The trickle of retailers crossing the Atlantic to the UK has now become a flood as US businesses look to capitalise on London’s newly cemented status as a global fashion capital.
When Victoria’s Secret opened its first UK store at Westfield Stratford this July, the lingerie giant drew crowds of women rushing to fill up on the likes of neon knickers and push-up bras from the latest American import. A flagship store on New Bond Street soon followed in August, complete with mirrored staircase and crystal chandeliers, once more to queues of shoppers.
US businesses have flocked to the UK this year. In the past few months, Rag & Bone and Opening Ceremony have opened their first stores here, Urban Outfitters’ womenswear fascia Free People is launching a UK website this month (November 5) and J Crew, a favourite of Michelle Obama, is whipping up a frenzy among the fashion crowd over its impending UK launch.
Kevin Farrow, senior director of central London retail agency at property firm CBRE, says there is a “follow the leader approach” when it comes to retailers expanding overseas.
“If they see others have done it, it makes them feel more comfortable [about doing it themselves].”
Experts say the trend among US retailers began with the arrival of Abercrombie & Fitch in 2007 and shows no sign of abating.
US brand housE Kellwood is thought to have enlisted Harper Dennis Hobbs to find a store in London for its premium lifestyle brand, Vince, and its contemporary brand, Rebecca Taylor, although it declined to speak to Drapers. Sources also say womenswear and homewares retailer C Wonder is seeking a London store, but the company says it has no immediate plans for the UK.
A major factor in wooing US retailers to the UK is London’s position as a fashion leader. Its position as a world-leading destination was further cemented during this summer’s Olympic Games.
Craig Leavitt, chief executive of US womenswear retailer Kate Spade, which opened its third London store in August, says: “It is truly a world economy and to be successful brands need to appeal to consumers in fashion capitals around the globe.”
Retailers from across the pond tend to kick off their UK ambitions by testing the water first. Take womenswear and menswear retailer J Crew, which launched a UK website and was sold on designer etailers Net-A-Porter and Mr Porter before scouting for a London store, while Kate Spade debuted via a Covent Garden pop-up shop.
Urban Outfitters’ womenswear fascia Free People is rolling out its UK website following demand from British fans on its Facebook page and blog, according to David Hayne, managing director of retail and direct. “It made us confident Free People would be well received and that the consumer was ready and receptive,” he says.
“At this time we don’t have immediate plans to open a store but we are exploring this as part of a multi-year strategy,” he adds, offering a hint at future expansion plans.
When the UK is firmly in their sights, US retailers often launch one store in central London before opening several more in the capital, often including one or both of the Westfield malls, then consider rolling out across other parts of the UK or Europe.
For example, womenswear retailer Eileen Fisher opened in Marylebone and Covent Garden last year and wants to open in Westfield London, Wimbledon, Richmond and Guildford.
Karen Gray, director of retail and global development, explains: “London is very important in setting UK style trends.
Our strategy is to introduce our brand in London and gradually expand out.”
However, US retail strategy has changed, notes James Ebel, director of international at retail property adviser Harper Dennis Hobbs.
“GAP would have opened first in London and then taken the ‘hub-and-spoke’ method of opening in Manchester, Liverpool and Birmingham. There’s been a critical change and now the focus is on capital cities. Global retailers are thinking, ‘Do I need to be in some of the secondary towns such as Runcorn or Harlow?’”
Nevertheless, Forever 21 has taken a more unusual path, opening its first UK store in Birmingham when it arrived in 2010.
Chief executive Larry Meyer told Drapers’ sister magazine Retail Week in July 2011 that it planned to open stores in “every major city, every mall and every major high street” in the UK within the next five years.
One year on, however, there are doubts over whether the retailer still intends to pursue this ambitious strategy. Honor Westnedge, senior analyst at Verdict Research, says Forever 21 has found the market “tougher than anticipated and held back on further store openings”. Forever 21 declined to comment.
That’s one reason why property agents are now targeting US retailers to try and lure them across the pond.
Sheila King, leasing director of new business at property firm Hammerson, says: “In the UK there has been a lot of consolidation, especially in fashion, and we’ve not seen that many new UK brands coming through. From landlords’ point of view they want innovation and customers want something different, so we will engage in talks [with US retailers] and target certain schemes and units.”
Those working on deals know there are huge challenges facing newcomers, particularly the high rents and rates. For example, says Ebel, there is a 40% business rates bill on top of the rent at the Forever 21 store in Birmingham.
One of the biggest obstacles facing retailers of any nationality is lack of availability of prime retail space which, for many, means Regent Street, Oxford Street and Bond Street.
“London is not a very big place,” says Farrow. “It could take two years [to find the right location] and very often that’s not in their plans.”
Although there are plenty of UK and international retailers on our high streets, there are opportunities for new ones as shoppers “are always hungry for novelty”, argues Ashma Kunde, an apparel analyst at Euromonitor International.
“Despite being a saturated market, brands with a compelling identity, offer and pricing continue to be accepted.”
To be successful, it helps if the retailer is unique, Duncan Gilliard at commercial property broker Cushman & Wakefield says. “In London, new concepts are often successful as it’s fresh and exciting to the UK consumer.”
Story in Numbers
5000 - Size, in square feet, of Rag & Bone’s first UK store in Sloane Square, London
2010 - Year Forever 21 made its UK debut, with a store at Birmingham Bullring
29 - Number of Hollister stores in the UK
40,386 - Size, in square feet, of the Victoria’s Secret store in New Bond Street