Troubled Tesco to sell House of Fraser goods

Supermarket giant puts 2,000 products online as it bids to halt sales slump

SUPERMARKET giant Tesco has signed a groundbreaking deal with House of Fraser to sell the department store’s products through its website in its latest bid to revive slumping sales.

The plan will be hailed by beleaguered Tesco chief Phil Clarke this week as a key step in reviving its fortunes, but the plan will coincide with another set of disappointing sales figures.

House of Fraser will benefit from Tesco’s huge customer base and marketing clout while the supermarket will extend its reach into more premium products.

Tesco, which is the biggest grocer in the UK, hopes the agreement will be the turning point for its online ambitions and pave the way for deals with other high street chains.

It also marks the first significant strategic deal by House of Fraser since it announced in April that it was being taken over by Chinese conglomerate Sanpower for £480million.

That acquisition is due to be completed later this year, but Sanpower is thought to have backed the plan. The deal will see 2,000 House of Fraser products sold through Tesco Direct. Customers will be able to collect Clubcard points with House of Fraser purchases through the site and pick up items at the supermarket through the Click & Collect service.

Tesco is expected to say on Wednesday that likefor-like sales at its British stores dropped 3.5 per cent in the three months to the end of May.

It is scaling back non-grocery products in stores as it restructures its business for the digital era.

The supermarket launched a new website two years ago as a rival to Amazon’s Marketplace – and for the first time started offering products from other smaller retailers including baby products chain Mamas & Papas and electronics retailer Maplin.

Tesco has drawn up a far-reaching online plan under its multichannel chief Robin Terrell, who

has worked for House of Fraser and John Lewis.

Until now it was feared the project had stalled as Tesco focused on turning round its main grocery business. But the signing of House of Fraser provides it with the biggest name on its roster and signifies the scale of its ambitions. It is understood to have been talking to ‘dozens’ of other chains in recent months according to retail sector sources.

House of Fraser multichannel chief Andy Harding said there was ‘huge potential to create a great working relationship between our businesses’, which will begin with dining and bedroom products and include the store’s own-brand lines such as Linea and Pied a Terre.

Meanwhile, one of Tesco’s biggest rivals, Morrisons, which is also struggling in the highly competitive grocery market, will face the ire of investors when chief executive Dalton Philips faces shareholders at its annual meeting in Bradford, West Yorkshire, this week.

In March Philips confirmed investor fears of a major supermarket price war.