In 2007, the UK’s staple Pan-Asian restaurant chain, Wagamama, decided to make the big leap across the pond, opening their first US location in Boston, Massachusetts. While their 'tried and true' business model had been a major success in the UK, they quickly learned that conquering the US market wouldn't be as simple as copy and paste. After conducting some much needed market research, Wagamama came to the realisation that the UK and the US are two very different countries with different tastes, cultures, and preference, and one must adapt accordingly to succeed.
Some of their research findings included:
Americans value their independence - and this extends beyond just politics to include their own personal space. While communal seating may be part of the authentic Pan-Asian dining experience, Americans would prefer to have their own table.
Despite being an incredibly diverse country with people from all over the world, some American's can be a little hesitant to try new "foreign" foods. Having a staple American dish on the menu, such as a burger or a steak, can help to ease some of the more cautious eaters into expanding their palettes.
Speaking of new experiences, not every American knows how to use chopsticks. Offering some more familiar cutlery can help these people gain the confidence to try new foods and potentially turn them into a repeat customer.
By adapting to the US market, Wagamama managed to win over American consumers, and have since expanded to 8 other locations. In the words of Wagamama's CEO: ‘We want to take advantage of everything that Wagamama is because it’s great, but we do need to make a few small tweaks or adjustments to really make it a better experience for the U.S. consumer.’
As the world’s largest economy, the US has long been one of the most coveted markets for businesses worldwide. Its size, skilled workforce, and economic stability make it an attractive destination for companies looking to expand internationally. A common language and cultural ties make it particularly attractive for UK companies, even more so post-Brexit.
While the US market can be challenging even for American companies, the land of opportunity presents an even greater obstacle for foreign firms who must navigate unfamiliar cultural expectations, a highly competitive landscape, and complex federal, state, and city level regulations.
How to develop a market entry plan for the US
If your UK company is considering expansion across the pond, here are five key pillars for success in the US, from an American’s perspective.
1.Select a model for market entry
There are three main methods for foreign companies to break into the US market.
1. Launch your business organically
2. Merge with or acquire a US business
3. Form a partnership with a reputable US brand
Choosing which avenue is the most suitable for you and your business depends on resources, the overall market, and your time of entry.
Launching organically may seem like a lower cost route but is can be the most difficult due to the lack of American connections and knowledge. Britain’s beloved Laura Ashley opened its first international store in San Francisco, California in 1966, and while they were met with initial success, they failed at adapting to American consumer preferences, leading to a selling off of all US stores in 1999 for $1.
While acquiring or merging with an established US business comes with significant upfront costs, there are the benefits of pre-existing connections and relationships as well as economies of scale, especially if you plan on serving a larger region or even the entire country. The UK’s Grand Metropolitan acquired many American food, drink, and hospitality companies, such as Pillsbury and Burger King, throughout the 1980’s in order to gain a foothold in the US before merging with Guiness in 1997 to form Diageo, the largest drinks company in the world.
One of the most common methods to enter the American market is to form partnerships with US companies. This can be more cost effective than acquiring a US business whilst still providing a much-needed American network. In 2021, ASOS began a partnership with popular department store chain Nordstrom, which provides ASOS access to Nordstrom’s knowledge of the American market and the store’s physical network to establish brand awareness. This partnership also gave ASOS access to a well-established route to market, enabling rapid distribution of their products and the ability to scale.
2.Hire local talent and leadership
One of the benefits of entering the US market is the abundance of highly skilled and specialised labour. However, this will come with a higher price tag than you may be used to paying. Due to the higher cost of American labour, it is important to prioritise where you need US talent.
In our experience, there is also a key role for senior leadership to relocate from the UK to the US, to preserve company culture, product knowledge and ties to UK HQ – key for empowered local decision making during the early stages of market entry.
One area where having local talent is particularly useful is for roles directly interacting with other Americans, such as sales and marketing. Despite the stereotype of Americans being charmed by the British accent, ultimately Americans like to buy from Americans. Some of your most successful UK/ European salespeople may not be as effective as a less experienced American simply due to their ability to better navigate through the intricacies of local culture, such as small talk or reminiscing about (American) football.
Burberry’s successive American CEOs are often credited for Burberry’s rebranding and revival in the early 2000s. Italian American CEO Rose Marie Bravo was able to recognise the contrasting perceptions of Burberry in the US vs the UK and leveraged American’s fascinations with all things British, or “Anglo Mania,” to reposition Burberry as a luxury brand in the US. Her successor, British American Angela Ahrendts, brought a deep understanding of the US market, further accelerating Burberry’s successful penetration into the American market.
3.Adapt to American tastes and preferences
While it is well known that the United Kingdom and the United States have a ‘special relationship’ it has also been said that they are two countries divided by a common language. While we may be mutually intelligible (with some minor disagreements over spelling), it is important to realise that culturally, Brits and Americans are very different with different social and cultural expectations.
Tesco learned this the hard way when they launched their chain of Fresh & Easy stores in the Southwestern US. Despite boasting more than two years of market research, going so far as to send executives to live with American families to study how Americans shop, Tesco failed at understanding American consumer preferences. To list but a few of their initial operating mishaps, Tesco refused to accept the much beloved American Express, allow for manufacturer coupons, or provide service check-out.
Despite being the third-largest retailer in the world by gross revenue, Tesco entered the US market with Fresh & Easy as a complete outsider, lacking any established branding or customer loyalty. They assumed that their UK business model with some tweaks would succeed in the US, only to see the stark differences in consumer behaviour and expectations between the two English speaking countries, which ultimately lead to a £2bn failure. Tesco serves as an important lesson for other companies that no matter how big you may be abroad, the US is an entirely different market in which everyone must prove themselves in order to succeed.
4.Develop local brand positioning
While the US is the largest consumer market in the world, it is also incredibly competitive with many well-established giants of industry. Americans are generally more trusting of well-known American brands and being a foreign challenger means you will need to differentiate yourself from your competitors, which often means spending more on marketing and brand image.
Topshop was a popular brand in the UK with a long history of success, but when they launched their first US store in 2009, they failed at cultivating a brand identity that differentiated themselves in a highly competitive market. Topshop was even accused of being arrogant for skimping on their US marketing and believing that their international reputation and clothing quality could build their brand persona in the US.
Depending on your type of business and your product, you can lean into your British heritage, which can appeal to certain American consumers. As aforementioned, this strategy worked for Burberry when they rebranded themselves as “British luxury;” however this strategy may not work for all. When Graze, a popular UK snacks firm, entered the US market, they initially sold the same selection of flavours as they did in the UK. Some of the flavours Americans loved, others were absolutely loathed, such as mango chutney and deconstructed Jaffa Cakes. Graze quickly responded to this feedback and pulled their more distinct British flavours in exchange of quintessential American favourites, such as barbeque sauce. Since then, US sales have risen drastically and now account for half of the company’s annual revenue.
5.Prioritise at a state/city level
Breaking into the US market is resource intensive, thus ensuring your limited marketing spend is being used as effectively and efficiently as possible is essential to growing and scaling your business in the US. A well-structured Go-To-Market strategy is critical, not only to drive immediate growth but also ensure that long-term objectives are met.
When planning your GTM strategy, it is important to recognize the sheer size and scope of the US. While the US may be one country, by land area it is more than twice the size of the European Union and only 4% smaller than continental Europe. To put this in perspective, the distance between New York City and San Francisco is greater than the distance between London and Moscow. Additionally, the economies of individual states can rival European countries, with California alone having a larger GDP than the UK. It is important to remember that when considering how much marketing spend to allocate, or salespeople to hire, in your market entry plan – it is very easy to be spread too thinly.
Due to the sheer size and scope of the US, it is better to think of each state as its own country (with its own consumer preferences as well as taxation & regulatory environment) and not assume homogeneity across the entire American populace. Each individual state has its own culture and may consist of unique competitors and different target account lists, requiring its own target Ideal Customer Profiles, marketing messaging and routes to market. Many of our clients at Coppett Hill will initially target individual states or even cities in order to establish a ‘beachhead’, often preferring the East Coast owing to the more convenient time difference with the UK.
It is important to keep in mind that in the US, perhaps more so than other places, consumption is an experience and a smart business needs to cultivate a specific customer experience catering to their target customer segments. Taking a lifetime value lens on different customer segments can help companies prioritise where to focus these efforts for the best return. It is also important to have realistic expectations for how long market entry may take, with appropriate ‘leading indicators’ being tracked – beyond simply waiting for revenue to roll in.
Conclusion
History is littered with numerous examples of UK businesses successfully entering and thriving in the US market; however, there are perhaps just as many cautionary tales of companies that, perhaps too confident, neglected to understand the differences between the US and the UK and attempted to break into a foreign market without sufficient research. While expanding to the US is a resource intensive venture for any company, successful expansion to the world’s largest economy and consumer market can be incredibly lucrative and yield significant returns on your investment. If you are looking to take the leap across the pond, learn from the past and be sure to keep in mind these five pillars for success in the USA.
If you would like to discuss Go-To-Market strategy for US expansion, please Contact Us.
All views expressed in this post are the author's own and should not be relied upon for any reason. Clearly.