FOREIGN RETAILERS FLOCK TO FIND THE AMERICAN DREAM
According to a recent report from JLL, America’s diverse consumer base, continued income growth, and strong economy have attracted 175 international brands in 19 top retail markets coast to coast.
In 2014 U.S. retailers also posted their best holiday sales season in more than a decade, giving a strong case for the growing strength of the domestic retail market. And with 90 percent of U.S. sales taking place in brick-and-mortar stores it becomes ever clearer why overseas retailers are setting their sights on expanding their retail portfolio throughout the United States.
The U.S. presents an appealing opportunity for foreign retail brands to capitalize on a major consumer market; we’ve seen this with the success of foreign brands like Uniqlo from Japan, H&M from Sweden, Zara from Spain, Primark from Ireland, and Top Shop from England. But there are a number of commonalities that seem to arise among those brands who’ve flourished in recent years as they venture westward -- and north, east and south -- to try the U.S. retail market on for size.
Strong (and growing) brand awareness
Globalization is taking place across all industries, including retail, and those companies that seem to be “winning” here are those that have a powerful brand image. Or they capitalize on goodwill by partnering with American brands, as was the case when U.K. natural fast food chain Pret A Manger partnered with McDonald’s Corp. to help select its point of entry. Some companies are going to extremes to increase visibility, while others employ more traditional, yet comprehensive marketing campaigns to familiarize American consumers with the new product. The key is that companies need to focus on what their brand brings to the table and understand how to test that in the market.
Creating an experience
Whether you’re a shopping fanatic or the type of shopper who knows what they need and gets it done, the experience you have in a store can make or break your impression of a retailer. Today, that phenomenon challenges both foreign and domestic retailers to create an experience that moves beyond normal consumer expectations and brings shoppers into a more engaging and interactive world of retail. Experience retailing involves entertainment, emotion, and deeper engagement. And it’s not just about understanding those emotions, it’s about shaping retail environments and service encounters to cultivate those desired emotions and eliminate undesired ones.
This type of retailing involves the use of new technologies including in-store text messages to customers, innovative store designs, and in the case of Lowe’s, an automated robot that helps customers find what they are looking for in the store – whether they describe the product in English or Spanish!
While the concept of experience retailing isn’t as shiny and new as the robots some retailers are exploring, reports shared by the National Retail Federation say what’s new in 2015 is the increased eagerness of consumers and retailers alike to experiment and get creative with new ideas and technologies in stores.
Taking it personal
According to an article in the Harvard Business Review, leveraging synergies globally while providing operational independence to adjust to local needs is a critical balancing act. When it comes to retail, the U.S. is an assemblage of unique local markets, so what works for a brand opening in Boston might not work in San Francisco.
But tailoring to local markets isn’t the only challenge. People want their own individualized attention, too. In fact some studies show that 78 percent of consumers would buy from a retailer more frequently if they received offers that were specifically tailored to their interests. While mass-marketed products have a role in the industry, it’s becoming increasingly important for retail brands to integrate across physical, digital, and media touch points in order to enable more personal connections.
At Kimco we believe many retailers do a fantastic job connecting with consumers from the moment they walk through the front doors. As a landlord we are also doing more to connect with customers leading up to that point to drive even more value for tenants, shoppers, and investors. Some of the efforts to attract shoppers to our centers and encourage lengthier stays include offering WiFi and providing on-site promotions via mobile devices and shopping center Facebook pages. We are also adding new cultural and community events that bring people together for more than just a shopping experience as our properties become a central gathering place for friends, families, and businesses.
Though the U.S. is viewed by retailers as the most challenging foreign market to break into, due to its size, cultural diversity, and its highly competitive nature, for those with strategic expansion plans, the rewards can be considerable. We’ve assisted foreign brands like Japanese furniture and interior goods retailer Nitori, Japanese novelty/variety retailer Daiso, and London-based apparel retailer Jack Wills in navigating a U.S. expansion. We did so by leveraging our long-standing local relationships and on-the-ground experience so they could avoid a difficult and lengthy entitlement, permitting, and construction period, which are often roadblocks for new retailers unacquainted with the market. These types of strong partnerships are one way to ensure retailers gain a foothold in this highly desirable, though unfamiliar territory.
It will be interesting to watch the developing globalization of retail in the coming years, especially its impact on the United States. In fact, that’s a headlining topic at MAPIC 2015 – an event which gathers 8,400+ international participants, including retailers and property developers, for three days of exhibition, conferences, and networking events targeting all types of retail properties. Check out the video of my interview at MAPIC 2014 on why it’s an exciting time for retail in the United States.