Turning the tables on an American dream

There was a time, long ago, when US retailers moulded the look of the UK high street. Back in 1987, Gap was a breath of fresh air with its innovatory focused retail format that challenged the rather stuffy department store mentality then prevalent.

Others followed: John Hoerner revolutionised clothes retailing at Burton Group (he’s still here, but works for Tesco these days); Toys ‘R’ Us category killed the toys sector. Much later, Borders spearheaded new ways of selling books, following the repeal of the outmoded Net Book Agreement. And Saks-bred Rose Marie Bravo, by general consent, was instrumental in turning around the fortunes of Burberry. In short, “US” and “retail” were two words which, spoken in one breath, elicited admiration from the professionals.

Not any more. The dire travails of Gap, which is in severe contraction, are well advertised. Borders is considering decamping. Toys ‘R’ US is a pale shadow of its former self. Other attempts at category killing have either met with outright failure (who remembers the Home Depot initiative?) or – surprisingly in the case of Wal-Mart’s takeover of Asda – floundered badly.

With that kind of fading track record, it is not wholly surprising that new US retail enterprises pitching camp here are looked at askance. Consider, for example, the hollow mirth which greeted Whole Foods Market after it set up its palatial emporium in Kensington High Street; or for that matter, the exploratory bridgehead being established by Brooks Brothers (est 1818). Is such scepticism really warranted, or is it just fashionable sniggering?

The truth, rather boringly, seems to be somewhere in the middle. American businessmen are routinely criticised, with some justification, for a naive belief that they are dealing with a 51st state when they come to Britain: just change the $ sign to £s, and the fresh retail format will carry all before it. Too little attention is paid, for example, to the gross disparities in land prices, rents and therefore margins between the two countries.

This is not to suggest that the likes of Gap somehow didn’t do their homework properly. But the target was a lot softer in the flabby British retail sector of the early 1990s, weakened further by recession. Subsequently, others like Spain’s Zara and Mango, Sweden’s H&M or our very own, uniquely powerful, grocery multiples have got a lot better at playing the game.

That of course is not the whole story. US retailers such as TK Maxx and Staples continue to buck the trend. They’ve done painstaking research into the UK retail scene and they’ve got a retail proposition which is compellingly different and difficult to challenge.

Will Whole Foods Market be able to boast the same thing in a few years time? There’s a feeling that they’re too late on the scene; that UK retailers have already stolen their clothes. Regardless of whether WFM has got its planning right, the supermarkets will make life very uncomfortable.

Stuart Smith, editor


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