In the past, the US has been a bit of a graveyard for British retailers; a land of almost limitless opportunities that few ever truly realise. However, with a number of brands heading stateside this year, is the American dream back on for UK retail?
Over the last few years, many of the UK’s biggest retail names have retrenched from international expansion to focus on an increasingly competitive and fractured home market.
This was preceded by a number of high-profile failures abroad, and nowhere was that more pronounced than in the United States of America. While countless retailers have chased the bright lights and deep pockets of the US market and ultimately lost out, few UK names loom larger in their failures across the Atlantic than Topshop.
However, that narrative is beginning to shift. In the last six months alone, UK brands Mountain Warehouse, JD Sports and most recently Card Factory have all expanded into the US.
They join brands like Primark, All Saints, Watches of Switzerland and numerous others in chasing the American dream.
But why are UK brands once again looking to make it big in America? What will be different this time around? And what can they learn from British retailers’ failures there in the past?
Growth and resilience
The simplest reason brands are turning their attentions back to the US is because its economy is far stronger and more resilient than the UK or Europe’s.
Despite the backlash against the Biden administration in the recent election, which has once again elected Donald Trump to the presidency, the US economy has been the world’s strongest since the pandemic – having grown around 15% since 2019, compared to just 5% across the UK and Europe.
And while inflation and the resulting cost-of-living crisis, which has crippled UK and European consumer confidence over the last few years, have also proven stickier than consumers would have liked across the Atlantic, spending has remained stronger in the US in 2024 than at home.
“The US is a huge retail market, and it has been very resilient over recent years – far more so than most European retail markets, including the UK,” says GlobalData managing director, retail Neil Saunders.
“This growing disparity and the generally more friendly business environment have probably made more retailers take another look. I don’t think the desire of UK retailers to capture a slice of the action in the US ever went away, it was more a matter of the timing having to be right.
Card Factory completed the £20m acquisition of US firm Garven Holdings last week. Speaking to Retail Week in September, before the deal was completed, chief executive Darcy Willson-Rymer said: “The US is a big market and if we’re going to achieve our strategy, we must enter into the US card market that’s valued at $7bn in total.
“But of course, we have to learn, and we have to understand the differences between the US and the other places we do business, not just from how you do business, but also from a consumer perspective. So this is a good first step.”
For other brands like JD Sports, there is also a feeling that the UK is a very mature market, and any further sales growth will be hard-earned. The US, by comparison, is just waiting to be explored.
“The UK is a mature market for JD Sports, so as a retailer selling third-party brands, it is a logical move to expand in the largest market if you want to be a global player,” says Investec analyst Kate Calvert.
The pitfalls of the past
While the momentum may be on the US economy’s side, UK retailers are still likely haunted by the mistakes of the past.
Because of all of the opportunities that a rich and dynamic market such as America presents, UK brands have historically found it very difficult to break through with US consumers. How can the latest group of brands avoid the fates of their predecessors?
“Understanding the market is critical,” says GlobalData’s Saunders. “There is still a lingering view that because the language and culture are similar, the UK and US are the same. The reality is that, in retail terms, they’re not.
“Patterns of consumption, consumer priorities, tastes and preferences, and shopping habits are all very different. This needs to be fully appreciated and understood. Taking a cautious approach and learning as you go, as Primark has done, is smart. Launching with partnerships, as M&S have done with Target, is also sensible.”
With this in mind, what Card Factory, JD Sports and Mountain Warehouse all have in common with their US pushes this year is that they’ve come through acquisition, rather than launching under their own names.
While this might present UK brands with a higher upfront cost, Saunders says expanding through acquisition presents brands some answer to America’s sprawling geographical and logistical challenges.
“Expanding organically in the US is difficult. The market is vast in terms of scale and geography and to make a significant impact it requires a lot of time and capital, which is risky,” he adds.
“Setting up from scratch also poses problems as it means propositions and ways of doing business need to be adjusted and it is very easy to get things wrong – as we have seen in the past. Acquiring an existing brand can also be expensive but the risk is reduced as it’s an already functioning business with a track record and a body of people who understand the market.”
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