US expansion

Who is pushing into the US at the moment?

Topshop has pressed the button on its second US store opening in Chicago, after declaring its Manhattan store a success. Asos has just launched the US version of its website and Ted Baker is also set to open an ecommerce channel in the US in early October.

At the same time, Waitrose-owned Duchy Originals has revealed plans to launch in the US, selling the brand through a variety of retailers. Next is also pushing across the pond in a tie-up that will see its clothing sold online by US giant Sears, expanding on Next’s own ecommerce channel, which US consumers can use.

Isn’t the US economy struggling?

The US economy is back into growth. But after a couple of strong quarters of GDP growth, the second-quarter 2010 figure of 1.7% marks a slowdown that is worrying some. At the same time, the unemployment figure continues to hover at around the 10% mark, and the housing market is still in the doldrums.

Economists believe that the growth spurt seen earlier in the year was partly fuelled by inventories being restocked, and so a slowdown in growth was anticipated.

So why the renewed interest in US expansion?

Household spending is continuing to rise, making up about 70% of US GDP. Consumer spending rose 2.2% in the second quarter, the fastest growth since the first three months of 2007.

For Ted Baker, the transactional website is launching to support its 13 existing US stores, and store opening programme. Waitrose, on the other hand has said that its plans for the Duchy Originals brand do not signal an interest in opening US stores. The grocer already has a successful business selling in 25 countries and says it has been studying the US market for four months.

Lots of retailers have failed there before, what’s different?

The focus on trading in the US without opening lots of stores marks this series of US pushes out from previous ones. Supplying product to established US retailers in the manner of Waitrose and Next is a much lower-risk strategy.

For those pushing ahead online, a transactional US site will give Ted Baker and Asos national coverage for what is likely a smaller investment than opening even a single store.

But even if the US economy does hold up, retailers still need to be wary of the hurdles to US trade. Not least the country’s infamous customs, which have caught out many a retailer with stock being stuck in warehouses for weeks when it is needed on US shopfloors.