The American Dream?

by Feb 7, 2019Coaching0 comments

It is well publicised about the special relationship us Brits have with the United States but how easy does this translate when it comes to retail? Why do some retailers flourish both sides of the pond while others faulter? Do some retailers fall foul of poor economic timing? Or are they simply victims of arrogance and poor preparation? What is the key to the American retail dream?

The attraction

It’s easy to become attracted to the bright lights of the US market; 325+ million residents, highly urbanised & educated, high disposable income, an abundance of commercial real estate and more recently lower levels of corporation tax. On the flip side there are huge regional, cultural, economic and political variances which means a one size fits all approach will not wash with the American consumer.

Tesco, Sainsburys, Marks & Spencer, WH Smith, Dixons, and HMV have all been forced to revaluate and retreat from the US market even German retailer Lidl has recently had to review the size and pace of its expansion on the US east coast.

What’s the catch?

Property and location planning play a huge role here – making sure you deliver the right kind of stores, in the right places and at the right price. Given the pull factors, UK retailers in the race to get as many stores open as possible, often, unintentionally, select inferior sites, and complete poor property transactions with expensive and inflexible lease terms versus their US counterparts. They also struggle to “sell the brand” to landlords, where covenant strength and protectionism of their existing tenants is king. US retailers, particularly anchor tenants, can also restrict who else can come into a centre or development, something the CMA in the UK would have a field day with. In the case of Tesco and Lidl this pushed them to the fringes of the markets, where their competitors would be located on “main and main”.

Clever marketing

Pret logoPret A Manger however offers a beacon of hope of what can be achieved by being true to your brand values and proposition, whilst respecting different cultural and consumer preferences by tweaking at the edges. They also offer insight on the importance of taking your time with expansion and location selection. How could a chain which is famous for its natural pre-packed sandwiches crack Manhattan which is home of the fresh deli sandwich? Rather than change the model, as so many of the aforementioned retailers above did, Pret invested heavily in in store messaging and marketing material to truly tell the story of how their food is sourced and made on site each morning.  Educating consumers that, although already packaged, the product was fresher than what they could make themselves.

Pret entered the US in 2001 and its steady eddy approach to expansion has really paid off. 91 stores exist today 60% of which are in New York but expansion the last few years has resulted in representation in Chicago (13), Boston (8), Washington DC (10), Philadelphia (3) and a few suburban outliers in affluent neighbourhoods. With the exception of Chicago, despite a 17-year tenure they have kept their geography tight, building their brand and proposition, helping them to understand their customers better as each season passes. A really methodical approach to site selection has created a portfolio which is envious of many an American retailer. Their store in New York’s Penn Station has the highest sales volume in the entire business.

Core strategy

Pret’s core strategy is the same as the UK, constant but steady innovation and ensuring the product assortment is right before setting off on mass expansion. They have even taken some of the finest US bits and landed them in the UK sharing international best practice.

For Pret US the future looks very bright. This summer they were acquired by JAB group which also owns Panera Bread and Peets Coffee, two national chains which have revolutionised healthier fast casual dining. This is likely to provide them with a slingshot for coast to coast expansion……let’s hope they continue on the methodical path. Pret are an excellent case study on how to crack the notoriously unforgiving US market.


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Published by Neil Andrews

Fifteen years market strategy, research, real estate, location planning, data analysis & retail experience assessing new sites for retail development and building market strategies & optimisation for new space growth. Has developed international bricks & mortar & digital strategies for new market entry, growth and consolidation across North America, Asia and the UK&I.


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