What does it take to sell to America?

Primark’s attempt to crack the US retail market begins this week with the opening of its Boston store. But will the British fashion chain prosper Stateside, following in the footsteps of Topshop – or flop like Tesco and M&S?

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The Independent Online

Breaking into America is no mean feat. Dozens of bands have tried and failed. And some of the biggest names on the high street have also fallen by the wayside.

So the big question facing Primark, which has decided to give it a go with the launch of its Boston store on Thursday, is: can the UK’s biggest fast fashion outlet compete in a crowded market, or will it be dumped like so many before it.

Primark has certainly done its homework. The new store is in the centre of Boston, with students galore just arriving at university to start the new term. The mayor of Boston has agreed to open the 80,000 sq ft store and the company is playing up its Irish roots, which bosses hope will tap into the city’s large Irish immigrant population.

But what makes it think now would be the perfect time for a tilt across the pond? “The timing is key” says Maureen Hinton, a retail analyst at Conlumino. “The US is becoming much more receptive to global fashion thanks to the internet. Younger shoppers are also happy to shop at international brands, thanks to the growth of Asos, H&M and Zara in the US. Older shoppers are perhaps still more entrenched and less likely to change their habits, but younger ones are different.”

Speed of growth is also going to be key to Primark’s success in the US, with just one store opening initially, followed by concessions in a handful of Sears department stores.

Jon Copestake, a retail analyst at the Economist Intelligence Unit, says taking things slow could actually help. “Discount clothing in the US is fairly saturated but there are varying levels of ‘discount’ which could enable Primark to carve out a niche” he said.

“It has also approached the expansion carefully, thoroughly and efficiently. The fact it’s taken a year to open one store, while Uniqlo is opening 20 a year, shows that Primark wants to do things properly. By comparison, Uniqlo could find itself over-extended.”

A slow expansion could prove key to the business, with other British fashion brands including Ted Baker, Topshop and Boden all putting in strong US performances through steady unveiling.

Mr Copestake added: “Its geographic size also means that trying to conquer the US as an entity is impossible, and more successful ventures have done so state by state or simply focused on creating flagships in key city locations rather than an all-out assault.”

But at the back of Primark’s mind will remain the flops of Marks & Spencer, Sainsbury’s and Tesco, which all failed to break the US in recent decades. Those companies failed to tap into what the US consumer wanted, and thought selling the same goods as their UK stores would be enough to win over customers. Even Primark’s vast European experience, with stores in France, Germany and six other European countries, will make little difference when it comes to US expansion, with a completely different set up required.

When Tesco tried heading Stateside, it already had successful overseas ventures in much of Europe, Thailand and South Korea. Yet, at a cost of about £2bn, the company was left nursing the wounds of a very costly experiment.

By comparison, Topshop has managed a successful foray into the US, with a new flagship store on New York’s fashionable Fifth Avenue, and stores across both the East and West coasts. One big difference is that Topshop sold a 25 per cent stake in its business to US private equity, meaning US expertise was on board to help deal with local nuances.

Other European retailers have also chanced their arms on a US big break, with Spain’s Zara and Sweden’s H&M showing how it can be done – both have had runaway success and continue their dominant position as the biggest and second-biggest fashion retailers in the world.

Mr Copestake explained: “Entering the USA is difficult because it’s already a highly developed and competitive retail market and virtually all subsectors are crowded with established domestic players, which makes carving out the share required for success tough.

“Domestic retailers already have established brands and supply chains as well as customer loyalty. Retailers can be mistaken into thinking that the USA will be easy because it exemplifies Western culture and taste (and shares a common language with the UK) but it has a more different consumer base to Europe than people think.”

Primark is going it alone, and seems determined to handle anything the market can throw at it. Finance director John Bason explains that the offer will be different, and he seems sanguine about the potential pitfalls.

He says: “There are many similarities to our range in Europe but we have taken a view on what will work in the US. We hope to get more right than we get wrong but we also expect to be learning in the early days.”

Learning seems to be the key message for Primark’s future, but at least it has its eyes open. The company saw like-for-like sales up 4 per cent in the three months to the end of this week. The lure is obviously to pull off that sort of growth in the biggest consumer market in the world.

They made it here: retailers in Britain

TK Maxx The Massachussetts clothes retailer TJ Maxx opened its first UK store in Bristol in 1994. (It altered its name to avoid a clash with TJ Hughes). Now has 280 stores in UK and Ireland.

Asda Owned by the US supermarket giant Walmart since 1999, it has 568 stores.

J Crew New York company launched a London branch on Regent Street in 2013. Now has five stores in the capital.

Victoria’s Secret Lingerie retailer opened first UK boutique in 2005 at Heathrow Airport. Now has 10 stores.

Whole Foods The upmarket US grocery chain operates in nine UK locations including one in Glasgow.

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