This week in the news, Tory Burch has opened its largest store in the world in Shanghai, Uniqlo is rapidly expanding into smaller Chinese cities, Fendi has remodeled its Hong Kong flagship store as it eyes greater Asian expansion, Hainan is becoming over-saturated with luxury hotels, and some are worried that China’s mall building boom may bust.
Signaling it is serious about China expansion, Tory Burch opened its first Asian flagship, and its largest store in the world, in Shanghai this week. The 9,645-square-foot flagship is located in the prime Kerry Center retail complex on Nanjing Xi Lu. The opening celebration included celebrities such as Chinese actress Zhangzi Yi, a dinner prepared by Ben Towill and Phil Winser of New York’s Fat Radish restaurant, and the launch of an exclusive special capsule collection of 20 ready-to-wear pieces and accessories only available in the Shanghai store. Unlike the U.S. where her personal appeal is strong, the challenge for Tory Burch in the Chinese market is that her personal story may not be as familiar in China and may not resonate with Chinese buyers.
Fast Retailing, parent of Japan’s fast-fashion retailer Uniqlo, is planning to expand into smaller Chinese cities – tier two, three and even tier four cities – to generate further growth. Uniqlo will add 200 stores this fiscal year and expects profits to grow by 34 percent. Uniqlo has 316 stores in 70 Chinese cities, with 160 new stores added in the 2013 and 2014. Shanghai and Beijing accounted for nearly 27.8 percent of its China store total – 50 in Shanghai and 38 in Beijing. Further expansion in tier one cities does not make good business sense given the level of market saturation in those cities. Uniqlo Greater China CEO Pan Ning sees huge market potential in China given that Uniqlo is only in 70 cities out of China’s 660 to 680 administrative districts.
Italian fashion house Fendi has reopened its newly renovated boutique in Hong Kong as part of a larger Asian expansion plan in the works for the brand. Designed by Gwenael Nicolas, a French architect based in Tokyo, the newly redone three-story store is located in the Landmark mall in Central. Richly decorated with bronze, stone, travertine, and leather, the store is the first of its kind in Asia. Fendi has its eye on not only Hong Kong, but also on the entire greater China region. Along with the Japanese and Americans, Chinese buyers are one of the top-three worldwide clientele for the brand. Fendi will open a store next month in Beijing’s Shin Kong Place and the brand will reopen its Shanghai Plaza 66 store the following month.
A popular vacation destination, the tropical Chinese island of Hainan is becoming saturated with luxury hotels, raising market concerns for some experts. Hainan has drawn huge numbers of domestic and foreign investors since 2010, when the Chinese government announced a plan to build it into a leading international tourist spot over the next decade. Today, the island has 65 five-star hotels, a greater number than the 50 to 60 five-star hotels in first-tier Chinese cities like Shanghai and Beijing. Last year alone, tourists made 36.72 million trips to the island, a 10.6 percent increase from 2012. That number is expected to increase to 76.8 million by 2020.
Driven by rapid urbanization and growth of disposable incomes, China holds the title as the world’s most active shopping mall development market in 2013, according to real estate services firm CBRE. Nine cities out of the world’s top 10 for new shopping malls were in China. The China Chain Store and Franchise Association (CCFA) estimated that about 300 new malls are opened in China each year and there will be a total of 4,000 malls by the end of 2015. These shopping malls are not all destined for success. In fact, due to poor market positioning, many fail. With the current shopping mall building boom in China’s softening retail market, many industry experts fear supply will outstrip demand.
image credit: www.spiegel.de