When Primark announced in April that it was planning on opening stores in the U.S., there were mixed feelings among retail analysts and industry observers. Beyond Primark’s involvement in the Rana Plaza collapse -- which is concerning enough -- there was a question of whether the high street retailer could make a success of the U.S. market when so many of its compatriots have not.
Sure, Americans love a bargain. But from Tesco’s Fresh & Easy chain -- which popped up in California, Arizona and Nevada in the midst of the recession, only to be sold to billionaire Ron Burkle’s Yucaipa Companies at the end of 2013 with billions of dollars lost -- to Sainsbury, which sold off its Shaw grocery stores in 2004, few value-focused British chains have found success across the pond.
Fashion-specific British retailers seem to have a teensy bit more luck. Kate Middleton-favorite Reiss, for instance, opened its first U.S. store in New York in 2005 and has slowly built up to five standalone stores, with multiple concessions in Bloomingdale’s locations across the country. Karen Millen, which opened its New York flagship in 2008, now has shops everywhere from Chicago to San Francisco. (The company says that 65 percent of its sales come from outside Britain, although it doesn’t break that figure down by country.) AllSaints, which landed in SoHo in 2010, initially spent £43 million taking the brand to the U.S. But few of these brands have popped in the way that might be have been expected.
The exception is Topshop, which owner Sir Philip Green hopes will be bringing in a billion dollars in U.S. sales by 2018. (That said, its expansion has been slow compared to fashion-fashion, non-British competitors H&M and Zara.)
So why is it so hard? “The U.S. is a huge market by any measurement, and to get traction and a national name, generally you have to open a lot of stores,” says Faith Hope Consolo, the chairman of Douglas Elliman’s retail group, which helped bring Jimmy Choo, Paul Smith and Burberry from the UK to the U.S., along with dozens of other overseas retailers. “It's not financially viable otherwise for any but the top luxury retailers, or those with a cool factor like Topshop.”
It’s also more challenging to cater to drastically different U.S. cities. In the UK, the weather is virtually the same everywhere. In the U.S., it can be 20 degrees in one city and 80 in another. And tastes vary as well, almost as much as they do between European countries. (What flies in Dallas might not do so well in Los Angeles, and vice versa, just as there’s a big difference between the way French and Spanish people dress.) “A lot of it comes down to not doing enough detailed research,” says Consolo. “Some British retailers think that the UK and U.S. are more similar than they really are. Measurements are different in the U.S. We like packages bigger, beverages colder. We shop for groceries weekly rather than daily because we have big cars. We have set seasons for shopping based around national holidays: Black Friday, Memorial Day sales, etc. Yet market research doesn't seem to take that into account.”
Pricing is also a challenge. “Many UK-based retailers come with a hefty markup because of the cost of importing goods,” says Michael Fisher, creative director for menswear and lifestyle at Fashion Snoops, a New York-based trend forecasting and advisory firm. Even Topshop has faced this. (As did J.Crew and Forever 21 when they launched in the UK.) “When Topshop first entered the country, the virtual doubling of the price from what a garment would have retailed for back in the UK could have easily taken the brand from a fast-fashion value to a slightly more expensive contemporary level. I think that's still an issue for them to this day.”
But the biggest problem might be weak messaging. E-commerce sites like Net-a-Porter and ASOS -- both based in London -- have done exceptionally well in the U.S. But they also spend a lot of money on marketing, both online and off. “Social media is more important than ever before to build a brand awareness -- that's key if you're appealing to a young demographic, as Topshop does,” says Consolo. Adds Fisher, “American consumers, more than many others, are very set on routine when it comes to their shopping habits. While urban consumers are more likely to try out a new shop, many of the other markets around the country are hesitant to try new things.”