China Retail Group Fast Fashion Approaching China

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China Retail Group explores things to consider whilst entering the China market with your fashion brand.

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China Retail Group Fast Fashion Approaching China

  1. 1. Andrew Waters April 2014
  2. 2. • Rapid underlying economic growth • Expanding middle class • Demand for foreign fashion brands rising more quickly brick-and-mortar penetration
  3. 3. • Chinese consumers are starting to spend & will create one of the world’s largest retail markets • China’s consumer economy has been likened to that of the USA, developing from the 1970s where many consumer brands started from this time to dominating the US market by building their brands & distribution through this consumer growth cycle
  4. 4. 4 Paris 11.7 million Guangzhou 12 million London 8.5 million Chongqing 28.8 million Dongguan 8.2 million Berlin 3.5 million Madrid 3.2 million New York City 8.3 million Los Angeles 3.8 million Shenzhen 10.5 million There are more than 120 cities in China with a population of more than 1 million people, all developing at different stages and paces
  5. 5. Chinese Consumers are: •Transforming from savers to spenders in this generation •Adopting a “what about me?” approach •Gaining assess to credit cards and facilities •Very aware of brands and what they want •Quickly maturing in an online environment
  6. 6. • Only way to reach consumers across China’s vast land • Effective way to operate on a low cost model • More effective stock controls • Removes risks of dealing with: • Property leases • Staff training & issues • Fakes For the cost of a Shop Fit-Out, a Retailer can set up an e- commerce response that can service 500 cities in China
  7. 7. Online penetration within the apparel sector is more than 20%
  8. 8. Within the apparel sector, B2C platforms and independent B2C are gaining share over C2C 2011 Online Apparel Spend: 33 Billion RMB 2012 Online Apparel Spend: 51 Billion RMB 80% 14% 6% 61% 22% 17%
  9. 9. Awareness of where the current market is & how fast changes take place is crucial for retailers entering China, as this could be very different from international trends. You don’t have to be the largest international brand to succeed, though you have to be smart on how you enter & service China.
  10. 10. Success Stories • Uniqlo • H&M • Zara • Forever 21 Failure Stories • American Eagle • Abercrombie & Fitch • Marks & Spencer • Esprit • Gap Uniqlo Success Model
  11. 11. In the west, consumers say “Let me Google it”. In China, consumers say “Let me Taobao it” • Ecommerce in China is dominated by the Alibaba Group, which operates China’s two largest Ecommerce platforms, Taobao and Tmall as well as the number one payment platform, Alipay (comparable to Paypal) • Instead of searching for a product on Baidu or Google, most Chinese consumers will go directly to Taobao or Tmall to conduct their search
  12. 12. • Consumers are beginning to lose loyalty to mass market merchants like Tmall and shifting towards more specially websites that focus on market sectors • Sales are also starting to increase in stand alone websites that have effective social media support Percentage of online shoppers loyal to one Ecommerce site 80% 73% 61.60% 51.50% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 1 2 3 4 2009 2010 2011 2012
  13. 13. Retailers must first decide: • Who and where their customers are • Which SKUs are really suitable for the local market • If they want to establish their own operation or use an integrated agent
  14. 14. Example China market rollout: 1. Open a Tmall store integrated with a social media strategy to showcase your brand’s products and to educate consumers on the brand’s culture 2. Identify third-party physical distribution channel to sell one or several SKUs to grow expand brand awareness and provide consumers with physical interaction with the brand 3. Launch a stand-alone website to roll out comprehensive product line with full brand control 4. Open unique physical flagship locations in select key cities across China to further enhance branding image by providing events, stylists, brand educators and strong customer service
  15. 15. • Look at the most efficient brand building strategies. • Keep updated with ongoing product development to keep up the incredibly fast changing market • Think INTERNATIONAL, act LOCAL
  16. 16. • CRG can provide consulting to a standalone e- commerce sales & support solution that can also include full back-end fulfillment and an end-to-end solution
  17. 17. “The Question is: Can you ignore what is evolving in the retail sector China & can you ignore what your competitors might do in China”
  18. 18. E-commerce is one of the only ways that a retailer can reach and connect to its targeted consumers across China on a low cost operating model
  19. 19. CRG is a multi-channel retail services company that has the ability to assist retailers entering China through a multi-channel approach and network
  20. 20. “CRG’s operating model is to use its sales and distribution channels to partner with retailers and brands to link them to consumers in China through a multi-channel approach.”
  21. 21. • Through its sales, marketing and logistics channels, CRG can offer international retailers both a stand-alone or a broader multi-channel approach for end-to-end retail e- commerce, sales & distribution services to facilitate or support their growth in China • Our E-Commerce division provides combined services allowing retailers who are not present in China to have a full stand-alone sales and distribution response to enter China without the need to build a full service operation in China
  22. 22. To maximise sales, retailers must select the right partner to work with that has, the local knowledge, relationships, connections, and local expertise are the primary ingredients for success. Given the bureaucratic nature and ever changing picture in China, anything else will lead to significant problems. CRG is the right partner. CRG prides itself with the following capabilities: •Multi-channel capability •Unique E-Commerce capability •National licence for fulfilment •Different solutions tailored to customers to maximise sales •Ability to collect payment using various methods for Chinese consumers •Local Marketing expertise •Flexible approach to the commercials •The logistics infrastructure •A Customer Portfolio
  23. 23. Andrew Wyles Waters, Chairman CRG China Retail Group Investments & Strategic Partnerships T: +852 6117-8852 E: andrew.waters@chinaretailgroup.com Wing-Yun Wong, Hong Kong E: wy.wong@chinaretailgroup.com Mike Woodall, London China Retail Logistics Limited E: mike.woodall@chinaretailgroup.com Kristin Graham, China China Retail Services E: kristin.graham@chinaretailgroup.com W: www.chinaretailgroup.com
  24. 24. THE END

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