British fashion goes where food failed in America
From discount to luxury, UK brands are vying to conquer the States. Laura Chesters asks if they can succeed in a graveyard for our retailers
Saturday 26 July 2014
Tesco’s Fresh & Easy was a flop, Marks & Spencer’s foray was an expensive failure and Sainsbury’s Shaw’s business was shipped off 10 years ago. The UK’s track record in cracking America is poor.
But that hasn’t stopped a batch of fashion chains taking the risk.
In April, the Irish cheap- clothing chain Primark, owned by the London-listed Associated British Foods, revealed its plans for North America. In the autumn Topshop will unveil its latest New York store on Fifth Avenue – the largest yet in the US – as part of the global push of the retail tycoon Sir Philip Green.
So what makes these retailers think they have got what it takes?
Primark has signed up to open a giant 70,000 sq ft shop in Boston next year and more will follow. It thinks it has a chance of success because its cheap clothes are more fashionable and its stores are better designed than the average US chain in the discount sector. John Bason, Primark’s finance director, said: “The US is a different market but the East Coast is more Western European looking in its outlook. The area also has around 50 million people – around the same for European countries – so we are emulating markets we have already entered. We are attractively priced against all competitors with broad appeal.”
Mr Bason, who says Primark is looking to open 10 stores initially, is aware the expansion won’t be easy. He added: “We expect to get some things wrong but we are outward looking. If you get the approach right, you can succeed.”
Further upmarket, Ted Baker, founded in Scotland and based in London, opened in the US in 1996 in Soho in New York and now has 16 standalone stores, five outlets, concessions in Bloomingdale’s and other department stores, as well as a wholesale business. Ted Baker’s chief executive and founder, Ray Kelvin, said: “If our strategy is to be a global brand then we need to be in the US. But trading in the US is not easy. People think that because we speak the same language, we are similar, but it couldn’t be further from how it is. It is much easier to go elsewhere. I would say the US is the most different market that we have encountered.”
Up against other global retailers, how should UK brands plan their entry?
Annette Healey, a New York retail specialist and executive vice president at the property group CBRE, said: “British brands tend to come over tentatively, but to build a brand you need to come in with full force. It takes time but if you look at Uniqlo, H&M or Zara, they entered, worked out the kinks, then came in all guns blazing. Many of the UK brands are still just dipping a toe in the water and haven’t made a splash yet.”
But Alan Smith, the man who masterminded Marks & Spencer’s ill-fated acquisition of the US menswear chain Brooks Brothers back in the early 1990s, and subsequently resigned in 1993, has an opposite view. Mr Smith, who is now chairman of Space NK, the cosmetics retailer, and a director of Planet Organic, spoke out in a “Going Global” report from the private equity group Piper: “Do it slowly and quietly until you really get the hang of it.”
The likes of Tesco may have failed because they were not offering anything new. Mr Kelvin explained: “The market is fragmented. At the cheaper end there is JC Penney, Target; retailers really need to make sure they provide something that you can’t get already in the US. You have to have a unique brand, not just be about price. For instance, Tesco going in to sell food – well, America already had shops that sell apples and pears. Sugar is sugar; you have to offer something different.”
Primark thinks it can take on the big US discounters. Mr Bason said: “We are well aware of the number of discounters in the US but we have entered countries like this before, such as Germany.”
While high street fashion brands are making a go of it, one category that is also expecting huge growth is luxury brands from the UK and Europe.
The British luxury giant Burberry has managed to compete with the best of them and it is opening new stores in San Francisco and Beverly Hills in Los Angeles this autumn. Andrew Maag, the retailer’s chief executive of Europe, Middle East, India, Africa and the Americas, said: “The US is a major under-penetrated market and there is plenty of growth still to come for luxury. Americans value authenticity in brands so we’re fortunate Burberry’s British heritage and modern sensibilities really resonate with this consumer. There are big opportunities in the US for us.”
For some luxury brands, shops in the US might not be the answer. Michael Wainwright, managing director of the jeweller Boodles, has an affluent US clientele who shop on visits to the UK and at trunk shows it hosts in the Carlyle hotel in New York and at the Four Seasons in Toronto. He is also planning a trunk show on the West Coast. He said: “Twenty years ago the Americans were very big spenders. They went back in to their shell after the crisis but it looks like they are back.”
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