Coming to America: Retailers Entering the US
This past November, Goulston & Storrs hosted a booth at the MAPIC retail conference in Cannes, France. A hefty percentage of the 8,000 attendees were European retailers who expressed a serious interest in expanding their operations to North America. The legal and operational issues facing these aspiring retailers run the gamut from employment, tax and immigration to risk management and distribution. At MAPIC, however, the questions we fielded were quite often of a more basic nature. Here are the top two:
Question 1: Where should I locate my stores? This threshold issue for the foreign retailer triggers some straightforward considerations: where are your customers and your competitors? It’s not all about demographics. For example, Goulston represented a high fashion retailer whose sales at a Jacksonville, Florida mall outpaced those of its flagship location on Madison Avenue. Why? Every block of Madison Avenue, from midtown to the 70’s, has at least three high fashion retailers. Our client was one of two “New York” fashion retailers at the Florida mall. If you needed a prom dress or wedding outfit in Jacksonville, your choices were limited, and our client was likely to benefit.
Question 2: Do you build your brand by opening one store in each of New York, Chicago and Los Angeles, or would you be better off opening all three in one metropolitan area? Operationally, you will undoubtedly simplify your life with geographic concentration. After all, it’s so much easier to build, merchandise and manage three stores within 100 miles of each other. But will you get the necessary buzz by ignoring the rest of the country? Social media, coupled with an efficient distribution network (wholesale, retail, on-line), will mitigate your concerns regarding concentration. If your product is hot, word will travel, Gangnam style.
Retail markets differ from street to street. Imagine, then, the issues facing the European retailer in considering the fit of its merchandise in a land far, far away. The two questions posed above should be explored in depth with professionals who have the appropriate expertise. The answers are by no means easy to come by. But, to paraphrase Robert Frost, the road you take—and the site you choose—could make all the difference.