LONDON — Oh, to have been a fly on the Chinese wallpaper at Winfield House.
William Susman, founder of the boutique advisory and research firm Threadstone Partners and son of the U.S. Ambassador to the Court of St. James’ Louis B. Susman, last week entertained 20 British retail moguls for dinner at Winfield House, the American ambassador’s official residence in Regent’s Park.
Among those invited to a dinner of English lamb and Winfield House pudding were Sir Philip Green, Sir Stuart Rose, Sir David Tang, Jack Wills cofounder Peter Williams, designer Duro Olowu and the chief executives of retailers including Sainsbury’s, Hobbs, Reiss and River Island.
“From an Internet-hits point of view, what are two of the most important trends globally? ‘Downton Abbey’ and the Duchess of Cambridge — two British institutions. Today Britain is in a wonderful position to be an exporter,” said Susman during a predinner interview at Winfield House, which has its own connections to retail. It was named after Frank Winfield Woolworth, founder of the five-and-dime stores.
Susman also believes it is Britain’s moment to shine on a global level. “There is great British design inspiration today. Retailers and brands have the ability to bring design, sensibility and newness. What is being done in Britain today is amazing — and has global appeal,” he said.
He said Topshop is blazing the trail for British retail in the U.S. “The successful push they’ve made into the U.S. market is evidence of demand for things British. They really opened the door for opportunity,” he said.
While the pound is rapidly losing ground against the dollar — it has declined nearly 7.5 percent against the U.S. currency since mid-January — Susman said the depreciation should not be a major incentive to expand abroad. “Currency is a little bit like the weather — people love to use it as an excuse. I don’t think it’s a strategic driver to new market entry decisions or acquisitions. I can’t imagine any U.K. retailer coming to the U.S. because it’s cheap. It may be more economic because of currency rates — but it is not the dog wagging the tail,” he said.
Currency fluctuations aside, he said the U.S. is looking particularly attractive right now. “It seems to be having a moment of economic stability. We are not aggressively talking about gas prices or reading about a housing crisis. The stock market is at record highs. The situation we are in could be fragile — but right now the sentiment is fairly positive.”
He added that going forward, transactions in the U.S. will be selective. “Seller expectations are high, and while there is a tremendous amount of capital, there is a gap between buyer and seller of some magnitude. Ultimately, can those gaps be closed or not? Time will tell,” he said, adding, “There is a very healthy bid out there on behalf of high-quality brands.”
And investors don’t have to worry about competition from the Far East — at least for now.
“Fundamentally, there’s talk — but no action,” he said regarding the appetite for acquisitions among Far Eastern investors.
“There is an active conversation with regard to Asian acquisition of brand and retailers. There is the desire to be closer to the end customer and offer vertically. But they tend to be price-sensitive and move very slowly. The exception is Fast Retailing, which has demonstrated itself as a global player. Beyond that, there hasn’t been that much activity,” he added.
As for valuations in the U.K. and Europe generally, he said they are higher than in the U.S. “There’s a much deeper base of luxury companies in Europe and the U.K. Multiples in the U.K. have been higher, but I think that’s reflective of the businesses that have transacted,” he said.
Despite the gloom on the U.K. high street and the wary consumer, Susman said he’s most certainly looking for opportunities here. “At Threadstone, we’re just at the point of reaching outside the U.S., looking to this market and to pick and choose opportunities.”
During his stay he was hitting the street, looking at companies ranging from Pretty Green, the casual and tailored clothing label founded and designed by former Oasis front man Liam Gallagher, to the Westfield London shopping mall.
“One of the most exciting things that is absolutely happening in the U.K. is Westfield. The parking garage is full, the stores are full. The U.K. customer is going to love mall-based shopping, which will create new store growth opportunities but may impact some high streets. I would not underestimate Westfield as a 10-year trend in the U.K. It’s going to be a phenomenon,” he said.
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