Why do so many American fashion brands crash and burn in the UK?

J.Crew
J.Crew Regent Street

Retail success in the US often fuels aspirations for international expansion. The UK is time and again chosen as the first stepping-stone into Europe and a gateway to other neighbouring markets because of our shared language and work culture. There is an attitude; if you can make it here, you can make it anywhere.

But, for years, the UK has become a graveyard for American fashion brands with so many crashing and burning, and badly. London’s Regent Street is littered with the memory of flagship stores come and gone. Blowing large volumes of cash and then retreating with their tails between their legs, why is the UK fashion market so hard for US fashion brands to master?

The most recent American brand to bid farewell to our shores is J.Crew. Announcing the closure of all six of its UK stores, the company appointed FRP Advisory as liquidator to the UK business. Fresh from an exit from bankruptcy protection in the US, a J.Crew spokesperson said: “After a thorough review, we have determined we are best able to serve our UK customers through our global ecommerce platform and are closing our six store locations in the country. We thank our UK associates for their dedication during this unprecedented time and are working to support their transition.”

J.Crew opened in London with a weird mix of stores in 2013. A location on Regent Street was complemented by bijou sites in Lambs Conduit Street and East London’s Redchurch Street, plus, the, obvious, International neighbourhoods of Marylebone High Street and Chelsea. The J.Crew flagship opened with much fanfare, dining out on the fact it was one of Michelle Obama’s favourite brands. Jenna Lyons, the much lauded President and Creative Director, was still there and it was hot on collaborations with in-demand brands and makers.

But, Barbour waxed jackets, Alfred Sargent shoes and taking coals to Newcastle are the main memories of the launch. Giving the British British-made products at prices far higher than what they could pay elsewhere was never going to fly in a culture which prides its itself on being savvy. It instantly marked J.Crew down as being very expensive. The same could be said for Brooks Brothers opposite J.Crew on Regent Street. It is yet to be seen whether its new owners will continue to bankroll the UK operation and its four stores, two of which are outlets.

Brooks Brothers
Brooks Brothers Regent Street

America’s fashion conservatism is seen as boring here, and, what can be different in the US market doesn’t really seem that way by the time it arrives here. The competition is fierce and, unless you’re the cheapest or the best, you’re going to struggle.

American fashion will never be the cheapest because of the import duties and our higher rents and costs. The 20% VAT rate is charged on the total value of the goods including the cost of packaging, transport and insurance. It also includes any duty that has been charged on the goods. Many brands just convert prices in dollars straight to pounds, often making it much higher than the competition.

Many American brands seem to plough all their money into expensive central flagships rather than scatter the openings regionally, creating more brand awareness and spreading risk. For example, Tommy Hilfiger tried multiple times in the 1990s to make a splash with big, flashy stores on Bond Street and Sloane Street. It just wasn’t that type of brand. It was only when, under parent PVH Corp., that the brand started to reduce prices and opened in regional shopping centres, around the country, that the brand started to cut through. Headquartered in Amsterdam, it realised that you need to tailor the product to the European market, you can’t simply replicate American product and that costs more.

International expansion is speculative and when American brands start to struggle in their home market it is the usually first bits of the company to get the chop. American Eagle, Forever 21 and Banana Republic all called it a day on their UK ventures when things got tough at home. Even designers like DKNY and John Varvatos have thrown in the towel. The king of American preppy, Ralph Lauren recently announced 15% of global staffing redundancies, and there is a rumour that the giant Bond Street store is to close after breaking records in 2016 by paying £2,225 per sq ft, following a rent review.

Banana Republic formerly on Regent Street

American fashion’s greatest commercial export “preppy” could easily be substituted with the word “white”, today, and that is not cool right now. Brands which have long traded on images of Waspy perfection looked dated and out of touch.

Abercrombie & Fitch had been trying hard to change its image of black and white body shaming perfection, but with just three UK stores, since 2007, it hasn’t really created a big enough business here. The Savile Row children’s store, opened in 2014, is to close and “will be enhanced and repurposed as the global company’s EMEA Home Office, allowing more room for its expanded team in the region”, the company said. That’s an expensive location for an office. Abercrombie has already closed flagship stores in Copenhagen, Hong Kong and Milan.

BrandEntered the UK Left the UK?Notes
J.Crew20132020Six stores are to close after parent company exited Chapter 11 bankruptcy protection
Forever 2120102019Three UK stores closed as parent filed for Chapter 11 bankruptcy protection. It has returned to the UK in online-only form
Banana Republic20082016Opened just eight stores in eight years before calling it a day
John Varvatos20142020Exited UK as parent firm was placed into Chapter 11 bankruptcy protection
DVF20072020UK arm was placed into administration earlier this year as parent company ran into financial strife
DKNY19972019Closed Bond Street flagship as parent brand struggled following exit of its founder Donna Karan
Brooks Brothers2005NoCurrently 4 stores in UK including 2 Outlets. Has re-emerged from bankruptcy with new owners
Jack Spade20122015Parent Kate Spade closed the brand
Abercrombie & Fitch2007NoCurrently has three stores in Manchester and London
Gilly Hicks20102014Re-entered UK with one single store at Westfield London in 2019
Club Monaco2013NoFive standalone stores in London
Gap1987NoCurrently has 81 UK stores having closed many in recent years. Four more closures announce in Jan 2020
Victoria’s Secret2012NoL Brands placed UK arm in administration and has now agreed a joint venture with Next to operate it. Some of its 25 stores are expected to close
American Eagle20142017American Eagle is planning on re-entering Europe and said stores were “expected to open in Ireland this summer” [2020]

 

Gap, opened in the UK back in 1987, and was, initially, very successful, expanding nationwide. The blonde wood floors and clean imagery felt fresh and resonated with consumers happy to pay a premium on the once dreary UK high-street.

It has been closing stores and reducing its store footprint within the UK and it now has an image of being in perpetual sale. Famed for the white tee and blue jean combo of the 1990s, it hasn’t really innovated in brand and product terms.

Hoping to add some cool, they announced a collaboration with hot designer Telfar Clemens, which they quickly backed out of and, then, announced a collaboration with the unpredictable rapper, Kanye West. In June, West signed a “multi-year partnership’” deal to launch “Yeezy Gap”  a “robust creative partnership with multi-season product development” featuring a new line of men’s, women’s and children’s clothing that will launch in Gap’s stores and online in 2021.

In September 2020, West posted on Twitter, “I’M NOT RELEASING NOTHING ON GAP TILL I’M ON THE BOARD”. This feels like an ominous start and not something Gap shareholders should be banking on to give the brand new energy. They need to get the core of the brand sorted, but for the UK market it feels like it has been lost already.

American fashion rarely leads in fashion direction, and, with the UK market much more experimental and disposable, it is a tough market to stay ahead and expand in.

The costs involved in a chain of a few stores are often too high to warrant years of heavy losses. Just thinking Americans and Britons are the same is lazy merchandising and putting up prices to compensate is usually a turn off and doesn’t help sales. Making small quantities of specific product is too costly for the returns these giants are used to.

Every penny counts right now and we’ll probably see more American retailers withdraw from the UK, but there will be huge opportunities for those who can get it right.