On the assumption that the world has not ended today, and that Retail Week is still being read beyond Bugarach, attention will carry on being devoted to transatlantic developments.

On the assumption that the world has not ended today, and that Retail Week is still being read beyond Bugarach, attention will carry on being devoted to transatlantic developments.

US private equity interest in the UK is in the spotlight: Apollo’s acquisition of Aurum has come the week after Clayton Dubilier & Rice took control of B&M Bargains and Leonard Green & Partners purchased a 25% stake in Topshop.

Heightened US interest over here is in piquant contrast to the other current big story that Tesco will likely withdraw from over there.

Alternative investment strategies can show markedly different returns, with no surefire guarantees for any - be it mergers and acquisitions, minority stakes and/or organic growth. But instead of the latter, Tesco could potentially have considered an investment opportunity in Whole Foods, a high-profile, but then under-rated, business. This would now be realising exponentially richer rewards. (It’s rumoured that such a move might even have had the backing of a Tesco board director.)

Tesco opened its first Fresh & Easy store in California in 2007 with plans to invest about £250m a year. Some months later, another Californian investment of similar scale was also made in the food retail sector.

Leonard Green (Sir Philip’s now newly associated namesake) injected $425m (£262m) into Whole Foods, converting this into approximately 30 million shares at $14.50 (£8.95) each. Leonard Green now says this has become “one of the best investments in our firm’s history”. Four years on the shares are trading at six times the purchase price - $88.54 (£54.64) on December 14. Leonard Green’s gains will be as significant as Tesco’s losses over the same period - with considerably less management upheaval and attracting reputational kudos not flak.

Twenty years before Tesco, another European grocer made a doomed attempt to enter the US. Carrefour opened its first hypermarket in Philadelphia in 1987 then left with hefty losses in 1993. However, in mitigation, since 1985 Carrefour had also held a 20% stake in Costco. Shame it couldn’t have kept it: Costco’s market cap today is $45bn (£28bn); Carrefour’s is e13bn (£10.6bn).

Tesco’s announcement has prompted the British press to indulge in a bout of self-schadenfreude, citing litanies of other British retailers who have failed to conquer the States.

These include Dixons, which also entered Philadelphia in 1987 by acquiring Silo, but six years later suffered exactly the same fate as Carrefour. (They should have heeded W.C. Fields - he could have told them both that Philadelphia was closed.)

However, Apollo’s acquisition of Aurum provides a reverse reminder that it’s a British jewellery retailer that can best refute the view that all British retailers will fail in the US.

1987 was an ominous year for Dixons and Carrefour but an auspicious one for Gerald Ratner. That was when he acquired Sterling Jewelry in Ohio and then went on to buy Zales and Kay Jewelers in the succeeding years.

The bittersweet irony is that Mr Ratner was undone not by these sorties overseas but, quite the reverse, by his domestic peccadilloes.

Signet, as the group was renamed when Ratners became a pejorative term, is now the largest jewellery retail chain in both the US and the UK. We don’t all drown across the pond.

  • Michael Poynor, managing director, Retail Expertise