Grenson – challenges and opportunities of opening its first overseas store

 

In a bold move, British shoemakers Grenson decided to open its first international store in New York in January 2016. A year on, owner Tim Little discusses the challenges and advantages to moving from distance selling to having a physical presence overseas.

One of the challenges of growth is knowing where to go next, and how. Opening a store in America was about making a market where we already have a strong following even stronger. It’s also about control and trust.

Distance selling or selling through other retailers makes it difficult to tell your story. In our case, if there are eight different shoes on a shelf in a department store and staff don’t know much about the brand, you don’t have a lot of control. Opening our own store in New York gives us that control and lets us tell our story.

Enhancing the brand

Expanding operations abroad should be more than just ticking a box. You need to build confidence in what you’re doing and, above all, understand and meet the needs of your key market. And we’ve achieved that. Our New York store has already strengthened Grenson’s connection with our second largest market.

Prior to launch, we spoke to a lot of people and what really stood out was that the American market likes brands that are really part of the country. Having a physical presence in the US is important to the American consumer. In just over a year, we can see that opening the store has focused people on the brand and it’s given us more strength and credibility.

Choosing the right market

It’s crucial that you choose the right location for your next venture. In our case, New York was a natural choice for our first store in America for a number of reasons:

  • Do the numbers add up?
    We’ve always sold more in New York than in any other city, which made it a natural starting point.

  • Are you familiar with the area?
    I used to live in New York, so I know the city well.

  • How easy is it to get to?
    It’s more practical to get from the UK to New York than it is to say LA, which means we can be there more often and we can control the store more easily.

  • Is there a brand fit?
    We’re a little more of an autumn/winter than a summer brand, where people are wearing flip flops or sandals, so the climate in New York suits Grenson more than in California for example.

  • What’s the customer appetite?
    New York has always been a city driven by fashion and the home of menswear, so the business would have instant appeal.

Managing a store at arm’s length

In retail, you learn so much just by being on the frontline and, if I could do one thing differently, it would have been for me and some of my key people to have spent more time at the New York store in its first six months. Undoubtedly, the most difficult thing about having an overseas store is the distance. Nothing compares to being on the ground where you can really get under the skin of your new venture, and understand what works and what doesn’t. Time permitting, you should do it as much as possible.

In New York, we've learnt quite a lot about very specific things, like the type of soles people like. But the big thing we've learnt is that nowadays the most successful bricks and mortar stores are the ones that engage their customers through things like events and promotions and even parties. Things that their customers can get involved in and feel part of, so that it's not just a shop, it's not just a place to go and buy a particular product; people come for the experience.

Deepening customer engagement

If your brand has heritage, it can be a huge benefit, but whilst important, you can’t just rest on that. The potent thing about Grenson is that we combine quality with modernity and design. Inviting customers to an evening where we talk about how to look after your shoes, or a local ‘celebrity’ talks about menswear or fashion, allows us to deepen the customer’s relationship with the brand.

The challenge of bricks and clicks selling

The combination of selling across channels and across international markets has also thrown up the challenge of price equalisation. So, if we sell a shoe in say Bloomingdales, we have to pay import duty, shipping costs and so on, making the shoes more expensive than in the UK. However, if we sell those shoes to a UK-based e-commerce retailer, who sells to a customer in America with next day shipping, they could be 10 per cent or 15 per cent less than the price in the department store in New York (or Australia or Japan).

Tackling price equalisation

Technology makes that an enormous issue for our business and for everybody else selling the same way. To tackle that, we’re trying to equalise our prices as much as possible. Next season, for example, our American prices will be much more in line with our UK prices. But it can’t happen instantly. We need to assess the impact it will have on our business in terms of costs and margins.

It’s an issue that will affect all international retailers in the next 10 years. Five years from now, I believe nearly all products will be the same price in any country, which is good news for consumers. For global sellers, the end result will be that you will set a price around the world and you'll make a bit more margin in one country and a bit less in another. But overall, you'll make the margin that you need to make to cover your costs and make a little bit of profit. And that will be fine. The pain is in the change, not in the end result. Brands just have to be clever in how they respond.

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