Yahoo Finance Tesco may open dozens more Arcadia fashion concessions in its stores
Retailer expands tie-up with Sir Philip Green group in effort to find profitable use for spare space inside branches
Tesco is to deepen its relationship with Sir Philip Green’s Arcadia group, potentially opening dozens more concessions for its Dorothy Perkins, Burton, Evans and Wallis chains in supermarkets.
The two companies first partnered up about a year ago when Tesco put 14 Arcadia group concessions in five stores including Chesterfield, Woolwich in south London and Culverhouse Cross in Cardiff.
A further four stores will host about six more Arcadia concessions by the end of the year as part of the supermarket’s efforts to find a profitable use for spare space in large stores. Supermarkets are trying to downsize as shoppers switch to buying goods such as TVs and microwaves online.
Tesco told analysts attending a presentation at the group’s Welwyn Garden City headquarters on Wednesday that the Arcadia tie-up was part of plans to have at least 26 concessions by the end of this year, including a handful of Holland & Barrett outlets. Tesco then hopes to open up to 35 more concessions a year, although it is not clear how many of those would be Arcadia brands.
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The new avenue of expansion comes as a boon for Arcadia, which lost dozens of concessions with the closure of BHS, the department store chain once owned by Green that collapsed in controversial circumstances this spring.
The group has also been closing smaller high street stores as the whole fashion market struggles to cope with the switch to online shopping and a wave of unseasonal weather conditions over the past two years.
Green said the Tesco concessions were “hopefully something we can grow”.
He said the two companies had decided to expand their relationship after a good response from shoppers. “Customers like it and obviously Tesco has got great footfall [of shoppers]. It works for everybody,” he said.
Bruno Monteyne, an analyst at Bernstein Research, said Tesco had indicated that the 26 concessions would generate nearly £4m in rental income a year for the retailer. If Tesco opens 35 more concessions a year over the next five years that could bring in as much as £40m a year.
Aside from Arcadia and Holland & Barrett, Tesco has also experimented with hosting Claire’s Accessories, Pavers and Sock Shop in various stores.
