Thursday, July 29, 2010

“Two Nations Divided by a Common Language"

Engaging in a prolonged bit of retail therapy in London the past day or two, we were struck by the similarities and differences that still remain between the U.S. and England. Perhaps there’s no better way to look at the two countries than to compare retail businesses, something we’ve been doing now for over two decades. At this point in the post, we would attribute the above quote to someone but as in all things that can be “googled” today, even that’s no longer so simple (you can take your pick—it has been alternately credited to Shaw, Wilde or Churchill).

Figure 1: Hotel Chocolat

As we have pointed out before, however, the divide between the two nations has never been smaller, at least as concerns retail, which has become increasingly internationalized. On the High Streets of London (or Tokyo, New York or Seoul), retail reads like a true United Nations. One short strip along Kensington High Street says it all and does foretell the real future of retail—Japan’s Uniqlo sits next to U.K.’s TopShop which is nestled against US brands American Apparel, Diesel, and Urban Outfitters.

This leads us to one universal truth: The future of retail will be defined by great retailers, global in nature that can effectively provide a consistent branded experience while making the necessary refinements to succeed at a local market level.

Of course, this is far easier said than done as our retail visits confirm. If we were forced to sum up the UK experiences into one key difference, it would be housed around the term Refined Sensibility. There is a higher degree of information provided, consistently better storytelling and an overall refinement in the offer that seems to be missing too often in the US.

By evidence, we offer up the somewhat random experiences of:
· Pret a Manger, which defines freshness in a delightfully understated way;
· Hotel Chocolat, which brings a new level of experiential and sensorial delight to the category of chocolate;
· Waitrose, which launched their Essentials line of low priced private label with great flair;
· M&S, which communicates the benefits of newer meal solutions lines directly to consumers with sub-brands like Fuller Longer and Count on Us;
· And one of our favorite little brands Neal’s Yard Remedies which is intelligently pursuing natural and homeopathic ingredients in beauty care.

What’s on the US side of the ledger? Based on what’s crossed over to date, we would sum it up in another word, Theater.

· The Whole Foods on Kensington appears to be closer to hitting its stride after a financially disastrous debut. We saw much better distribution of traffic than in prior visits with the suggestion that they are finally finding their footing (though we would never want to be paying their rent!). Losses in the UK continue but they seem to be in a more manageable range.

Figure 2: Anthropologie

· Easily the most spectacular store in our visit was the new Anthropologie store on Kings Road in Chelsea. Housed in a former antique market space with high ceilings and stunning stained glass, this is truly a cathedral for retailing—they could charge admission to this open, airy, inspiring retail playground.

With retail playing at an elevated level in both countries, we will expect to see a lot more crossovers in the future. British fast fashion is already making inroads with TopShop, which has had a big opening in SoHo (ours, not theirs)and we expect AllSaints to make a similar splash as it brings its vintage grunge rock sensibilities over to New York this year.

Figure 3: All Saints
No surprise—Retail Watching now, more than ever, needs to be an international activity.
Sign us up!