trial the fashion range in a small number of pilot stores set to open in the first half of 2011. The company declined to name its franchise partner or the country it will debut in, but said the move formed part of its plan to grow non-food revenues.
“George is a key driver in our ambition to grow our general merchandise businesses,” said president and CEO Andy Clarke. “George is already a global business and franchising is an exciting growth opportunity for us in new markets.”
George accounts for 50 per cent of Asda’s general merchandise sales.
The announcement marks Asda’s first overseas franchise for its low-cost fashion range, though the brand is already sold overseas through its parent company, Wal-Mart.
“True value for money isn’t just something on the minds of UK customers,” said Clarke. “Getting the best quality at affordable prices resonates with shoppers worldwide.”
The George brand was launched in 1990 by designer George Davies, initially as a joint venture with Asda. It has since become the fourth largest clothing seller in Britain behind Marks & Spencer, Next and Debenhams, selling everything from budget bridal dresses to school uniforms.
The low-cost label could be a welcome addition to Dubai, the largest shopping hub in the Middle East. Traditionally known for their luxury brands, the emirate’s malls are witnessing the emergence of a budget retail market aimed at the mass market.
The shift is a response to the global recession and the changing spending patterns of UAE residents, said analysts.
“When a recession hits what do you do? You buy cheaper things,” said Mike Leighton, a retail analyst at property consultants CB Richard Ellis. "It’s no secret that since the recession the luxury brands have struggled more
than the mid-range or value brands."
It will boil down to the price points which George Clothing will pitch. Value Retailers like Peacocks, Matalan & New Look from UK have not been able to click with middle class customers like what Max & Redtag have done. We have seen in middle east, the franchises while pitching these value brands, makes a desperate effort to make improve their own profitability, thus marking up the retail prices, and making them out of reach of the middle class.