Vastness of Marketplace and Real Estate Errors Stymie British Retailers

By Jennifer Steinhauer

New York – If it is true, as everyone from Adam Smith to Disraeli and Napoleon has said, that the British are a nation of shopkeepers, why can’t they keep shop more successfully in America?

The language is the same, on the surface anyway, consumer tastes seem similar enough – both nations, for example, embraced the spice girls with unfathomable zeal. What is more, London has been a locus of hip, with its fashion designers basking in the international limelight and stores like Saks Fifth Avenue importing British cool for their shelves.

One success story is that of the Virgin Group, which started with an airline and had added music stores, a soft drink, various entertainment media and now even clothes as part of kits U.S, operations. But for most British merchants, the hop across the pond has not been easy. Many have tried their hand in the United States and failed, like Habitat, a house-wares chain that is now defunct, and Next, a trendy clothing store.

Others made a splash and then struggled mightily, most notably Laura Ashley Holdings PLC and Body Shop International PLC, which was finally forced to form a joint venture with Bellamy Retail Group LLC to stay in business in the United States after bleeding cash for years.

The reasons are many, ranging from Americans’ desire for a bargain to real estate mistakes by British retail companies. And then there is the sheer vastness of the U.S. marketplace, where the mall is king and competition can upset the market in the time it takes to finish afternoon tea. ”What English companies don’t understand is that America is a much more dynamic marketplace and much more competitive than the U.K.,” said a former vice-president of business development for Body Shop who now runs a food business in London. “You have to have deep pockets to roll out a concept very quickly there, and have a very aggressive marketing strategy.”

High-growth U.S. retailers tend to get started by opening in a few markets, backed by venture capital money. Once the stores get acceptance, the retailer moves quickly – often after a successful public offering or after being bought out – by sprinkling new stores around the nation’s malls and downtown shopping districts like so many flower seeds.

“In the U.S., there is a very active venture capital community focused on the retail industry,” said Henry Jackson, a managing director at Peter J. Solomon, an investment bank that specializing in retailing. “It is a very different business culture in the U.K. they have had very few examples of entrepreneurship in retail, and from the standpoint of venture capital and small companies going public, there is less of a focus.

In addition, British merchants often have trouble choosing real estate in the U.S., so different from England, where London rules the roost and most

other cities have one concentrated shopping district.

Habitat, which began in Britain in 1964 under Sir Terence Conran and was a success there, would have seemed like a natural export for the United States – years later, two home-grown chains, the Pottery Barn and Crate and Barrel, have had wild success here with fairly inexpensive, trendy house-wares. But Habitat out one of its Manhattan stores in Midtown, in the Citicorp Building on East 53d Street, an expensive site that was hardly a spot for casual browsing. Similarly pricey spots were chosen in Philadelphia, Washington and Boston, and most stores had trouble generating enough in sales to support the rent.

Marks & Spencer PLC, a national institution where half the population of England buys its underwear, opened stores in Canada 35 years ago and learned an expensive lesson: it is very hard to translate that feeling to another nation of consumers who already have their favorite place to buy basic necessities.

“We made a big mistake trying to take a British retailer to Canada,” said Chris Littmoden, the company’s chief executive for North American Operations. “They saw us as a bit old-fashioned.”

TheNewYorkTimes

Notes

1. Adam Smith (1723-1790) – Scottish political economist and philosopher

Benjamin Disraeli(1804-1881) – British statesman, author and diplomat; prime- minister (1868, 1874-80)

1. Spice Girls –a British pop-group, popular in the1990s
2. locus of hip – здесь: центр моды
3. Saks Fifth Avenue– one of the most famous U.S. retail department stores, offering brand name fashion, apparel, cosmetics, shoes and accessories
4. British cool – elegant clothes typical of the British style
5. to hop across the pond– meaning to cross the Atlantic (in search of a new lucrative market)
6. to bleed cash– to be in the red
7. to make a splash– to make a great, though often short-lived impression
8. PLC–public limited company (публичная компания с ограниченной ответственностью)

LLC– limited liability company (компания с ограниченной ответственностью акционеров)

1. mall – a street lined with shops and closed to vehicles
2. to rule the roost– to be in charge, to dominate
3. to browse– to inspect in a leisurely and casual way (“пройтись по магазинам”)
4. to translate– to explain, to convey

Vocabulary

to bleed cash (to be in the red) –испытывать дефицит наличности (нести убытки)

venture capital – венчурный (рисковый) капитал; venture capital community – учреждения, банки, специализирующиеся на выдаче кредитов на осуществление проектов с повышенным уровнем риска; joint venture – совместное предприятие

vast, dynamic marketplace – обширный, динамично развивающийся рынок

to run a business – управлять предприятием, компанией