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More businesses than ever are choosing London as their launch pad into Europe, with the likes of fashion retailer American Eagle, Zara sister company Stradivarius and outsourcing site TaskRabbit coming to the UK this year. These businesses are contributing to a 16 per cent increase in international companies launching in the city since 2012/2013.
The UK’s capital is attractive for its talent, multiculturalism and forward-thinking consumers. Figures from promotional body London & Partners reveal that 260 international companies established their businesses in the capital in the 2013/14 financial year, with a particular focus on companies arriving from the US and China.
From the US, 54 companies set up operations in London, with more US tech firms (32) arriving than before. From China, 24 companies launched, including firms from business services, creative industries and tech sectors.
These new entrants are bringing with them a wealth of fresh ideas and strategies to establish themselves and then grow in the UK, so what can established companies learn from their new neighbours?
Use word of mouth and partnerships to stretch your budget
When US cloud telecoms company Twilio launched in the UK in 2011, it focused on start-up hubs, while social dashboard Hootsuite used a ‘freemium’ model before developing paid for pro-versions. In other words, they started niche and grew from there.
Twilio, which provides telecoms software to businesses that takes away the need to partner with the bigger telecoms providers, moved from the US to the UK because of demand from its customers who were wanting to move across the Atlantic. These include taxi app Uber and room rental website Airbnb.
Twilio’s approach in the US has been to partner with the likes of Google and that strategy is being duplicated in the UK. It recently partnered with the brand again to offer a call centre function on Google’s Chromebook.
As brands expand, some fall into the trap of diluting their identity and lose the qualities that made them popular in the first place
This draws in businesses looking to communicate without having to partner with the big telecoms companies, which can be time consuming and expensive to set up.
Reports on the new partnership say it is a win for Twilio to be associated with Google and for Google products to be considered an option for businesses.
However, partnerships are not the only way Twilio is looking to build its brand: being recognised as a standalone company is also an ambition. European director James Parton says: “We have enjoyed a fairly high profile in the technology press, so the brand has grown organically standalone from other companies, but of course if we work with Google and Facebook, that helps our profile and credibility.
“Our next challenge as a company is to break out of the tech community and start to get recognition and understanding of what we do in vertical markets, such as retail or banking.”
Use your network
Using the resources around you is vital for brands looking to build up a presence in the UK, especially for companies with limited budget. “Networking is extremely important,” says Hootsuite general manager Joseph Smith. “Hootsuite came to the UK two years ago and we were an unknown. We had a small budget for marketing or office space so we initially set up at Central Working, which provided a way for us to meet people in the London start-up scene.”
Boston-based TaskRabbit launched in the UK this year, and also uses office space from Central Working, relying on the power of its network to spread the word. TaskRabbit is an online marketplace that outsources errands to people in their neighbourhood, from cleaners to personal assistants. It found that Brits are more reserved about using the service than their US cousins, so it used targeted word-of-mouth campaigns.
Uma Subramanian, director of marketplace operations for Europe, says: “We have quite a strong brand in the US but not here, and there is a bit of reluctance to use us. Service networking and service-based businesses have much slower adoption in the UK than in the US, and some education is required for the customer.”
Embrace technology and innovate
Identifying trends in innovation, developing technology and solving market-based problems is one of the attractions of the UK for international companies, and the London & Partners figures show a record number of technology companies coming to the capital, with 90 tech firms arriving in the 2013/14 financial year.
However, UK brands can also seize these opportunities due to the pace of change in the market. At Central Working, which provides office space and support to businesses, chief executive James Layfield sees a huge trend in people revolutionising the banking sector and starting new ways of making payments (see Q&A, below).
“It’s a big dynamic economy, but there are lots of opportunities for us to innovate and bring new products and services,” says Colm Lyon, chief executive of Realex Payments.
Lyon and Layfield also elude to the rise of the ‘fintech’ scene in London, which includes companies that solve financial challenges in payments, data analysis and banking. The fact that UK consumers are so comfortable purchasing online makes this an market to watch.
Realex Payments facilitates online payments for retailers and works with brands such as Aer Lingus, Virgin Atlantic and Paddy Power, processing £20bn-worth of transactions a year. Although it launched in 2000, the company is now investing in London, recruiting staff for its office in Hammersmith.
Lyon says there are always opportunities to be gleaned from being innovative as “companies can get a good understanding of the problem out there and go and make your product to solve that problem.” The company launched its business boot camps designed to help new and existing businesses set up online at London Technology Week last month.
Have a ruthless customer focus
Chinese ISP Tencent works with brands such as Burberry in the UK to help them reach people in China through its WeChat app. “We see more brands expanding through mobile and social channels as they look to reach the Chinese market,” says senior executive vice-president Seng Yee Lau. He advocates a steely focus on user experience, claiming that is what makes the company stand out.
“We have expanded our services so that the user can conduct whole transactions in one place, from initial discovery and research through to payment. What is important is the journey that customers go through and this is where collaboration is so important.
We wanted to find access to a talent pool that had international experience and multiple languages and it became compelling to choose London
“Agencies and brands have great insight into their customers and there are opportunities for us to add to that through good content and an integrated approach,” he says. “I see this customer-centric approach as the most important part of how we will continue to expand.”
Research consultant Millward Brown claims that being ‘meaningful, different and salient’ are the key drivers of brand equity. In many sectors the UK market is already saturated with a choice of products and services but the brands coming to these shores have in common the ability to innovate to address consumer needs.
Global account director Peter Walshe advises UK brands not to rest on their laurels. “It’s crucial to be able to understand how your customers are perceiving you and that the service is living up to what is special and different about your brand.”
Concentrate on talent
Recruitment is an area that international companies focus on to drive their brands forward. Access to talent, for example, was a draw for social relationship platform Hootsuite when launching in Europe in 2012. Smith advises those looking to start up in the UK to hire the best people, which he admits can be a challenge for unknown brands.
He says: “We wanted to access to a talent pool that had international experience and multiple languages, and London, with its multinational mix, became the compelling option.”
Recruitment is also a process that cannot be rushed. “It’s always hard to recruit the right people. We have a high bar in terms of who we employ, both in skills and personality, so it is essential that we take our time,” says Parton at Twilio.
Brands looking to stand out in a crowded market can use the premium nature of their products combined with a new offering to take advantage of the growing appetite for luxury in the UK.
US bathroom brand Waterworks is one of those brands using its luxury status and promoting differentiation. This month it launches its first UK showroom, on London’s Kings Road in Chelsea, to introduce its ‘full service’ proposition, including original bathroom designs and fittings, tiles and towels.
Chief executive Peter Sallick claims that existing players can learn from its approach because it offers a full service, whereas most showrooms and brands offer only fittings, tiles or accessories.
Waterworks is using the UK as a launch pad to grow internationally and the brand is in the process of setting up a flagship store in Asia.
“The UK has developed an appetite which more and more international brands are looking to satisfy,” says Marcel Knobil, founder of VeryFirstTo, a website that enables consumers to hear about and purchase luxury products and experiences. “We have especially noticed new arrivals from the US, France and Italy which appear to be responding to a demand for luxury, strong design and distinction.”
Knobil believes that jewellery, drinks, hotels and restaurants, as well as fashion and accessories are all seeing new international entrants.
Emphasise your identity
Rosewood Hotels and Resorts is another example of a US-based luxury brand that has looked to the UK as part of its global expansion, opening a Hotel in London’s High Holborn in October last year.
Rosewood president Radha Arora emphasises the need to focus on an identifiable brand. “As brands expand, some fall into the trap of diluting their identity and lose the qualities that made them popular in the first place. While uniformity may work for some brands, we know that our guests value the uniqueness of our properties and we work hard to enhance this.”
The hotel brand commissioned British artist Gerald Scarfe to create artwork for Scarfe’s bar as part of its ‘sense of place’ philosophy.
American steakhouse group Smith & Wollensky, which will launch in the Adelphi Building off London’s Strand in spring 2015, is looking to mix its identity with the original style of the space (see Viewpoint, below). Meanwhile, Parisian shoe brand Bobbies opened its first store outside France in May in London’s Covent Garden, focusing on an “imaginative and quirky universe,” according to founders Antoine Bolze and Alexis Maugey.
Arora adds: “London continues to be one of the major global gateway cities and a centre for finance, the arts, fashion and commerce. Since the start of 2014, London has had a staggering 2.95 million visitors from overseas, and holiday visits to Britain increased by 15 per cent during April 2014 compared to last year.”
Viewpoint: Kim Lapine
Vice-president of marketing, Smith & Wollensky Restaurant Group
The US Steakhouse Bar & Grill is opening its first UK restaurant in London in spring 2015, but as a heritage brand the key challenge is keeping true to its story while appealing to the locals.
Smith & Wollensky is a well-recognised and established brand in the US and we therefore believed it the right time to explore growth possibilities and expansion opportunities. With the thriving economic landscape and the upswing in international travel, the opportunities available were very attractive.
However, we are not a chain but a boutique collection of iconic restaurants connected to our local communities, and this is something we hold important in achieving in the UK. We aim to become partners with those that surround us, supporting our local communities in all that we do.
There is always an element of locality in each one of our restaurants in the US, and this is no different for London, paying respect and homage to the local culture, demands and lifestyles of the community.
We are currently working with local suppliers to develop a well-balanced meat menu to satisfy all palettes. So, while the experience remains consistent and true
to the Steakhouse brand, our formula for hospitality and quality translates across borders.
We have enormous respect for the UK’s spectacular culinary scene. The opening will pay homage to that as we bridge together these two vibrant countries with a common thread.
Q & A: James Layfield
Chief executive, Central Working
Marketing Week (MW): What trends are you seeing in terms of the companies coming to London?
James Layfield (JL): Many businesses are from Silicon Valley in California and they are looking to London as a launch pad into Europe. We are in an interesting position where we had a host of relatively well-known names choosing London and Central Working as the place to launch into the UK.
MW: What can UK brands and companies learn from those international players?
JL: US tech companies tend to look through a more technical lens and UK tech companies tend to be marketing heavy. For example, Google is not great at marketing but it is good at building things that work. Some of these companies may not be the best marketing companies but because the technology is good, people would use it. You have to have a product that’s so simple and single-minded that it doesn’t need explanation.
MW: What attracts these companies to launch in London?
JL: The city is set up to enable connectivity. If you come to this city, you are a Boris bike ride away from some of the top creatives, PR agencies and all the different components you need to build a business. That is a unique set of circumstances. There is also the culture and community that London has and it’s what makes the difference compared to other European locations.
MW: What types of companies are the ones to watch?
JL: We are seeing people revolutionising the banking sector. Paypal acquired one of our members, Braintree, for $800m in 2013. There are phenomenal shifts in what has been a traditional sector. How things used to be done is being unpicked as a result of people asking why certain processes take so long to do, why is it so hard to do and why is it done this way and not another? Those companies are going to make the biggest changes.