Lucky 13: How to live the American dream with your business
Cracking the US market is no mean feat. Managing director Julian Granville reveals the 13 secrets of British clothing brand Boden’s success
Where countless British household names have failed, clothing brand Boden has built a $150m business in America in barely a decade.
Here managing director Julian Granville reveals his lucky 13 tips for breaking into one of the world’s toughest markets…
1. Beware the doom-mongers
The moment you mention the words ‘US market’ in polite company you’re guaranteed to hear strong opinions – all negative. The general consensus is: America’s the graveyard of the British retailer, everybody screws it up, you must be completely mad. This is always delivered in slow, portentous, slightly patronising tones. After hearing these warnings repeatedly, you’ll be very tempted to unpack your suitcase. Or zip it up and ignore them.
2. And as for consultants…
If the doom-mongers don’t scare you off, just wait for the consultants. They’ll tell you how marvellously complicated the American system is but what a huge potential market – carefully balancing fear and greed. They’ll go on to warn that you’ll need to make all sorts of difficult judgments and can’t possibly be expected to do this on your own. So why not, well, hire some consultants?
3. But do some homework first
Having said that, the warnings are often well founded. Back in 2001, when we first started thinking about America, we did some fag packet case studies of every British company that has failed there. Examples weren’t hard to find – and most were very strong UK businesses.
4. Which may (or may not) include a screw-up classification system
In our newly established system, cast iron historic screw-ups included a) buying an American business from the Americans, the kings of capitalism b) being too simplistic and treating America as one market c) putting infrastructure in the wrong place or at the wrong scale and d) going in with the wrong joint venture partners. Identifying these blunders didn’t stop us making two of them ourselves.
5. Be confident about self-confidence
Joint ventures are particularly dangerous in a land of brilliant salespeople. Whenever I visit our US operation, I’m convinced one of them should be running the company instead of me. Everything out there’s ‘phenomenal’. So try not to be taken in by the supreme self-confidence of most Americans. (Though honestly, our US staff are great.)
6. Canvas opinion from real people
Since we’re a direct business, we already had 2,000-3,000 Americans buying from us anyway – not many, but a hell of a lot better than a focus group, and real, paying customers with valuable insights. For instance, consultants had advised us to change our catalogue format to the standard American size. When our customers told us they were receiving around 40 catalogues a week, we realised we needed to be distinctive so kept to our original size.
7. Find a mantra
We had a very helpful meeting with Ray Morris-Hill, who knows a lot about direct and worked at Laura Ashley during its failed American venture in the 1990s. ‘Don’t bend the business out of shape,’ he said. We took his advice to heart, designing everything in the UK, having no US employees and shipping from our Leicester warehouse for our first six years in America.
8. And prepare for failure
Our second mantra. We had a six-month plan and a £250,000 investment limit – far less money than we would have risked by opening a store. We did actually choose a joint venture partner but built in a strong pre-nup in case the relationship broke down. Which it did – so we emerged relatively unscathed. Nor does success reduce your chances of screwing up in the future, so a level of mild but never-ending paranoia is quite healthy.
9. Hide the calculator
It’s a classic mistake to multiply your UK price by 1.57 and end up with ludicrous, uncompetitive price points. Your customer has no idea of your margin and couldn’t care less. Just make sure your brand is positioned correctly in the competitive landscape – worry about the margins later.
10. But maybe change the lens
In Britain, we may like white furniture but IKEA also produces the same range in brown. The guy who launched the furniture giant in Germany once told me how they had to recolour their entire catalogue when they realised Germans prefer brown to white. He compared brands to cameras, saying you sometimes need a different lens for a different market. The analogy stuck in my mind, for America and elsewhere.
11. It’s only a test…
Whenever America came up at board meetings, everyone was very nervous. Until we added it was only a ‘test’, then people visibly relaxed. It was still a ‘test’ in Y2, as womenswear hadn’t yet taken off. And again in Y3. And even Y4 – by which point we were turning over more than $50m. It’s a handy calming device to have up your sleeve.
12. Until it isn’t
With turnover approaching $80m, our operations director said: ‘Look, it’s great that this is all a test and we’re still shipping out the UK but don’t expect me to set up a $100m US business overnight.’ Two unanticipated incidents underlined his point. First the Icelandic volcano eruption, then the Yemeni toner cartridge bomb plot; both shut down our entire US business as parcels couldn’t get into the country. We badly needed to build an infrastructure behind the business, which we did but we’ve been catching up ever since.
13. Grab a fistful of dollars
It sounds obvious but be disciplined about making money. You’ve got to see the route to profitability quite quickly otherwise all those doom-mongers may be right and you’d be better off parking the idea in the ‘too difficult’ box. But if you can generate a cash profit in 18 months, no matter how much string and Sellotape you use, your American dream could well become a reality.
This article is an extract from ‘Going Global: 30 Years 30 Insights’ by Piper, the leading specialist investor in consumer brands. Piper targets businesses with a £5m-£50m turnover – investments include Boden, The Rug Company, Las Iguanas and Maximuscle. For more information or to order a copy of Going Global, please go to piper.co.uk
About Julian Granville
Julian Granville joined Boden as finance director in 1995 from Coopers & Lybrand. He became managing director in 1997 and leads Boden’s overseas development programme, which has dedicated websites and catalogues in the US, Germany, France and Austria and customers in more than 50 countries. Boden’s worldwide sales now exceed those in the UK. Granville joined Piper’s Advisory Panel in 2008.