China Consumer

Dressed for action

UK retailer enters China – via an online strategy

Model Kate Moss poses with British retailer Sir Philip Green at the grand opening of a new British based Topshop and Topman clothing store in New York

Next stop, China

In 2007, supermodel Kate Moss designed a collection for the UK fast-fashion label Topshop. The clothing line, and a series of subsequent ones, sold out quickly. When Topshop launched the Kate Moss line in the United States a year later, hundreds of people queued up to get their hands on it.

Sir Philip Green, the owner of the Topshop label, will be hoping that Moss has the same appeal in China. Last week Green’s company announced that it has partnered with the Chinese e-commerce platform to sell its merchandise online. Established in 2010, Shangpin sells multi-brand contemporary fashion goods from luxury labels like Lanvin, La Perla and Diane von Furstenberg. Most of its customers are in second and third-tier cities, where direct access to luxury brands is more limited.

“We decided to partner with in China because they demonstrated to us their capacity to operate brands and understand marketing and brand building,” Green said. “As we further our global expansion, this will be a step forward in being able to use the power of China’s online reach and sell into one of the world’s most exciting consumer markets.”

In addition to Topshop, its parent company Arcadia controls seven other major high street brands in Britain: BHS, Burton, Dorothy Perkins, Evans, Miss Selfridge, Topman and Wallis. But Topshop’s road to China has been anything but smooth. In 2008 Green told reporters that he was planning to expand his fashion empire with a push into Asia. However, it took five years before the first store opened in Hong Kong (there are now three in the city). In mainland China, Topshop launched a pop-up store in Shenzhen to test the market in 2012, pledging to look at opening 30 more pop-up stores across the country. But a quick look at the company website suggests that it doesn’t have any formal stores operating in China at the moment.

Now the strategy seems to have evolved – with the reliance instead on selling via Industry observers say Topshop is hoping to understand China better by partnering with an e-commerce site instead of opening bricks-and-mortar outlets in the country. “The challenge of brands coming to China is that the country has an established market and shoppers display mature shopping behaviour. The online business model is cost-effective. The retail strategy is less about avoiding competition than reading consumer behaviour in a targeted way,” Colin Light from PricewaterhouseCoopers China told the China Daily.

Topshop will be optimistic about its prospects in China. The fast-fashion label’s clothes are affordable for Chinese teenagers and may appeal to a younger demographic less “logo-obsessed” than older generations.

David Zhao, chief executive of Shangpin, concurs: “China’s new fashion consumers are in their twenties to thirties and are moving away from big logos to being fashion forward, and wanting to express their individuality through mixing and matching styles and brands.”

Still, foreign brands don’t always prosper in the Chinese e-commerce market. In April, Neiman Marcus, the US luxury department store, decided to sell its 44% stake in e-commerce site Glamour Sales after disappointing sales.

Topshop might want to take heed. Neiman Marcus was also trying to break into the Chinese market and opted not to open physical stores, deciding to deliver goods to online shoppers instead. But it struggled with brand recognition (Shaun Rein of China Market Research told the Financial Times: “Nobody knows who Neiman Marcus is in China”) and the venture flopped. Industry observers say it can also be difficult to sell full-priced items online because most customers in China shop for bargains on the internet. “Chinese consumers are going online to get a good deal. If there’s no motivation on price, you can’t convert them,” says Olivier Chouvet, co-founder and chief executive of Glamour Sales.

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