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Foreign Retailers Flock to U.S.

Sandwich is the latest to open a store stateside.

A spring style from Sandwich.

NEW YORK — Sandwich, the latest retailer you’ve never heard of to land on these shores, arrived by way of the Netherlands last month when it unveiled its first U.S. store at the Fashion Show Mall in Las Vegas.

Sandwich is part of a larger trend of small- to medium-size foreign specialty retailers opening stores Stateside. While these chains may be popular in their home countries, they have little or no name recognition here. Nonetheless, mall operators have embraced the newcomers at a time when many American retailers are closing stores or scaling back expansion plans.

Bart Terhorst, managing director of Veldhoven Retail USA LLC, which is introducing the brand to the U.S. market, said the 3,600-square-foot Las Vegas unit has been in the works for some time. “Two years ago [the idea] looked good,” he said. “Of course, the economy looked much better then than it does now. But you can’t abandon such a project. The economy will pick up.”

Terhorst said the store, which had a soft opening last month and will celebrate a grand opening on Sept. 7, has been trending well. “We are pretty much on track for what we were expecting for next year,” he said. “This should be a $3 million store for us. We are going in the right direction. The good reaction we’re getting from customers is what keeps us very optimistic.”

Sandwich is priced “in the Zara range,” Terhorst said, noting pants range in price from $65 to $85, and tops, $25 to $65. Veldhoven, which produces garments in Europe and Asia, manufactures two other brands, No-No apparel for babies and girls, and Stills, a higher-priced women’s collection. Sandwich, which was primarily a wholesale brand, began opening stores six years ago and now operates units in 25 countries.

“I have experience in the European market,” Terhorst said. “The U.S. is different. Customers are a bit more demanding. Nevertheless, that’s good for us because we want to be a service company. We want to do it right. It’s good that shoppers are demanding. There are [so many] choices here — you can shop anywhere. It keeps us focused.”

Underestimating American consumers has been the downfall of some foreign retailers that retreated. After acquiring the Dutch brand Mexx in 2001, Liz Claiborne opened 11 stores in the U.S. The brand never resonated with consumers and all 11 Mexx units closed between early 2006 and July 2007. Sold in 66 countries, Mexx failed to replicate in America its success in Europe, particularly in France. “Mexx does not have the brand recognition here,” said Jill Granoff, group president for direct-to-consumer, last July. “

Some foreign retailers have taken their time expanding. Reiss, a U.K. chain, opened a 5,000-square-foot flagship on Manhattan’s West Broadway in 2005. The company has been relatively quiet since, studying the market. Now Reiss is getting ready to open 20 stores in the U.S., according to Laurie Marco, executive vice president of U.S. operations.

“One of the challenges of doing business in America was managing the U.S. business from the London corporate office,” she said. “Reiss then made the decision to set up corporate offices in New York in order to manage the day-to-day business and manage our expansion in the market.” When it comes to customers, Marco actually finds New York shoppers to be very similar to those in London. “All are fashion-forward,” she said.

Now a new crop of retailers from abroad is targeting the U.S. Kira Plastinina, Russian fashions designed by a wealthy teenager, has opened stores on South Beverly Drive, Robertson Boulevard and in Beverly Center in Los Angeles, on Santa Monica’s Third Street Promenade, Manhattan’s SoHo and Stamford, Conn. Who.A.U., a South Korean-based brand for teens and young adults, last fall opened a 4,100-square-foot store at Stamford Town Center. Diana Milligan, a director of leasing for the Taubman Co., said the mall owner would “definitely want to put Who.A.U. in our shopping centers if it’s successful.”

Karen Millen, which opened an American flagship in SoHo last year, is a well-known brand in the U.K. Recently, an employee at the downtown store said traffic is down and blamed the lack of name recognition for the brand.

But Jeffrey Paisner, a retail broker at Ripco Real Estate who now works with Zara, said name recognition or not, “all mall operators are looking for unique and innovative retailers to add to their tenant mix that will differentiate them from other centers. It requires much less of an investment for a tenant to go into a mall than to open a store on the street. Malls tempt tenants with lower installation and build-out costs and none of the hassles with permits. They are getting a significant tenant allowance from landlords.”

“I think you’ll continue to see more foreign chains,” said Robert Michaels, president and chief operating officer of General Growth Properties, which operates the Fashion Show Mall, where Sandwich opened. One reason is because chains such as Mango, Zara and others “are out of expansion possibilities in most of Europe.”

Michaels said GGP is talking to Who.A.U. about a number of potential leases.

“It’s a great example of a chain that could be big,” he said. “It takes time for people to understand what the [foreign] stores are and what they represent. They have to stand for something. The issue is identification and value. It’s understanding quality. Consumers are open to anything that’s new and will give it a chance. But if they falter on quality, consumers won’t give them a second chance.”

Correction: Sandwich operates units in 25 countries.