China’s rapidly changing luxury market poses challenges for brands, but also opportunities.
The Chinese government’s austerity measures finally seem to be having an effect on international retailers’ enthusiasm for expanding in China, with 60 percent of companies saying they feel less welcome in China than before. However, as one of the world’s most valuable retail markets, retailers can not just turn away from China. Despite any hesitancy from companies in expanding in China, it is still a key market for retailers. Abandoning China completely would obviously be folly, but companies must now be smarter when doing business in China and have a clear strategy.
With the e-commerce boom outside of China’s first-tier cities, a storefront in every city is not as necessary. International brands such as Burberry, Zara, and Estée Lauder have found success in opening stores on Alibaba’s Tmall, and more brands are embracing the e-commerce platform everyday.
Major brands have their own take on the market, but what is clear is that Shanghai and Beijing are still the favorite Chinese cities for international footwear retailers.
Here’s what five footwear retailers share about their China strategy including their take on the Chinese consumer and China hotspots as reported by Women’s Wear Daily:
“First-tier cities such as Beijing and Shanghai are performing very well. Other interesting areas are the Sichuan province, cities such as Chengdu and Chongqing. Places in the northern areas are also upcoming, such as Harbin, Shenyang and Changchun,” Zanotti said. It’s no surprise that those cities are among the companies targets, as they are home to some of China’s wealthiest.
The company plans to expand through building “brand equity,” expanding its distribution network in China, and holding more brand events.
The company has opened two stores this year, one in Shanghai and one in Harbour City in Hong Kong, with plans to expand into Beijing. The company is open to expanding to other Chinese cities, as company founder and designer Rupert Sanderson told WWD, “Of course, we’re always looking for the right location in mainland China and the wider Asian region.”
“The Chinese woman we are talking to is someone who loves her European luxury brands, but who also has a real sense of provenance. [Shoppers have responded strongly] to our gold heel and gold-pebble accessories that have formed a bit of a pillar in our Chinese business,” Sanderson said.
Brown Shoe Co.
Tim Brown, the company’s international SVP, said the company is looking into “Central eastern China in the Yangtze River area, from Sichuan to Shanghai. This area has 35 percent of China’s total population and 40 percent of total GDP. It is important in terms of average income, purchase behavior and climate.”
Brown notes that the company’s main demographic for its Naturalizer brand is women 30 to 45 years old that don’t have many footwear options among domestic brands and they want something a bit different.
The company will focus on increasing productivity and performance at its existing stores and expanding its e-commerce offerings. “More consumers like to buy online using their computers and mobile devices. E-commerce has become an increasingly important channel,” Brown said.
The company will introduce three more brands in China: Franco Sarto, Via Spiga, and Ryka.
The children’s footwear company is focused on “the northeast part of China: Shanghai/Suzhou/Hangzhou and Beijing, and cities between the two,” according to the company’s founder Angela Edgeworth.
“Given the ‘one-child’ policy, Chinese consumers tend to seek out the best products for their children. The consumer is changing as China changes. As China’s economy continues to grow, more consumers are able to afford high-quality products. More Chinese are traveling internationally, and they are returning with knowledge of brand names,” Edgeworth said.
The company will open at least two more stores by the end of 2014 with contracts in place for additional stores in 2015. The company expects to have between 14 and 16 stores in China by the end of 2015, up from its existing 10 stores in the country.
By the end of 2014, the company will have over 900 branded stores in more than 130 Chinese cities.
“In the eight years since our iconic clog was introduced in China, the [region] has become Crocs’ most successful market. Its urban middle class, which has enormous spending power, is emerging as a strong consumer all across China. Chinese consumers are also becoming more sophisticated, style-conscious and [interested] in quality. China is going through a period of urbanization, with lots of established malls providing opportunity for growth,” Ted Lee, VP of China operations, told Women’s Wear Daily.
image credit: rupert sanderson