Banana Republic bends Britain to its will

The high street may be a gloomy place right now, but Banana Republic is well-placed to expand. James Thompson reports

The US fashion retailer Banana Republic will this week unveil its fourth UK store in One New Change, London's new shopping centre in the City.

But while it is likely to be low-key opening, there has been nothing understated about the performance of Banana Republic, which is part of the same group as the clothing chain Gap, since it launched in the UK on London's Regent Street in March 2008.

Stephen Sunnucks, the president of Europe and international strategic alliances at Gap, has revealed that its UK flagship Banana Republic store has delivered soaring sales. Appearing to pave the way for a major roll-out of the chain in the UK, Mr Sunnucks said that the Regent Street store was "already one of the top three performing Banana Republic stores in the world," out of more than 500 shops stretching across the US, Canada and Japan. In terms of sales volumes, only Banana Republic's store on Grant Avenue in San Francisco and its shop in New York's Rockerfeller Center – thought to be its top performer – can rival Regent Street.

Industry experts are not surprised by the barnstorming launch of Banana Republic in the UK and were surprised it took so long to arrive. "I can well remember looking at its website about 10 years ago and thinking: 'Why on earth are they not introducing this into the UK?'," says Robert Clark, the senior partner at Retail Knowledge Bank. "It has been clear for a long time it is an appropriate format for the UK. The product offer seemed to be absolutely in tune with the UK market."

UK consumers seem to be buying into Gap Inc's original goals for Banana Republic to create an "accessible luxury brand". Banana Republic was founded by Mel and Patricia Ziegler in 1978, as a retailer of military surplus clothing and safari adventure wear. But Gap Inc – which also owns the Old Navy, Piperlime and Athleta brands – acquired it in 1983 and largely consigned the travel-related theme to history.

Maureen Hinton, the lead retail analyst at Verdict, the retail consultancy, says: "The brand fits well with what consumers are demanding in the UK, which is affordable, premium ranges that stand out. Banana Republic has got its own look: it is smart, contemporary and with clean lines."

It seems to be particularly popular among a slightly older generation of customer. Ms Hinton says: "It does appeal to a sort of older man, the 40-year-old-plus man." For women, Ms Hinton says it is particularly popular among working women, "who want smart clothes and have a bit more money to spend on those clothes".

In addition to Regent Street, Banana Republic has also opened stores in north London's Brent Cross shopping centre in December 2009 and Covent Garden in April this year. But Mr Clark says that Banana Republic may find life tougher outside London.

He said: "Regent Street is a flagship destination with high footfall and affluent shoppers and it may not be able to replicate it outside the capital – that's what happened with Gap."

Gap, which has 138 stores in the UK, first launched in the UK in 1987. But Mr Clark says Gap has, over the last decade, "found it difficult to replicate the success it enjoyed in the 1990s". While its performance has improved recently, the retailer's "record has been poor in the UK," he added. Sources close to Gap said the retailer is trading robustly and has done so for the last 24 months.

But Ms Hinton believes that Banana Republic "would do well in big urban centres" in the UK.

Before any such expansion, Banana Republic – which posted flat sales in North America for the five weeks to 2 October – launched online in the UK in August. And the retailer remains tight-lipped about its UK expansion plans. A spokeswoman said: "We are always exploring new opportunities." Banana Republic will open its first store in continental Europe in Milan, Italy, in December, with additional openings to follow in cities such as Rome, next year.

While the UK retail market has been through – and looks set for – a rocky ride, there seems no shortage of retailers looking to come to the UK. The Dutch retailer The Sting opened earlier this year in London and Forever 21, the US clothing chain, will make its debut in Birmingham next month.

Some foreign chains, such as the German company Tchibo, have failed to make a success of it in the UK. But Mr Clark says: "Since the Carnaby Street days of the 1960s the UK has been willing to adopt and make room for new formats. It has been one of the most exciting markets in the world."

Certainly Banana Republic seems to have struck a chord with UK consumers. Mr Sunnucks says: "London has been a massive success for us."

Comment

By Harriet Walker

No one does preppy like the Americans, and we've seen a multi-pronged attack on our shores in recent times from brands whose USP is Wasp. But the preppiest of all is Banana Republic.

Still seen as something of a glamorous newcomer since its arrival in London in 2008, the brand has managed to corner a niche spot in the market – it is aspirational but affordable, pragmatic but progressive, universal but not ubiquitous.

While sister label Gap is known for chic, modern basics and comfortable leisurewear, Banana Republic takes a smarter, more mature approach. Tailoring is key, whether for well-cut suiting and workwear or off-duty chinos, blouses and coats; all inspired by a clean-cut, all-American way of life we Brits are keen to ape.

By appealing to "professionals", BR has garnered an economically and sartorially reliable fanbase, who are happy to spend a little more for quality and who regularly update their wardrobes. One of the problems Abercrombie & Fitch (another transatlantic purveyor of preppiness) encountered was they were trying to flog a student-inspired aesthetic at grown-up prices to teenage customers.

A combination of traditional style and modern savvy has helped Banana Republic hit the Ivy League both at home and abroad.