Asia has surpassed the US to become the world’s biggest retailing market, offering $3.8 trillion in sales in 2011, or 41% of the global pie. Within this feverishly expanding industry, the luxury retail sector has dominated; the number of luxury stores in China has nearly doubled over the past five years. However, for the first time, the growths of mid-range retailers have outpaced the growths of their high-end counterparts.
“This is the first time this has happened,” says Sebastian Skiff, executive director of CBRE Retail, a real-estate services firm, in Asia. “It’s only natural that after being here for so long [the luxury retailers] are likely to grow at a slower pace. [The Chinese no longer] need to drip in brands – they want a relative amount of uniqueness. There is a lot of opportunity in China with value brands – and a lot of competition there,” he adds.
And companies are also taking note of this opportunity. Gap Inc. recently announced that it will add 35 new stores to their existing 47 in China. The company’s executives also said they would consider introducing company-operated Old Navy and Banana Republic to the world’s second largest economy, as reported by Wall Street Journal. Athletic wear company Adidas AG is stocking many of its China outlets with its lower-end NEO brand to cater to more price-conscious shoppers.
“Fast fashion” brands, such as the aforementioned Gap, provide shoppers with trendy items at a much lower price than upscale luxury brands. Chen Jing, a 20-year-old who makes 3,000 RMB ($485) a month working in Beijing, says she regularly shops at H&M and Zara. “I shop for style and look for popular brands,” Ms. Chen says.
While Western brands remain popular, another trend showing shift towards cheap chic is the embracement of homegrown brands. Local brands such as Me & City, Meters/bonwe, and Ochirly also provide fashionable options at reasonable prices.
photo credit: thinkretail