Paula Levitan, UK head of retail law at Arnold & Porter.
The failure of British and other European fashion brands in the US market used to perplex the industry. Until recently, notable exits from the US, such as those of Marks & Spencer and Laura Ashley, seemed to dampen enthusiasm among the companies I spoke to about entering this vast market. Although Tesco is not a fashion brand, its recent failure in the US was so high profile that it has affected confidence among some in the fashion industry.
However, the tide now seems to be turning. Asos says the US is its fastest-growing market; Topshop plans to expand beyond its current four US stores; and Boden says the US will overtake the UK as its biggest market soon.
This sea change is largely due to pioneering European brands developing strategies that have proved successful in penetrating the market. Earlier British entrants used to rush into the US; M&S, for example, acquired US clothing veteran Brooks Brothers outright in the 1980s.
British companies went in feet first because they perceived the US to be an easy, homogenous market: real estate was cheaper, employment laws more relaxed, there was a common language, it was possible to participate in group advertising and there was built-in consumer traffic in shopping malls. But there are differences between states, some of which are as significant as the differences between EU countries. Arguably Tesco’s Fresh & Easy format might not have failed had it launched on the East Coast rather than the West Coast.
Recent successes reflect a more strategic approach. Topshop’s strategy was to open only in big cities. Others, such as Boden and Jack Wills, have successfully emphasised their Britishness in branding, playing on the recent US television success of Downton Abbey and the London Olympics.
European brands should therefore be increasingly confident of success in the US.