For China, Footwear is the Perfect Entry into Luxury

on September 17 2014 | in Fashion Retail | by | with No Comments

Retail opportunities for footwear brands are promising in China.

Although China’s yearly household income is still around $2,100 overall and $4,700 in Shanghai, the number of consumers with disposable incomes is growing, and China’s middle class along with it. Shoes often represent an entry point into the luxury market for people with money to spend, according to Peter Harris, president of the Pedder Group.

“For a lot of customers, footwear is their first entry point into luxury,” Harris said in an interview with Women’s Wear Daily. “It’s a big decision to buy a handbag when you are paying 15,000 to 20,000 RMB ($2,445 to $3,260 at current exhange). That’s a big choice. It’s not such a big [one] to buy a cool pair of shoes.”

According to the China Leather Association, more than 3 billion pairs of shoes were sold in China last year. International brands are at the top of China’s high-end footwear retail market. In the past five years, Stuart Weitzman, Giuseppe Zanotti, Christian Louboutin, and Jimmy Choo have all expanded their presence in the country.

Athletic footwear brands as well have increased their Chinese market presence. Adidas Group, for instance, is pushing for fast and intense growth in the country and has been focusing on second- and third-tier cities; currently, it maintains 7,600 stores in more than 900 Chinese cities. Over 1,500 of these stores have been added in past three years alone.  The company’s strategy lies in viewing China as “many markets with a wide spectrum of consumer segments,” as the wide range of products it offers allow it to tailor its products by region, depending on that region’s customer base, according to Colin Currie, Adidas’ managing director for Greater China.

“China is on track to become the leading economy in the world, and the increasing purchasing power, particularly in lower-tier markets, presents huge opportunities for the footwear market,” Currie said.

Luxury footwear brands are taking a less aggressive approach as they expand into the Chinese market. Real estate is a crucial consideration says Harris; moving in too quickly can lead to “taking locations that perhaps are not representative of how you want to position the brand.”

For that reason, Pedder Group, a retail partner of Louboutin, held out for a street-level space for the designer’s first store in Shanghai, even after other high-end shopping centers repeatedly offered upper-level locations.

“One of the things I constantly talk about with Christian [Louboutin] is the idea in China that where you are is who you are,” Harris said. “From the moment we considered entering China, we understood that our position in terms of real estate was the first thing that was going to speak to our customers in terms of the value of the brand.”

image credit: nicholasputz

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