Tesco forms new joint venture with iVillage

Tesco PLC, the UK's largest retailer and the world's largest online grocer, has announced a new joint venture with iVillage, a leading US Internet portal for women.

The new company, iVillage UK (www.ivillage.co.uk), will target the women's online market in the UK and Ireland. Women are expected to be 60% of all UK online users by 2005.

iVillage UK will provide a highly focused community and an array of interactive, customized online solutions and services including content channels, tools, planners, quizzes, message boards, chats, and newsletters. The new company will be independently managed and based in London.

The new site, which is scheduled to launch in the fourth quarter of 2000, will have eight content channels organized by topic areas important to women.

This is the first international equity relationship by iVillage, and the first move in a strategy of global expansion for the brand.

``The launch of iVillage UK is the first very exciting step in the globalization of iVillage.com,'' said Candice Carpenter, Chief Executive Officer, iVillage Inc. ``By partnering with Tesco, we are allying iVillage with Britain's premier, innovative, highly sophisticated retail company whose network of stores touches more than 50% of the UK population. It's a natural alliance: iVillage brings best-of-breed content. Tesco.com brings proven e-commerce savvy. As Tesco's Clubcard magazine also reaches 14 million UK consumers, iVillage UK is very well positioned to quickly build a leadership position through cross-promotional initiatives, further establishing an international footprint for the iVillage.com brand.''

Tesco and iVillage plan to provide a combined total of approximately $70 million in marketing, branding, cash, intellectual property, and other resources in support of the venture through online and offline activities. Tesco will provide $18 million in cash over the next three years, online and offline promotional considerations, and expert knowledge of the UK market. iVillage will provide the iVillage brand, intellectual property, content, online community know-how, and their expertise in developing an online portal for women. 

The new company, which is expected to turn a profit within three years, will generate the majority of its revenue from advertising and sponsorship.

"This venture combines Tesco's and iVillage's respective brand strengths as the leading UK retailer and leading destination for women online,'' said Carolyn Bradley, COO, Tesco.com. "We're building value by marrying complementary competencies, skills, and business models - all in the service of establishing and extending a meaningful, lasting relationship with our customers.''

"Our primary goal in creating this company was to choose the right local partner and capitalize on the leadership advantage we have in the US. The joint venture structure balances our commitment to profitability with long-term earnings potential from overseas markets, where forecasts predict continued strong growth,'' said Michele Anderson, SVP, Strategic Development, iVillage Inc. ``Given that 80% of all purchases in the US are controlled or influenced by women, we believe iVillage.co.uk is in an excellent position to benefit from the trend and provide sponsors a powerful marketing platform for reaching UK women, giving them services and solutions tailored to their lifestyles and preferences.''

As part of the venture agreement, Tesco.com will have anchor positioning on the homepage of iVillage.co.uk, and Tesco's products and services will be contextually integrated throughout the iVillage network. Tesco.com will have three anchor tenancies in vertical content areas: Tesco Direct will be the exclusive grocery partner on the Food Channel. Tesco's Baby & Toddler Store will be promoted throughout the Pregnancy & Baby Channel. Tesco.com will have a permanent presence in the Shopping Channel.

iVillage.co.uk will receive significant marketing and promotional support from Tesco to drive qualified traffic and brand iVillage.co.uk as the number-one women's network online in the UK. Online and offline promotions will consist of in-store promotions, Tesco mailings, and positioning on Tesco's Internet service provider (Tesco.net), online shopping site (Tesco.com), and related commerce platforms (Tesco.co.uk). iVillage.co.uk will further receive editorial and media space in Tesco publications including Tesco Home, Tesco Baby, and Recipes. iVillage.co.uk content will be syndicated across Tesco's portfolio of print assets, as well as Tesco.com and Tesco.net. 

The Board of Directors for the new company will be formed by three representatives each from iVillage and Tesco and by a jointly elected chairman not affiliated with either company. U.S. founding iVillage employees Hillary Graves and Tory Crimmins are part of the senior management team, and a staff of 16, almost entirely drawn from the UK, has commenced operations in the UK in the editorial, technology, sales, marketing and finance areas.  

07/19/00 Source: iVillage and Tesco