Citation
(2002), "Foreign-owned retailers now account for £1 in every £8 spent in the UK's shops and the proportion will keep rising", International Journal of Retail & Distribution Management, Vol. 30 No. 3. https://doi.org/10.1108/ijrdm.2002.08930cab.001
Publisher
:Emerald Group Publishing Limited
Copyright © 2002, MCB UP Limited
Foreign-owned retailers now account for £1 in every £8 spent in the UK's shops and the proportion will keep rising
Foreign-owned retailers now account for £1 in every £8 spent in the UK's shops – and the proportion will keep rising
As Marks & Spencer prepares to close shop in continental Europe and sell up in the USA to defend its domestic territory against the growing – often foreign-owned – competition, those very foreign retailers have been entering the UK in unprecedented numbers. Moreover, they will continue to expand and increase market share in many key sectors. These are among the crucial findings of International Retailers in the UK, a new report from specialist retail analysts Retail Knowledge Bank.
The key findings of the report include:
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UK consumers spent £24 billion in 2000 in shops owned by foreign retailers.
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That equates to 12.8 per cent of all UK retail sales, or more than £1 in every £8.
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There are now over 250 foreign-owned retail operations in the UK and the pace of entry has accelerated.
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Of the 253, 190 have entered since 1990.
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A total of 47 have entered in the last 18 months, since the start of 2000.
Other important findings include:
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Wal-Mart's ASDA may account for the largest single share of the £24 billion total, but other very familiar high street names have recently become foreign-owned, including:
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Victoria Wine + Thresher – £1.3 billion sales (Nomura, Japan).
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Lloyds Pharmacy (Gehe, Germany).
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Dollond & Aitchison (De Rigo, Italy).
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Laura Ashley (Malaysia).
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Holland & Barrett (USA).
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Grattan and Freemans catalogues – £1 billion sales (Otto, Germany).
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Allied Carpets (France).
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Poundstretcher, What Everyone Wants (South Africa).
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Magnet and Moben + Sharps (Sweden and Switzerland).
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Etam (France).
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IKEA is now the UK's largest home furnishing retailer, recently overtaking MFI.
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Other foreign retailers have created entirely new segments. Examples include:
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Claire's Accessories CUSA) – specialist fashion accessories.
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Aldi, Lidl, Netto (Germany, Denmark) – food hard discounting (£2+ billion p.a.).
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Staples, Office World (USA, Switzerland) – office superstores.
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Zara and Mango, the new international fashion retailing superstars, will expand rapidly, changing the face of UK fashion retailing – as M&S withdraws to base to try to defend its domestic territory against the ever-rising tide of competition.
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As Zara and Mango explode on the UK scene, so Retail Knowledge Bank expects them to attract other new Spanish (and Italian) entrants in their wake: watch out for names like Springfield/Cortefiel and Tintoretto, say the researchers.
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The chemists/health and beauty sector is attracting particular attention, putting more pressure on the durable Boots. As The Body Shop is being courted from Mexico:
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Lloyds Pharmacy, owned by Gehe of Germany, has as many chemists as Boots.
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Low profile chemist chain L. Rowland of Wrexham has grown from 70 to 250 outlets in two years under new owner – and Gehe rival – Phoenix Pharmahandel.
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Hutchison Whampoa of Hong Kong – SE Asia's largest drug-store operator – has recently bought the 180-strong Savers Health & Beauty chain and clearly intends to mount a major challenge to Kingfisher's Superdrug.
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The ubiquitous LVMH will be expanding its popular Sephora chain, ironically once owned by Boots.
The future?
While the frenetic pace of entry activity may ease off, as the UK passes the peak of its current cycle of rapid retail sales growth, Retail Knowledge Bank nevertheless expects the UK still to attract more than its fair share of foreign newcomers, compared with continental Europe. Despite well above average retail property costs and a peripheral location in Europe (plus the recent high, but now falling level of sterling), the researchers cite the following reasons for expecting a continuing high level of entrants:
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Low regulatory, cost, employment and cultural barriers to entry.
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Ready consumer acceptance.
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Disposable incomes, consumer spending and retail sales growing faster than in France, Germany and the Benelux Countries.
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English language (especially for US and Asian interests).
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Attractive retail profit potential.
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Low competition levels historically – and low price competition in particular.
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Obtaining larger store consents easier than Europe (despite recent tightening) and ready supply of premises generally.
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Lower level of sterling vs the Euro over the years ahead, reducing future entry costs.
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London presence essential for international retailers and designer labels.
Superdrug and Oddbins are but two familiar high street names currently being courted by foreign prospective purchasers. In the increasingly competitive UK market other high profile, attractive acquisition targets will inevitably catch the attention of expansion-minded foreign predators, according to Retail Knowledge Bank.
Meanwhile, many of the recent entrants will continue to increase their stores and sales noticeably faster than the overall UK market average, say the researchers.
Retail Knowledge Bank's International Retailers in the UK presents a detailed analysis of the 250+ foreign retailers present in the UK and the future entry environment, as well as speculating on possible entrants into the UK and wider European market. It also identifies those likely to be the most expansionist in the UK over the years to come of the recent crop of international entrants. The report presents over 250 profiles of each of the foreign presences. These detail the scope and scale of the parent organisation's domestic and international retail network, as well as setting out its UK interests, including future plans, strategies and direction.
International Retailers in the UK – authors: Robert Clark, Clive Grant and Philip Leech. To order a copy of this or another report in the series, please call +44 (0) 1858 438847.
For further information on Retail Knowledge Bank, please call Helen Dakin, Publisher. Tel: 020 7520 1673.