US: FCUK America

The taxi-drivers of New York City – not known for the purity of their language – refused to drive around with the ads on their cabs. Ordinary shoppers in Los Angeles complained it was all going too far. And now French Connection, the retailer behind the infamous fcuk campaign, is planning to splash the slogan all across the US.

The chain announced last week that it is to expand its US operations from 25 stores to up to 300 over the next few years.

Chief executive Stephen Marks says the fcuk campaign has been essential to the chain’s successful UK growth over recent years. He claims the advertising will not be watered down one iota for the US market.

Marks’ plans to shock the US with the foul-mouthed slogan seems risky, given the experience of other controversial campaigns such as Benetton’s death row ads and Calvin Klein’s anorexic models.

But Marks is also proposing something altogether more fantastic – to create a UK retail success story on the other side of the Atlantic. It has never been achieved on a large scale before, though many have tried. Next, Laura Ashley, Mothercare and Marks & Spencer have all been run out of downtown US and have returned to the UK licking their wounds and nursing their losses.

Last week, Prudential saw its shares marked down 14 per cent after announcing it was buying Houston insurer American General. Investors thought Prudential had paid over the odds for the business, given the fragmented nature of the US insurance market. Restaurant chain Belgo has also announced that it is closing its flagship New York restaurant.

Intense competition

According to some observers, French Connection’s advertising will be even more pivotal in the US than in the UK.

UK clothes sell, on the whole, from busy high streets. “Here, you rely on the product doing the work,” says retail consultant Helena Packshaw. “In the US, a lot of people are spread out over a lot of places and you have got to have good marketing and make a fair amount of noise.”

She says many UK retailers fail in the US because they are unaccustomed to the intense competition and the ability of US companies to respond to new players with lightning speed. UK retailers are used to paying exorbitant rents, some ten per cent of turnover, whereas in the US, rents may account for just three per cent of sales. This means there are lower barriers to entry into the market, encouraging stiff competition.

This in turn keeps prices down and requires retailers to seek greater differentiation and to spend more on marketing.

Niches within niches

“Retail in the US has niches on niches. American consumers have lots of places to go, so retailers’ targeting is much more precise than than their UK cousins. They have to survive on fewer customers,” says Packshaw. But UK retailers continue to try out the US market, as they reach their expansion limit in the UK. French Connection has doubled its store numbers to 60 in the UK over the past four years.

Prime city centre locations in the US attract less customers through the door than their equivalents in the UK. But prime sites are becoming harder to obtain in the US, with shopping malls reaching saturation point.

UK failures

UK fashion retailers have made many misjudgements in the US. Next closed its five test stores in 1998 because its formal clothes failed to attract Americans, who tend to dress down more. Its ranges are more “item-led than assortment-led” according to Walter Levy of Kurt Salmon Associates. Its colours were also more sober – with mauves and violets – than Americans tend to prefer. American usually like brighter colours, he says.

In addition, he claims, the quality of UK merchandise is generally thought to be of a lower standard than that created in the US. But he adds that French Connection may be immune to some of these problems – its merchandising is seen as more American, with less cluttered stores than is usual in the UK. He says that Mothercare failed because, although it offered something no US retailer could, it entered the market using UK clothes sizes, which are totally unsuitable for Americans, who tend to be larger.

US trends

Other trends in the US seem to be going French Connection’s way. There is a population bulge in the younger age group, as the children of the baby boomers hit young adulthood. Gap is on the wane, as it has failed to strike the right balance between its older and younger, trendy customers. American youth is looking more at continental and French styles, as seen by the success of Sweden’s Hennes & Mauritz, which opened a store in New York last year, as well as The Limited’s sub-brand Limited Express.

Shock ads

Gap had a tough 2000, with sales declining sharply. In the third quarter, the company blamed the decision to divert the marketing budget away from television ads into in-store promotions for what it called a “very challenging” time. Clearly, advertising is much more important in US retail than it is in the UK, where the high street store is the message.

Shock ads can do the trick in the US, but French Connection should be prepared for some harsh criticism if it is to extend the tactics it has employed in the UK to the US market. Levy cites the example of fashion brand Abercrombie & Fitch, which used nudity in its US catalogues. “There was a lot of pressure from the older market for the catalogues to be covered up,” he says. “Calvin Klein had to back off a bit too.” But he concedes: “That’s one way of garnering attention.”

In the UK, French Connection has been involved in a game of cat and mouse with regulator the Advertising Standards Authority (ASA). The body has upheld complaints about two ads, and if it upholds a third, it will force French Connection to have all future ads pre-vetted. In reality, French Connection has made a mockery of the ASA and has cleverly exploited publicity from complaints without ever going too far.

In the US, however, there is no equivalent of the ASA. Local areas take matters into their own hands if there are poster or press ads which offend.

Trevor Beattie, creative director of TBWA London and the man behind the fcuk campaign, says the ads will be rolled out in foreign markets in the same way they have been in the UK.

Cool Britishness

He believes American youth see Britishness as cool: “The Americans want to be cool, they buy London cool, though not music these days, but fashion with the whole Austin Powers thing.” He says the KinkyBugger TV campaign, banned in the UK, will be shown in the US next year, not on network television, but through youth cable channels such as MTV.

But Steve Rabosky, chief creative officer of Saatchi & Saatchi in Los Angeles, says: “The problem over here is it is going to get a lot of censorship. This society is not as open as the UK. If fcuk goes outside New York and San Francisco, it could run into problems. Things are very politically correct over here right now. The entertainment industry is being pressured to cut back on violence and nudity, and advertising is part of that.”

He adds that French Connection has managed to keep the campaign from being too outrageous in the UK. “Fcuk would have to be tasteful with it and not just slam it in your face. If it takes a restrained approach, it will be interesting to see.”

French Connection has been operating in the US for 20 years, and has built up a niche following. But to massively expand its business opens it up to all the risks of failing to get the right sites, misjudging fashion trends and creating an infrastructure for such a huge market. Few other UK retail brands have succeeded in the US, but fcuk would be forgiven for thinking it might be different this time.

The country that shops till it drops

By Polly Devaney in New York

Americans love to shop. It’s what they do best. It is unsurprising therefore, that fashion retailers would regard this as the market to conquer. However, the history books are filled with examples of European retailers which have tried and failed to get a foothold across the Atlantic. Still, history does little to deter attempts at invasion and European chains such as French Connection UK, Sweden’s H&M and Spain’s Zara are opening up thick and fast in the US.

Amid fears of a US economic slowdown, French Connection UK has been criticised for the timing of its assault on the US market. Neil Williams, fcuk chief operating officer, dismissed those concerns last month, claiming that US entry was a long term rather than a short term strategic move. French Connection UK, known for its provocative advertising, plans to open 300 stores across the US. Williams said the groups advertising philosophy remains intact and that: “Fcuk will definitely be expanding the volume of advertising based on a similar campaign in the US.”

However, Williams would do well do remember that the US is a country with a large puritanical streak and the general reaction to the emerging fcuk branding is one of shock, especially as it seems the company is using fcuk more overtly in the US. Before many consumers have heard of the brand French Connection they are faced with the four letter acronym that many find offensive.

Furthermore, in many parts of the US, fcuk was used as an Internet swear word long before French Connection used it to make people notice their brand. Graffiti and other youth culture slogans use the word fcuk and t-shirts, bags and other clothing with slogans such as fcuk off! have been widely available for some time.

Sweden’s Hennes & Mauritz shocked the fashion industry last spring by taking on the almighty Gap in its own backyard, opening a store on Manhattan’s 5th Avenue. Still, New Yorkers loved it and for the first weeks after the opening H&M had to employ bouncers and a velvet rope to keep the anxious hordes at bay. The H&M concept of high turnover of the latest fashions at moderate prices appealed to American students and the young urban working class. Suddenly, American consumers had another place to turn and the executives at Gap must have had a few sleepless nights. Gap under performed the retail market in the first part of last year, after H&M’s arrival, and its formula of reproducing the same basic items in the colour of the season was looking jaded.

The convergence of international media and entertainment has certainly led to more uniform fashion tastes and it makes sense for retailers to attempt globalisation to gain economies of scale. Whether now is the right time for these ambitious retailers is questionable and they certainly have a long road ahead of them. The US is not the most fashion conscious nation and Gap still has its place in the heart of most American wardrobes, although even the puritanical among them would probably be loathe to admit it.Brett FriedmanHennes & Mauritz: Has been successful at breaking into the US fashion market