Kate Middleton favors this British brand. Now it’s coming for Americans.

ME+EM’s newest store is in Manhattan’s SoHo neighborhood.
ME+EM’s newest store is in Manhattan’s SoHo neighborhood.

Summary

Smaller European companies are embracing the U.S. as online sales help pinpoint the most promising locations for stores.

When Clare Hornby, founder and chief executive of British fashion brand ME+EM, first wanted to expand in the U.S., her board wasn’t thrilled. America was more likely a money pit than a goldmine, they told her.

Hornby did it anyway.

“I actually went against all my board’s advice," Hornby said. “I go to New York a lot. It was gut-feel instinct: I just felt that the gap that existed in the U.K. existed there too."

Hornby’s concept of what she calls “modern luxury for busy women" has gained a following among British professionals as well as celebrities including Catherine, Princess of Wales, and actor Sienna Miller. She was confident its blend of stylish yet functional designs, intended to appeal across generations and outlive the latest fads, would be a hit in America, too.

This month the brand opened a second store in New York City and a third U.S. location in East Hampton. It sells ruffled broderie tops and paisley-print blouses for a few hundred dollars and full-length silk dresses for almost $1,000.

The expansion is the latest example of how European brands are embracing the U.S. as alternative growth markets such as China and Russia become increasingly fraught, and online sales show demand. In doing so, they’re challenging a long-held view that the U.S. is too big and overwhelming for most small foreign brands—and even some larger ones—to risk dallying with.

Building your brand in America had required vast sums spent opening stores, and even then some deep-pocketed entrants—such as British retail mainstays Marks & Spencer, Tesco and Topshop—fell flat. Seen as complex and expensive, the U.S. wasn’t as appealing as lucrative new markets like China.

Now the U.S. is a bright spot. Consumer spending is reliable and American shoppers, exposed to a broader range of brands online, are increasingly open to new names, retail executives say.

The trend of European brands setting their sights on America has been gathering pace, said Sudip Mazumder, the retail lead at Publicis Sapient, a consultancy, because their ability to compete has grown substantially.

European brands are typically more creative when bringing new retail concepts to market than U.S. incumbents, Mazumder said, and see an opportunity to “make a real dent with American consumers."

Major brands that once tiptoed around the U.S. have grown convinced that the rewards outweigh the risks.

Spain’s Mango, for example, recently quit China and refocused its ambitions on the U.S. It plans to have 40 U.S. stores by the end of this year, having seen sales there surge in recent years despite a limited physical presence. Primark and Zara are also putting more emphasis on U.S. growth.

Smaller brands, with little or no overseas experience, are also targeting the U.S.—or at least parts of it. Data accrued through digital sales has enabled them to identify hotspots where their brand has particular resonance, then they can double down on marketing through social media.

British fashion brand Seasalt discovered from online sales that its clothes, which have a maritime aesthetic inspired by Cornwall’s Atlantic-coast location, appeal to consumers in New England. It aims to open 20 physical stores, chiefly in the northeastern states, by 2026.

London-based vegan sneaker brand Løci has trained its sights primarily on California and New York. “We’re a little British company but the U.S. is already 70% of our business," said co-founder and CEO Emmanuel Eribo.

Having celebrities post photos of your sneakers on social media certainly helps. Rapper Nicki Minaj and Leonardo DiCaprio are investors in Løci, but other A-listers including Eva Longoria and Dwayne Johnson have latched on to the brand without any prompting from the company.

“We don’t pay these people, we don’t ask them to do this," Eribo said, checking his phone. “Abigail Spencer from ‘Suits’ just tagged us on Instagram."

Eribo mainly attributed three-year-old Løci’s progress in the U.S. to the company’s strategy of sponsoring events, such as live music, rather than buying social-media ads.

“It’s all about communities and the ground game," he said.

ME+EM’s U.S. journey began in London, where American women visiting its stores started spreading the word back home. They convinced Hornby that ME+EM’s collections, launched roughly every month, would travel well to the U.S.

Taking the initial step of launching online was “low risk," said Hornby. “You can test and learn quite easily, you don’t have to set up any big infrastructure."

For three years the company built up its American customer base, and accumulated a trove of data about who they are, on a relative shoestring. It discovered several demand clusters, including in New York and on the West Coast, which it then targeted on social media.

By 2022, Hornby was ready to invest in U.S. stores. ME+EM raised 55 million pounds, equivalent to $68.7 million, to partly bankroll the move. In 2023 the company reported sales of £120 million, up 46% on the previous year, and profit of £21 million, up 30%.

“Your route to market has shifted in quite a big way," said Hornby. “It’s data and intuition."

While the data pointed strongly toward New York as the right city for the brand’s first U.S. store, Hornby spent months researching the area before committing to its Madison Avenue location.

“I shopped the street in the summer, in the winter, in the autumn; in the week, at the weekend; I ate at all the restaurants; I lived the life of that customer to understand which bit of the street to put it," Hornby said.

Hornby repeated the exercise when choosing a second location. She initially favored Brooklyn, until hotel staff there told her many shoppers from Brooklyn make a beeline for SoHo. Hornby took their advice and realized she was in the right place when she noticed women wearing ME+EM in the area. The brand’s Mercer Street store opened this month.

The Madison store is growing its customer base at double the rate of an equivalent store in London, and U.S. customers typically spend twice as much as a British customer.

With many consumers preferring to browse in person and buy online later, stores serve as a way for shoppers to experience the brand as much as make purchases, Hornby said.

U.K. sales are also still growing, but the U.S. will likely become ME+EM’s biggest market by 2025.

“The economics in Europe aren’t as strong," Hornby said.

Write to Trefor Moss at Trefor.Moss@wsj.com

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