Much has been written about the apparent retail apocalypse taking place in the US. Combined with numerous Company Voluntary Arrangements (CVAs) and reports of struggling consumer confidence in the UK, brands based here could be forgiven for thinking that the retail market both sides of the Atlantic is experiencing a period of ‘sluggishness’. 

However, data from the US Commerce Department shows that retail sales in the US have been rising moderately in recent months and consumer spending is actually stronger than expected. In fact, the challenges faced by the sector there have been technological rather than consumer driven, with a migration towards online shopping exacerbated by the fact the US is over-spaced in terms of retail, with around five times more space per head than the UK.

With retail sales now picking up in the US, and landlords aware that the market is overpriced in rent terms in some areas, there may be opportunities for UK brands to secure stores at more attractive terms than seen three years ago. The scale of the US retail market also offers huge opportunities. For example, New York has estimated annual retail sales of $267 billion, over twice the $100 billion seen in London, while Chicago and Los Angeles both have retail markets similar in size to London.

The US restaurant market is also trading well although it is interesting to note that the fast casual subsector, now well-established in the UK through brands such as Five Guys and Chipotle, is still very much emerging. This also presents opportunities for UK and European fast casual brands looking to enter the US. Likewise there is strong appetite from landlords for new boutique fitness concepts, particularly where they can offer a point of difference as part of a larger scheme.     

This current sweet spot for UK and European new entrants is likely to last no more than 18-24 months before domestic occupational demand returns and with it rental growth. While opening a store in the US can provide great visibility, the sheer size of the market, even at a city level, means that it is vital that new entrants have the social media and e-commerce aspects of their business ready to go in tandem with the launch of any physical stores. This will ensure maximum impact. 

Further information

Contact Savills Retail