Upscale UK Retailers Look To Land In US Market

The British are coming. Again. One of the U.K.’s most high-profile retailers is doing well in the U.S. and another one is ready to open, both of them seeking a new market as their home turf sees retail struggles.

The new entry comes from one of the U.K.’s fastest growing brick-and-mortar retailer, Wren Kitchens. It has 90 showrooms across the U.K. and will open its first U.S. location this summer in Milford, Connecticut, according to reports. Several more openings are planned in the Northeast this year. The Milford site will fill a former Babies R Us location and at 31,465 square feet, Wren says it will be the largest kitchen showroom in America.

“We’re excited to bring our vertically integrated model to the United States, the largest home improvement market in the world,” a Wren Kitchens spokesperson said. “It’s imperative to offer our customers a first-class experience, and that starts in our showrooms. We invest heavily in them to offer the latest styles and a truly experiential visit where they can see their kitchen in virtual reality. And also in training our retail staff to offer the customer a fantastic service.”

Wren Kitchens is promising big things from its Milford location, such as the use of 3D virtual reality and other remodeling tools for consumers to see their kitchen as it will be after a potential purchase. In the U.K., Wren delivers over 2,000 kitchens a week. In anticipation of the store opening, it will also open a manufacturing plant in Northeast Pennsylvania, with plans of locating its headquarters in that area. The company employs over 5,500 people in the U.K.

Why now? And why so ambitious? In a word: Brexit. Last year was the worst ever for British retailers, according to The Guardian. Overall sales fell for the first time in 24 years as business at high-end retail and a lack of confidence in the post-Brexit economy hurt consumer spending. Total sales slipped by 0.1 percent in 2019, according to the British Retail Consortium (BRC). The downturn was accelerated by a 0.9 percent fall in sales in November and December when online sales rose by 2.6 percent in November and December.

Wren joins Primark as a high-profile U.K. expat effort. Primark announced last month that it will step up expansion in the U.S. and move into Poland after reporting a spike in annual sales for 2019. Primark is unique in that it has no eCommerce component. The discount clothing chain said sales were up 4 percent last year, which it will follow with 19 stores in various countries.

George Weston, the chief executive of Primark owner Associated British Foods (ABF), said four of those new stores will be in the U.S. with several more in site negotiation. Florida, Chicago and Philadelphia are set. Primark has opened nine stores in the U.S. since 2015, The Guardian noted.

Weston said part of Primark’s success has come from social media, according to reports. It now has has 20 million followers across social platforms up from 13 million last year. “People now research online and then go to the store to buy,” he said. “The best value is still on the high street (brick and mortar). It is the cheapest way of getting clothes to people and less environmentally damaging.”

Sustainability has been a huge issue in the U.K., with PwC calling it one of the three most important issues for retailers to embrace in 2020. Weston has been sensitive toward  critics who have said that cheap prices encourage shoppers to discard clothes after just a few wears.

“I fail to see how anyone can produce or sell T-shirts with a lower carbon footprint [than Primark] because of the sustainable cotton and high volumes [efficiency of supply chain] and because we are not delivering to people’s homes,” he said. “Half of what we sell through [an average store] is not being thrown away; it is basic well-priced clothing for families that can’t afford and don’t want to throw stuff away. We sell clothing cheaply so that people can spend money on other things.”

Deloitte has also warned U.K. retailers that sustainability and purpose will be the key to winning customers. “Retail is changing at an unprecedented speed, and with it come big challenges and opportunities. 2019 had the slowest rate of spending growth since 2010, largely driven by Brexit uncertainty. The industry faced large-scale business restructuring: 85,000 jobs lost, a third of FTSE 350 CEOs changing, and 9,169 store closures,” its February advisory said. “Despite this, online sales continued to grow, reaching 21% of total sales. There was also a rise in activism, largely driven by millennials and Gen Z who are demanding their voices be heard. These factors combined are going to have a huge impact on the consumer world, not just for the next year but for the decade ahead.”

The investment needed to crack the U.S. market in terms of marketing and real estate is substantial. It will be interesting to see if other U.K. power retailers come across the pond in search of growth.