Clamoring for a piece of the Chinese market
With the growing influence of China’s economy and the renowned spending power of its people today, it comes as no surprise that global brands are flocking to the country to secure a foothold.
Macy’s, one of the United States’ biggest departmental store chains, is the latest to enter the fray. Through a joint venture with Hong Kongbased Fung Retailing Ltd, the American brand is set to launch its first flagship store, albeit a virtual one, on Tmall Global, Alibaba’s e-commerce platform, according to Fortune magazine’s Chinese edition. The move will make Macy’s the first US department store to be featured on Tmall.
However, Macy’s foray into Chinese retail territory is by no means a novel one. Japanese department store operator Takashimaya Co had in December 2012 opened an eight-storey shopping space costing 4 billion yuan ($630 million) in Gubei, an area in Shanghai that is popular with Japanese expatriates.
More than a decade since it first entered China, French Galeries Lafayette made a comeback in September 2013 by opening a six-storey department store. The Galeries Lafayette (China) Ltd is a 50-50 joint venture between the French department store veteran and I.T Apparels Ltd.
Earlier this year in May, a new upscale departmental store called Shanghai New World Daimaru, a 6 billion yuan joint venture between Shanghai New World Co Ltd and Japan’s Daimaru Matsuzakaya Department Stores, welcomed its first batch of customers in Shanghai’s East Nanjing Road.
Not all those who have entered the Chinese market have been successful, however.
Back in the mid 1990s, Galeries Lafayette had opened a branch on Beijing’s pedestrian street of Wangfujing, but closed its shutters after just a year. US consumer electronics chain Best Buy closed all nine of their stores in 2011 after a five-year stint in the country. In 2012, Macy’s maiden attempt at investing in an e-commerce company failed as well. It has now joined hands with Alibaba, the Chinese e-commerce giant which closed 673 billion yuan worth of deals in the second quarter of this year.
While the old-fashioned, brick and mortar Chinese department stores in China are no long as popular, this retail mode still remains viable in major western cities the likes of New York and London, according to Regina Yang, head of research and consultancy with Knight Frank Shanghai.
Siu Wing Chu, deputy managing director of Savills Shanghai, attributed the decline of China’s department stores to the fact that most of them still offer a limited selection of brands and not having their own in-house products.
Chu also applauded Macy’s attempt to test the waters in China via an online store, saying that past failures by foreign retailers were mainly due to a lack of serious research.
“This small trial will provide them with important information of the China market such as shopping preference and preferred marketing tactics,” he said. “Chinese shoppers are just like consumers from other parts of the world. They have their unique preferences.”