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LONDON — Will the world’s biggest retailer soon own the world’s biggest clothing brand?

Andy Bond thinks so. Indeed, the managing director of Wal-Mart/Asda’s George clothing brand is hoping the sizzling tills at the two pilot stand-alone George stores in the U.K. aren’t just beginner’s luck.

This story first appeared in the September 24, 2003 issue of WWD.  Subscribe Today.

In the two weeks since the opening of the George stores in Leeds, England, and Croydon, a London suburb, both have outstripped expectations. On its first trading day, the Leeds store took in about $51,000, while projections for the entire first week had been $65,600. Croydon’s cash sales on opening day were about 40 percent higher than those of the Leeds unit.

Since both stores opened, sales have been “tremendously strong,” said Bond, who is also head of all nonfood business at Asda. “Who knows what’s going to happen in three months’ time? It’s too early to say.” Asda is Wal-Mart’s wholly owned division in the U.K., and the motor behind the George brand of clothing, accessories and children’s wear.

Although Bond may appear cautious, he and his bosses at Wal-Mart have very high expectations for the brand Bond said is still in its infancy.

In an exclusive interview with WWD, Bond talked about George’s potential, saying he believes that in the medium term — or over the next five years — sales, which are approximately $1.64 billion, could overtake those of the Gap brand, which were $6.8 billion in the fiscal year ending Feb. 1. This clarifies a report in these columns earlier this month that George sales would outstrip the $14.45 billion sales at Gap Inc.

All figures have been converted from the pound at current exchange.

“I would say that becoming the world’s biggest clothing brand is an audacious goal, and not one that’s easy to achieve,” Bond said in a telephone interview from his home near Asda’s headquarters in Leeds. “But the math is basic. If George is successful, it will be in every Wal-Mart store in the U.S. It’s clear that Wal-Mart has big ambitions for apparel generally, and George will be a big part of that.”

Outside the U.S., George already sells in South Korea, Germany and Puerto Rico, and is currently being tested in Mexico and Canada.

In the U.S. and internationally, Wal-Mart currently has just over 4,000 discount stores and supercenters.

Then there’s fashion-hungry Japan. George will launch at Wal-Mart’s partner store, Seiyu, next year and Bond said that market may very well be a future gold mine for the brand. “It will be very interesting to see what happens there, as Japan is the world’s second-biggest consumer market after the U.S.”

Bill Wertz, spokesman for Wal-Mart International, said of the Japanese market: “A lot is being worked out now. It’s always an issue to balance in Japan — do they want American styling or something for their market? Then the sizing is, of course, another issue to take into account.”

As for George’s potential, Wertz demurred in customary Wal-Mart style. “We really wouldn’t want to speculate on how big the business could get.”

George is present to varying degrees in all of Wal-Mart’s nearly 3,000 U.S. discount stores and supercenters, and Wal-Mart is currently increasing its floor space for George as it streamlines the overall look and feel of its apparel departments.

Overall, many U.S. analysts feel Wal-Mart hasn’t been doing a good enough job of showcasing George as a branded statement, so the consumer doesn’t necessarily recognize it as anything special.

In the U.S., it’s not uncommon to see it mixed in with other, more misses’-like and less-fashionable brands on a four-way rack. In addition, George’s small black and white signs can get lost amidst the bright, traditional signs at Wal-Mart.

Once Wal-Mart fine-tunes the George offer, Bond said, the main drivers of growth will be the U.S. and U.K. markets. In terms of product, the main growth area will be children’s wear. “Ladies is the biggest category, but kids’ wear is the big anchor for us. We’re known as a family brand, and kids’ is the most easily translatable category for international markets.”

Lois Huff, a senior vice president with Retail Forward, firmly believes George eventually could overtake the Gap brand, based on Wal-Mart’s current dominance of the U.S. apparel market. Wal-Mart’s estimated 2002 apparel sales were about $20 billion, which exceeds the total sales of second-largest U.S. apparel retailer, J.C. Penney, by $3 billion.

“Wal-Mart is making a considered effort to rationalize its brand assortment and we think that’s going to be a big push for them,” said Huff. “What they’re doing right now is a fashion story, but I believe it’s really a brand story. They’re making an effort to edit out brands so they resolve down to the lead brands by department and expand those brands. In the U.S., George is not the dominant brand but Wal-Mart has said that George is its global private brand.

“I don’t think the direction Wal-Mart is moving in is at all fashion. It’s not a Target direction, it’s a Kohl’s direction. George will be the brand they rally around.”

Therese Byrne, the editor and publisher of Retail Maxim, seconded the strategy. “Gap is wrestling with the family. They’ve lost all three customers, and it seems they’re still going after younger customers. Wal-Mart is a family store. George can make inroads if it goes for the kids,” she said.

As reported, Asda is now the U.K.’s number-one children’s retailer and second-largest clothing retailer by number of units sold, after Marks & Spencer. According to Fashion Trak, a division of London-based market information group TNS, in the two years to June 2003, George increased its U.K. market share for clothing to 3.1 percent from 2.6 percent, with the most significant growth coming in women’s clothing. The U.K. clothing market as a whole is worth about $40 billion.

Despite his ambitions for the brand, Bond doesn’t deny that George faces a number of challenges, both at home and abroad. “People who don’t know the brand get quite confused about George. It is not a brand for the high-fashion customer. It’s about basics for the everyday consumer, and its amazing strength is that it carries everything, starting from $8 pairs of jeans. So, depending on where the store is, making the brand successful is about selecting the right merchandise.

“In the U.S., the market is more diverse than it is here,” added Bond. “You have to think about the differences between east and west, north and south, urban and rural. That means buyers have to be a lot cuter about the way they merchandise George for their stores. We realize that George can’t look the same everywhere, but I can guarantee there is something for everyone.”

Another challenge for George — at least in the U.S. — is how it will sit alongside Wal-Mart’s other brands. They are White Stag, a casual misses’ wear line; Faded Glory, a family-focused apparel brand featuring denim; Jordache jeans; Riders, another denim brand; the new Levi Strauss Signature denim brand for men, women, juniors and boys, and Mary-Kate and Ashley, the trendy tween girls’ apparel brand.

Bond said another big challenge is logistics. “The concept of a global supply chain is a difficult one. Different countries have different important duties, as well as sourcing and trade restrictions. For example, maybe we can source a fabric for the U.K. market, and that same fabric would be far too expensive to source for the U.S. market because of import duties.”

Market observers in the U.K. say Asda’s ambitions for George are big — but potentially doable. “The opportunity in the U.K. is not enormous, although we all know there’s a massive opportunity in the U.S.,” said Richard Fitzpatrick, head of Retailmap, a U.K.-based retail research and consulting firm.

He and other British observers all agree the best George would be able to achieve in the U.K. would be to double its $1.64 billion turnover, thanks to plans to roll out the freestanding store concept. Fitzpatrick also estimates that, based on George generating sales of $200 a square foot in 10,000-square-feet spaces at 3,000 stores in the U.S., it could eventually achieve sales of $6 billion in the U.S. alone.

Richard Ratner, retail analyst at Seymour Pierce in London, said a lot of George’s future success will depend on Wal-Mart’s support. “Of course there’s the potential to overtake Gap. Prices are well below those of Gap and Wal-Mart has the audience. What more could you ask for?” he said.

But Byrne, of Retail Maxim, wonders whether George will ever have the same cultural cachet as Gap. “They can do volume based on simple mathematics. But Gap has became a part of our culture, part of our lexicon. Can George do that?

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