Topshop, Ted Baker and Reiss are among those aiming to crack America. So what’s the best route into this highly competitive market for UK retailers and brands?
It is Saturday afternoon and Topshop in SoHo, New York, is heaving as women look to get their hands on the British retailer’s stylish clothes. “What do you like about Topshop?” I ask one fashionable twentysomething. “It’s just so cool,” she responds, before picking up a pair of studded boots.
The fashion emporium is one of many UK businesses making waves across the pond. Walk around New York’s Meatpacking District and you’ll spot All Saints, an Alexander McQueen flagship and a Matthew Williamson store. Further afield in the West Village is Lulu Guinness and, in SoHo, Paul Smith.
You could go even further with the infiltration of British stores to consider all of the US online operations set up by British retailers, such as Asos and Aurora Fashions, which made its ecommerce debut Stateside in May with its Warehouse, Oasis and Coast fascias via its Andotherbrands.com platform.
Like a British entertainer or artist, the US is a market retailers want to crack. It’s no surprise given the opportunities: consumers are predicted to spend $675bn (£417.63bn) on clothing, footwear and jewellery in the US this year, according to retail analysis firm Planet Retail. To put this into perspective, the UK figure is $85bn (£52.59bn).
While store closures are on the UK agenda for Topshop owner Arcadia, across the Atlantic it’s all about expansion. Sir Philip Green signed a deal to sell Topshop and Topman ranges in 14 of US retailer Nordstrom’s department stores from September, building on the three standalone stores in New York, Las Vegas and Chicago.
Stacey Widlitz, president of New York and London retail consultancy SW Retail Advisors, believes the agreement will be a success for both, describing it as “a low-cost way to test the waters and get to know the consumer”.
The concession model is a common entry route for British retailers. Another example of a company taking that route is Reiss, which is opening a further six concessions across US retail institute Bloomingdale’s, to push its total to 13.
The retailer, which opened its first global store in New York in 2005, has seven standalone stores in the US, but the concessions give it a chance to test other locations. As commercial director Sanjay Sharma says, the concessions “provide Reiss with a huge opportunity to take the brand nationwide”.
Another UK retailer with a bigger US presence is Ted Baker, which launched there in 1997 across both wholesale and retail. It now has 18 standalone stores, 26 Bloomingdale’s concessions and strong representation across Nordstrom and other major department stores, as well as indie stockists.
But getting to this stage has been a careful process, says Ted Baker brand communication director Craig Smith. “Everything we do is carefully considered and thought through to the nth degree,” he says. “We will only look at store openings when we feel completely satisfied that they are feasible and will add value to the portfolio.”
But take a wider view and there are few examples of extensive expansion by UK brands in the States. Most tend to have a flagship or a few stores, have built their US presence through concessions and tend to stick to major cities.
Isabel Cavill, senior analyst at Planet Retail in London, says UK retailers usually take a sensible route when it comes to the US market. “Rather than open up countless stores, they are taking a less risky approach by opening a few stores in high footfall locations, and restricting themselves to markets where there is more of a fashion culture such as New York and San Francisco.”
For British retailers making their first move across the Atlantic, analysts recommend starting with a website. “Not just one as a marketing tool, but one that fulfils a complete customer experience,” says Chris Donnelly, managing director of management consultancy Accenture’s retail practice. “This is the ideal way to test demand. If a brand is successful, it will need an online presence anyway.”
This is the approach taken by Aurora Fashions, which launched its multi-brand website Andotherbrands.com, featuring all three of its brands on one platform, in the US in May. Its chief executive Mike Shearwood said at the time that the site would be used as a testing ground for Warehouse and Oasis and, if successful, the company would consider opening standalone stores.
But whatever method retailers take, the States are tough to crack, as the market is well established. “The US retail scene is a well-developed market currently experiencing slow-to-modest growth and an excess of retail stores by any comparative international measure,” says Donnelly. “One could argue the US does not need another store.”
However, he adds: “With the right offer and mix of product, quality, service and trend, there is opportunity.”
So, faced with a saturated market, what can British brands offer? According to Cavill, the answer is a “young and directional approach”, which has been traditionally lacking in US stores. “Topshop, All Saints and Reiss are all doing well because they are positioning themselves as niche brands. Cath Kidston is doing pretty well in the US too, and that is down to her niche offering and nice mix of clothing and homewares.”
For a British brand to succeed in the US, it needs to bring “a certain style and quality, and a price point that is appealing,” says Donnelly. “In today’s market, it is less important that a brand is ‘British’ but rather that it is trend-leading. Certain British brands have a historical style related to this country – for example, Barbour – but they are only going to be successful if their style is on trend.”
The Duchess of Cambridge has also helped propel UK retailers in the US. The ‘Kate effect’ has boosted sales and brand profiles for labels such as Reiss and Whistles each time she has worn them.
Comparing UK retailers with their European counterparts in the US, notable success stories come from H&M and Zara, with the latter operating 44 US stores. “H&M has done well because of its low price point and fashion sense,” adds Cavill. However, says Donnelly, while these European players have built a position in the market, they have so far failed to achieve brand recognition beyond some of the key metro markets.
With LK Bennett plotting more stores and All Saints set to double its store count in North America to 25, well-placed UK retailers are on their way to achieving their very own American dream.
Story in Numbers
£418bn - Amount predicted to be spent on clothing, footwear and jewellery in the US this year (according to Planet Retail)
14 - Number of Nordstrom department stores that Topshop and Topman are now sold in £49.5m Asos’s US sales for the year to August 31
18 - Number of Ted Baker standalone stores in the US
44 - Number of Zara standalone stores in the US