May 19, 2017 21:03 GMT by dailymail.co.uk

Britain's internet upstarts killing US department stores

Britain's internet upstarts killing US department stores

More than £3.6bn was wiped off the US retail store sector this month after established names such as Macy's and JC Penney saw sales plunge in the first three months of the year.

Britain's online fashion upstarts are taking on American retailers as US shoppers turn away from traditional department stores.

Asos and Boohoo are fighting for a share of the lucrative US market as appetite for online shopping rockets and in-store shopping declines.

More than £3.6billion was wiped off the US retail store sector this month after some of the most established names such as Macy's, Kohl's, Dillard's, Nordstrom and JC Penney saw sales plunge in the first three months of the year. 

This is fuelling fears that the traditional American department store could soon be a thing of the past.

US shoppers are instead turning to British upstarts which have already seen huge growth and have now embarked on ambitious plans to grow extensively in the region by tapping into the increasing number of teens and twentysomethings who want to wear the latest fashions.

They are using social media to boost their brands and sales across the pond.

Asos and Boohoo and up-and-coming Manchester-based Missguided, boast a combined 10.8m followers on photo app Instagram and nearly 2m followers on Twitter. 

So rapid is the growth that America is now Boohoo's second-largest market after sales grew 145 per cent last year, while Asos's sales increased by 50 per cent.

Asos, which has long dominated the British retail market, is planning to open a distribution centre in the US that will allow it to offer free next-day shipping to American customers, as it currently offers in Europe.

It also hopes its American business will be as big as its British market by 2020. In the UK it made almost £1billion worth of sales in the past six months.

Retail analyst Richard Hyman said the changing retail landscape has made it easier for British firms to enter the market as they're no longer crippled by expensive real-estate fees.

He said: 'Not so long ago, going to America was the kiss of death because the vast majority of companies had failed.

LEON'S US AMBITION 

Leon is planning to launch in the US after securing a £25million cash injection.

The healthy-food restaurant group will open its first outlets in the US in the second half of the year.

The firm, set up in 2004 by John Vincent, Henry Dimbleby – the son of broadcaster David Dimbleby – and chef Allegra McEvedy, has 46 outlets in the UK and two in the Netherlands.

The expansion follows an investment by Swiss group Spice Private Equity.

'But that was before, when you had to go and build lots of stores. Now it's much cheaper to build a brand abroad.'

The UK has led the way in large-scale online-only businesses, while US firms have been left playing catch-up. The UK was among the first to roll out click-and-collect – a feature many American giants have only just cottoned on to.

According to the British Retail Consortium, 24 per cent of clothing and footwear purchases in the UK are made online, compared to the US where 17 per cent of clothing is bought over the internet.

John Mercer, analyst at Fung Global Retail, said that choice – once the unique selling point of American department stores – has waned amid the rise in online shopping, while Boohoo and Asos are benefiting from customers who are 'used to convenience and getting products when they need them'. 

He added that the 'catch-all' American department stores model holds little weight in an increasingly specialised market, as brands target specific age-groups in order to dominate their niche. 

Carol Kane, joint CEO of Boohoo, said: 'The US already represents our second-largest market with sales more than doubling last year – and we've hardly scratched the surface.'

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