Western Retailers Expanding In Mainland China Market To Meet Growing Demand

High Street Fashion Companies Opening New Locations Throughout China, Mirroring Strategy Of Major Luxury Brands

China's female consumer segment is spending freely, even during the global economic crisis Image ©Reuters

China's female consumer segment is spending freely, even during the global economic crisis Image ©Reuters

Recently, as consumers in developed countries have cut back, Western retailers have had to retool their growth strategies to include more store locations in emerging nations. We have recently seen the Barbie franchise open its flagship store in Shanghai, and now H&M has opened its first Beijing location, joining 14 other locations in the mainland. With the opening of these new stores, joining other global retail empires like Zara, Levi’s, and Uniqlo and luxury brands like Burberry in expanding in the China market, it is clear that China has become a critical part of all retailers’ growth plans. As ARC China reports, the grand opening of H&M’s Beijing store enticed hundreds of fashion-hungry Beijingers:

The opening of clothing retailer H&M’s first store in Beijing was marked by the sight of hundreds of umbrellas clustered around its front doors.

Two women at the front of the line said they had been waiting since 6 a.m. The store didn’t open for five more hours.

“We heard about it in Shanghai and did some research,” one woman said. “We checked its Web site and its new designs. We loved it.”

Young, urban Chinese women who love Western brands are H&M’s target market.

The Beijing branch is H&M’s tenth store in mainland China, after opening in Shanghai, Nanjing, Changzhou, Shenzhen and Wuxi. China is a crucial part of H&M’s plan to grow its brand in Asia.

“H&M is targeting young women from the age of 20-35,” said marketing consultant Ray Ally. “They’re looking for a very kind of Western fashion. They want clothes they can’t buy in China from local brands.”

H&M is one of several Western companies seeking to expand in China, especially in light of bad sales back home due to the economic crisis.

They’re hoping to cash in on young professional women who want to be their own person, create their own style and have the money to do it.

“Women tend to spend more on brands,” said Ally. “They’re more self-conscious, more aware of health and beauty issues.”

It’s a good time for retailers — particularly those with a focus on female consumers — to incorporate China into their retail strategies, if they haven’t already. As the Independent UK wrote recently, this consumer segment isn’t afraid to shell out for the newest fashions or, in the case of Shanghai’s Barbie store, spoil their daughters:

Walk through the House of Barbie and you see young women browsing the Barbie clothes on sale, or young girls picking their favourite 11-inch doll from the different kinds of Shanghai Barbie on offer – one blonde and one Chinese. Here you get Totally Stylin’ Tattoos Barbie – who comes with a set of more than 40 tiny tattoo stickers. In the salon, mums and daughters get facials and manicures (although no tattooist is at work so far) as they chomp on specially commissioned chocolates, mulling perhaps over the day when daughter dearest will be back in the shop to spend £10,000 on a Vera Wang-designed wedding dress. This is “girl purchasing power” in action, and it’s very much a reflection of China’s growing economic importance in recent years.

3 responses to “Western Retailers Expanding In Mainland China Market To Meet Growing Demand

  1. We have to know that many international luxury brands invest and lose a lot of money in these flagship stores on very expensive Shanghai streets. Many of these shops are quite empty and do not target the appropriate consumer target group.
    A good marketing strategy is necessary to avoid losing money with not so good locations…

  2. chinaluxculturebiz

    It is true that many high-end luxury stores and malls draw few customers, primarily in the largest cities. However, I don’t think the Beijing/Shanghai/Guangzhou stores are really part of these brands’ growth strategies. I think they’re taking a hit on the big city stores knowingly, in order to maintain a brand presence, and are going to view the second- and third-tier cities — where thery’re currently focusing on growth — as the engine of revenue for at least the short and medium-term.

    I think the marketing strategy is building the brands, rather than just placing stores in expensive locations with no context to the consumer. But putting stores in bad locations is only part of the reason they’re not pulling in as many customers as they could. Currently, especially in the big cities, I don’t feel that the luxury brands are marketing as effectively as they could — their brands are just known as foreign and expensive, with secondary associations with quality and pedigree. But as buyers increasingly have more choices, without strong branding, you’re right, they’re not targeting the right groups.

  3. Pingback: Luxury Brands Look To Shoppers In China For Cushion In Crisis « ChinaLuxCultureBiz

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