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January Retail News and Insights

Jan 23, 2015

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Big Retail Stores In China Are Losing To E-commerce

Dec 12, 2014, Business InsiderLink

Summary: Business Insider comments that big retailers like Suning Commerce Group Co Ltd and its foreign competitors Wal-Mart Stores Inc and Best Buy Co Inc are struggling to attract customers to their traditional stores in China, where online shopping is booming.
 
SmithStreet Insights: Alipay recently launched a ‘10 year review of spending on Alipay’ for individual consumers, aside from gradual growth observed over the past decade, most have noticed a big jump in cash flow in these last 2 years. The other big news is that “Taobao for Countryside 农村淘宝” is under trial – if successful e-commerce will have the ability to reach rural areas faster than traditional brick-and-mortar stores and that will greatly change the potential of these markets.
 
The online purchase of goods is growing faster than any other channel. This means new players are fighting for market share against their already very established peers, and at the same time are facing losing their existing consumers from traditional channels” 
– Jasmine Sun, Manager & E-commerce Expert
 
 
Alibaba Rescues Slumping Luxury Brands In China
Dec 28, 2014, Forbes
Link
Summary: There has been a decline in China luxury spending with an estimated 2% drop in overall China luxury sales in 2014, the first fall in more than a decade. Following Buberry’s example, luxury brands are heading to Tmall to attract Chinese consumers with discounts. Moreover, brands also need Alibaba’s platform to give them more control over the merchandising of their products in China.
 
SmithStreet Insights: The Chinese are some of the most sophisticated consumers when it comes to e-commerce and digital platforms. Price and convenience are already two key drivers for consumers to purchase goods online. As consumer trust in the authenticity of products purchased online rises we will see an increasing number of consumers utilizing platforms like Taobao’s T-Mall to purchase luxury goods.” – Samuel Coopersmith, Analyst
 
 
Coach’s Stuart Weitzman Acquisition Could Boost China Sales
Jan 7, 2015, Jing Daily
Link
Summary: Coach has agreed to purchase American high-end footwear brand Stuart Weitzman. The deal, valued at an estimated $574 million, is expected to help Coach attract a broader base of Chinese consumers.
 
SmithStreet Insights: “For Chinese luxury consumers, footwear has become a more and more important emerging segment. In China market, Stuart Weitzman has built up a very high-end brand image and has a consumer base of young people most of whom are fashion-forwarded consumers in tier 1 and tier 2 cities. Right now, Coach’s consumer base in China are mostly entry level consumers, so the Stuart Weitzman acquisition will re-brand its image in China, and help Coach attract more sophisticated consumers in the future.” – Charlotte Wang, Associate 




In China, Showrooms Blossom
Jan 19, BoF
Link
Summary: Business of Fashion comments that traditional fashion retail is weakening meanwhile, showroom wholesaling is emerging as a new trend. Now, there are at least five designer showrooms wholesaling in China, including companies like DFO, VDS, and Project Crossover, which tend to focus on European designer brands; specialists like Ontimeshow; and Showroom Shanghai, the mainland’s leading designer complex selling brands from both China and abroad. Showrooms not only provide a much-needed wholesale marketplace, but also are giving rise to multi-brand designer boutiques around the country.
 
SmithStreet Insights: The mega brands need to start to think about 2 things: First, how much of threat it would be? How fast would this trend spread to lower tier cities beyond Shanghai and Beijing? How fast consumers are catching up in terms of sophistication? Second, where would mega brands be on the consumers experience curve given the new competition category joins the game?” 
– Jasmine Sun, Manager & E-commerce Expert


Tapping China’s ‘Silver Hair Industry’
Jan 19, WSJ
Link
Summary: China’s over-65 population is projected to soar to 210 million in 2030 from 110 million, and by 2050 will account for a quarter of China’s total population. China’s elderly are hardly affluent, but the sheer number makes it a huge market. Many companies like Nestlé SA, are seizing the opportunity to target elderly consumers with their new products and services. 


SmithStreet Insights: There is an emerging, underdeveloped market among the elderly that we cannot just overlook. In the West, it is quite common to generalize them as one group. But in China, we need to consider that the current and future senior population will have varying characteristics as a result of their different socio-cultural and economic background.


To be successful, brands must know the specific needs, preferences and capabilities of the elderly consumer profile that they want to target so they can develop, market and distribute the right products and services. One size does not fit all, even for the Chinese grandparents.
” – Jules Falzado, Engagement Manager





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