Some of the most compelling retailers in the US right now have a distinctly European flair.

You can see it in Greenwich, Connecticut, where the latest delivery of new products has arrived at the chichi Zara boutique — owned by the Spain-based Inditex SA. There’s a soft cardigan with an organza bow priced at $49.90, a $109 faux-fur jacket with leather fastenings and a holiday-ready sequin blazer for $109. Some 30-odd miles away at the Primark store on Jamaica Avenue in Queens, New York, the style is evident in the large range of affordable yet fashionable children’s wear, such as a sparkly red tutu dress costing $20. This is just the sort of price that attracts families to the value chain owned by UK conglomerate Associated British Foods Plc.

Both brands are at the vanguard of a group of European retailers making fresh inroads into the American market. Some are expanding an existing presence in the US. Others are crossing the pond for the first time — and a handful are trying again, after failing to gain traction in the past. Zara and Primark belong to the first camp — and their differing offerings underline why these new entrants pose such a threat to their US-based competition.

Zara is increasingly stretching upmarket, making it competition not only for traditional fast-fashion players such as Forever 21, but also for department stores and mid-market chains such as Abercrombie & Fitch Co. Primark — or “Primani” (rhymes with Armani) as it’s dubbed, thanks to its particular blend of cheap and chic — is a potential roadblock in the turnarounds of Target Corp and Gap Inc. And both retailers could complicate Walmart Inc.’s efforts to sell more clothing to the affluent customers that come to its stores to shop for groceries.

US brands should also be watching Next Plc, probably Britain’s best retailer and already the UK joint-venture partner for Gap and Victoria’s Secret & Co. The chain is once again dipping its toe into American waters after briefly experimenting with a US presence in the 1990s; it’s already selling some of its childrenswear in Nordstrom Inc. and will soon partner with another national chain (the company hasn’t yet revealed which one). Another British contender, JD  Sports Fashion Plc, will generate about 40% of sales from the US after a six-year acquisition spree, including most recently Hibbett Inc., while German discount grocery chains Aldi and Lidl are also building bridgeheads across the Atlantic.  In fact, there are JD Sports, Aldi and Lidl locations not too far from Primark’s Queens store.

Although the US is Inditex’s second biggest single-country market, it still has only about 100 stores, all but one of which are under its flagship Zara banner and located mostly on the East and West Coasts, plus Texas. For every $100 of fashion sold in the country, Inditex took less than 50 cents, Chief Executive Officer Oscar Garcia Maceiras said in March 2023. That means there are huge opportunities for the group to capture a bigger slice of American apparel spending. 

At that time, Maceiras said the company planned 30 projects in the following three years, including opening new stores and expanding and refurbishing existing ones. Zara’s sister brand Massimo Dutti recently re-entered the US physical market, with a store at the upmarket Aventura Mall in Florida. It hasn’t announced plans for more sites, but staying at only one would be unusual. All other divisions, including athleisure brand Oysho and Gen-Z favorite Stradivarius sell online to US customers. 

In the past, the US was a frequent graveyard for the global ambitions of European chains; Britain’s Marks & Spencer Group Plc and food retailer Tesco Plc are among those that tried — and failed — to crack America. But the new breed of interlopers could be different: not only are they excellent retailers, but changes to the way we live and shop are on their side.

The rise of social media and global streaming services mean fashion is increasingly crossing borders. Selling online can also pave the way to a physical presence. Take Zara, which hadn’t planned to open a store in Nashville but became convinced a branch could work there after the city put up strong digital order numbers. 

Zara is also a prime example of how to finesse the US market more broadly. The brand has been in the country since 1989, and succeeded, in part, because of its willingness to grow slowly and learn as it goes.

Greenwich is a case in point. Previously a typical Zara, offering items for women, men and kids, the store reopened in May as a women’s boutique. So rather than cramming in as much as possible, the location has a “less is more” feel, allowing products, such as a $229 wool coat, to stand out. Sleek shop fittings mean the store isn’t out of place on Greenwich’s main street, which also houses a Saks Fifth Avenue, Club Monaco and J Crew.

Zara is famous for encouraging store managers to provide constant feedback to the head office about what is and isn’t selling. In affluent Greenwich, this translates into the boutique being one of the few to carry cashmere, and a new range of real leather and suede bags. Inditex doesn’t disclose its US performance, but on an unseasonably warm October day, Zara was easily the busiest store on the avenue.

Primark has also successfully adapted to US tastes. It will have 29 US stores by the end of 2024, with another roughly 10 to follow in the next couple of years, giving the retailer a presence across most of the country (with the exception of the West).

But it downsized a handful of early sites, including its first, which opened in 2015 at Boston’s Downtown Crossing, as it experimented with different formats. Newer stores, at a tighter 30,000-35,000 square feet, in locations frequented by shoppers seeking value for money, are trading profitably. It might not reach its target of 60 US stores by the end of 2026, but it shouldn’t be too far off.

While the latest fashion looks are displayed prominently at New York City’s Queens and Downtown Brooklyn stores, both of which opened two years ago, much of the floor space is dedicated to basics. In Queens, this means t-shirts, leisure tops and bottoms, childrenswear and licensed products from local sports teams to Disney.

The strategy is paying off: US sales rose 30% in the fiscal year ended September 14. The country now accounts for 5% of the retailer’s sales.

Domestic chains might be tempted to underestimate the newish arrivals. After all, their footprint is still small. Primark’s store base is less than 1% of Walmart’s. European chains also lack the same US brand awareness as incumbents. Primark is at a particular disadvantage because it doesn’t sell online, a powerful way to build familiarity in a new market. And of course, European retailers operating in the US must navigate President-elect Donald Trump’s plans to impose a 60% tariff on goods imported from China and up to 20% on goods from elsewhere.

It’s worth noting, though, that tariffs might not hit all European competitors quite as hard as domestic chains might expect. Zara manufacturers about 60% of its products close to its Spanish headquarters, making it is less reliant on China than many retailers — including those based in the US. Primark, for its part, has prices below its main rivals, giving it more room to pass on tariff-driven inflation.

That’s not the only reason US retailers should take the threat posed by these foreign invaders seriously. Childrenswear is a particular focus for Primark and Next, so those selling products for babies and kids, particularly Gap’s family-friendly Old Navy, must ensure their selection is both good value and fashionable. As for countering Zara, it will be impossible to emulate its operating model, which can get garments from design studio to store in a matter of weeks. But as it debuts in more neighborhoods, competitors must ensure they have a continual supply of new styles. 

In Greenwich, the sequin blazer put out on the shop floor just an hour or so earlier has already caught the eye of one shopper, who slips it on in front of a mirror to see how it catches the light. Now that is fast fashion.