The worst recession since the Second World War has taken its toll on the high street, with one in ten stores left vacant as battered retailers go to the wall. But as the recovery gets under way and empty shops find new tenants the names over the doors are changing.
Several foreign retailers have plans to set up shop in the UK this year, attracted by the scale of the market — retail sales hit £286 billion (Dh1,596 billion) last year and a national obsession with shopping. After falling through much of 2009, retail spending started to recover at the turn of the year and with so many shops empty, landlords are offering prospective tenants the best deals in years.
Among the big names coming this way are American institutions Best Buy, Victoria's Secret and Forever 21 as well as a raft of new European brands including Cortefiel — the Spanish Next and Clas Ohlson, which offers a curious city-centre mix of BQ and Ikea.
Lorna Hall, retail editor at trend forecaster WSGN, says that even before the credit crunch some big American groups were sizing up the UK. Stores such as Abercrombie & Fitch and Best Buy have been hammered by the downturn on Main Street but have remained determined to press ahead with expansion in the UK, if only to gain a foothold for their large online businesses.
Add in the fact that US store chains can swap dollar for pound signs on their price tags and their prospects have never been better.
A-list crowd-pulling stores such as Hollister and Victoria's Secret will receive irresistible offers to open in new developments. One fast-growing fashion retailer told the Observer he was able to open stores at "zero cost" apart from buying the stock to fill the shelves. It is far harder, however, for unknown retailers to make an impact in such a packed retail market, although the depressed state of the commercial property sector means store rents are lower these days, with the UK benchmark 20 per cent less than at the 2007 peak.
Despite lower opening costs, Clas Ohlson said in a financial update last month that it would take "significantly longer for a new store in the UK to reach the break-even point, given the higher rental and marketing costs necessary."
With that in mind, UK property developer Land Securities set up a subsidiary, Brand Empire, to coax overseas brands on to British soil. It has signed a deal to open more than 20 stores a year with Spanish fashion giant Grupo Cortefiel and will bring over its eponymous fashion brand as well as two others: the Hollister-like Springfield chain and lingerie specialist Women'secret.
Despite the optimism shown by the flurry of new arrivals, economists fear that shoppers' resilience will be severely tested in the months ahead, with unemployment expected to continue to rise, credit harder to come by and, already, 900,000 shops to choose from. But, as Sharma says: "For the last five to 10 years we have seen quite an aggressive roll-out of already dominant brands. Consumers are always looking for something new."
There is also the risk that shoppers will turn their noses up at new retail concepts.
This year's most anticipated debut is the US import Best Buy, which will go head-to-head with Curry's and Comet when it opens its first store at Lakeside in Essex next month. Verdict analyst Neil Saunders says that, of all the new retailers entering the UK, it has the most potential to be a "game changer." It is already promising to price-match rivals on any product and then offer an extra ten per cent discount on top.
"Best Buy is coming into a crowded space and that is going to put significant pressure on the other players," says Saunders. "If it is very successful there will have to be a casualty."
‘Intimate appeal'
The biggest name in lingerie in the US or "intimate apparel," as Americans prefer to call it, Victoria's Secret has annual sales of some $6 billion (Dh22 billion).
The chain has more than 1,000 stores across the US and more than 300 in Canada. It also has a vast online operation.
The chain was founded by Roy Raymond, who built the business before selling it to the Limited Brands group, which also includes Bath Body Works, the CO Bigelow apothecaries and fashion chain Henri Bendel. The Ohio-based group is quoted on the New York Stock Exchange.
Victoria's Secret — founded in California in 1977, is now a huge brand in the US, and sends out 400 million mail-order catalogues a year. It has an annual catwalk show, which is televised live and features its "angel" supermodels, such as Gisele Bundchen, Heidi Klum and Rosie Huntington-Whiteley.
Limited also plans to bring its Bath Body Works to Europe this year and says it is seeking "best in continent" partners to open franchised outlets that would go head-to-head with Boots and the Body Shop.
The chain's parent company, Limited Brands, has laid out a plan to open a flagship store, probably in a prime London location, and build a huge new European online operation to offer next-day delivery.
The rivals: Marks and Spencer, with more than 26 per cent of the UK undies market, has most to lose. Online specialists like Figleaves will also have to watch out.
Grupo Cortefiel is Spain's second largest clothing retailer with more than 1,600 stores in 60 countries. Last year it had annual sales of 1.3 billion euros (Dh6.44 billion), with 85 per cent coming from Spain.
The retailer traces its roots back to a small haberdashers in Madrid in 1880 and has four main brands: Cortefiel, Pedro del Hierro, Springfield and Women'secret. It is now owned by a consortium of private equity groups.
The company has recently started a joint venture called Brand Empire with the UK property developer Land Securities, agreeing to open up to 24 stores a year for the next five years. Landsecs takes on the leases and sorts out logistics — all Cortefiel has to do is send over the clothes.
Grupo Cortefiel general manager Ezequiel Szafir says: "Our brands are already present in over 60 countries around the world and opening stores in the UK was our obvious next step. This arrangement with Brand Empire will give us quick access with high presence while reducing some of the risks usually encountered when entering a new market." Cortefiel is like a Spanish Next, though its prices are slightly higher and its target customer will be late 20s shoppers and upwards. The menswear has been likened to Hackett classic rather than cool.
Springfield is a direct competitor to Superdry, Abercrombie Fitch and Hollister while Women'secret is "very feminine", selling bras and pants starting at £8. The mid-market in fashion is one of the toughest and most crowded. They will have to be special to succeed.
Forever 21 now has outlets in Japan, Malaysia, China and the UAE. Its London shops will be the first in Europe and are expected to be in the West End and at the new Westfield Stratford shopping centre, and are due to open next year. Forever 21's global sales are expected to top $2 billion this year and, as with the UK's Primark, the retailer has prospered and expanded through the recession.
The property expert searching for sites for Forever 21 says: "This is an exciting young US fashion brand that is the hottest ticket in town. The timing is perfect for Forever 21 to hit Europe."
The key high street players that will need to watch out for this fast-expanding chain are teen-magnets New Look, HM and Topshop. Online fashion retailer Asos will also be keeping an eye on this US newcomer.
Taking on New Look, HM and Asos etc is a big ask. But when Forever 21 opened in Japan it smashed all records.
Raunchy fashion chain Vero Moda started in 1989 and is part of the Danish, family-owned Bestseller group. It employs 41,000 people and had turnover last year of 1.7 billion euros, not including sales in China.
The company was founded by Troels Holch Povlsen, whose family is ranked the second wealthiest in Denmark after building an empire of 1,700 Vero Moda stores in 45 countries. The brand is also available in 3,300 other outlets, with a further 2,200 stores in China selling Bestseller clothing.
In the UK the company will trade two brands side by side: Vero Moda and Jack Jones, the latter selling menswear. Vero Moda has boosted its profile by using supermodels including Helena Christensen, Kate Moss and Claudia Schiffer in its advertising. It is already available in the UK, through retailers such as Asos.com, Bank and House of Fraser. The first joint-fascia store will be on Oxford Street in what was formerly a branch of New Look, and is scheduled to open in the summer.
The rivals: Where shall we start? New Look, Topshop, Primark, Oasis, Asos and let's not forget Vero Moda's near neighbour, the Swedish powerhouse Hennes Mauritz, the slickest fashion operators on the block.
Competing in a crowded market won't be easy, as Vero Moda/Jack Jones have already found in Ireland, where some outlets have closed down.
Clas Ohlson — Who? Sweden's answer to Robert Dyas. The city centre shops — several are in former Woolworths stores, sell everything from outdoor gear to tools, electrical goods, toys, office supplies and wine glasses. The goods are cheap, the stores are light, bright and Ikea-esque.
The first store in the UK was in Croydon and there are now five. Two more, in Leeds and Liverpool, open later this month and there will be another ten by next year.
The company was founded in Insjon, southern Sweden, in 1918, selling technical handbooks, make-your-own crystal radio kits and furniture designs by mail order. It was not until the 1980s that it started expanding into stores. The shops now stock 15,000 products and made profits of £60 million in the last 12 months.
The company, which is quoted on the OMX Nordic stock exchange, now has 110 stores and is still a thriving mail-order and internet business. The UK is its first sortie outside Scandinavia and a website is being developed for British shoppers. Former Argos executive Mark Gregory has been recruited to run the UK business.
A spokesman for Clas Ohlson says the retailer is targeting the UK because the retail market here is twice the size of that in Scandinavia and because there is a gap in the market on UK high streets.
Clas Ohlson is targeting customers of a variety of stores, including Argos and BQ. Woolworths might have stood a chance if it had looked like this. But making it work will be a challenge.
Best Buy — America's biggest electrical retailer, started in 1966 by Brad Anderson, a one-time stereo salesman. When the chain floated on the Nasdaq exchange in 1985, the group had sales of $8 million. By last year that had grown to $45 billion.
Best Buy's springboard into the UK was buying half of Carphone Warehouse's retail business. The first UK store opens next month in the Lakeside shopping centre, Thurrock. Four more at Hedge End in Southampton, Merry Hill in the West Midlands, Aintree near Liverpool and Croydon will be open by the autumn. They will be vast "big box" stores of 50,000 sq ft.
The former Tesco and Boots executive Scott Wheway has been hired to run the group's new European operations.
The retailer's big idea is to ease shoppers' "techno stress" with smooth customer service. Sales staff, called Blueshirts, do not get commission.
Paul Antoniadis, chief executive of Best Buy UK, says: "We're here to make buying technology simple, exciting and tailored to each of our customers."
They are a big threat to DSG international, the group behind Currys, Dixons and PC World, and to Kesa-owned Comet. John Lewis where shoppers trust the advice and the prices could also be a hit.
The new Currys/PC World superstores will give Best Buy a run for their money but Comet could be in real trouble as the US group expands.
