2021 OCTOBER
DYNAMISM OF CHINA’S MULTI-BRAND STORES
IN NEW LUXURY FASHION FORMAT
Written by : Angie Lee
Introduction
There has been a huge growth of concept stores and multi-brand stores across China which has accelerated since the late 2000s. It’s not only in the first tier cities but more in the second and third tier cities such as Xi’an, Wuhan and Guiyang etc., which are creating opportunities for brands in an increasingly competitive Chinese market. The recent wave of luxury fashion format in China has created where over 1,000 multi-brand stores have flooded across China over the past decade.
There is an important need to understand multi-brand stores with major management and marketing operations, and their special brand-building for the new luxury fashion format in China. This can be observed from the following factors:
Customer Behaviour is Changing
As the bias against fashion from China was found to be a significant relevance within the luxury segment, people are no longer dressed from head-to-toe in brand logos in China. Instead, you can see the mix-and-match of luxury, contemporary and designer brands. Chinese consumers may not be satisfied with single-brand boutique experience and constantly seeking for more “unique and distinctive” experience via diversity of foreign niche brands and local emerging brands in China market. Multi-band stores are more clever to build a unique world with their own DNA with true creativity and unique store format from current social fashion trends. In fact, China’s luxury market is getting mature.
Multi-brand stores are essentially well-placed to deliver on this front because they have a strong focus on local customers’ needs and their hyper-curatorial approach. Luxury certainly signifies wealth, but a match with brands, tends to symbolize style. This idea is moderately widespread in first-tier cities and it is an indicator that the market thirst for more than the traditional luxury players. Therefore, opportunities prevail for multi-brand boutique retailers to expedite this.
Retail Landscape is Changing
It’s widely accepted that the shopping malls and department stores remain significant for fashion and luxury retail in China, They are changing between the market share of traditional retail formats and internet retail’s share particularly with the impact of the pandemic in 2020 facilitates the consumer purchase trend. In 2020, retail sales in department stores were 9.8 percent lower than the previous year, whilst online clothing sales have increased by 5.8 percent.
On-line Shopping Needs Shop Ambiance Support
The convenience of online shopping provides a major explanation for the increase of fashion consumption. Physical stores are required to offer more than just the location for shopping now. More elements must be included, such as an attractive store design and more exciting experimental elements that can be boosted up by the posting from social media and a personalized experience for exclusive access. Gen Z consumers are obsessively motivated by all these factors for buying.
Most of the malls in China are still very traditional and only intend to meet an overall customer group, so there is a disconnection in building the brand’s tone and attracting the more focused consumer group. The department stores have weak product appeal and absence of experimental substance and limited digitalization. In fact, the mall format is simply pulling more brands to occupy the retail spaces. They have fairly loose rules to develop a strong product appeal and to express the brand’s statement.
Multi-brand boutiques focus on a painstaking brand mix, which draws loyal, savvy consumers and preserves brand equity. This is common for the multi-brand channel in general, but even more so in China. The mind-set for finding the innovative and alternative brands are becoming more and more common in China. The multi-brand store model is based more around the creator’s personality and cultural background
Localisation and Space Curation
Significant names in multi-brand retailing, including Galeries Lafayette, IT, Lane Crawford, Joyce and the like, entered the Chinese market way before everyone else. They have worked on a comparative model but often struggled to build their momentum. They went through success, and suffered closures and reopened again. They began with modest sales performances.
KOCs and Local Credibility
Alluring store design and different installations draw in consumers, memorable in-store experience also addresses a chance to give a decent shopping experience and create their fan base. It also draws in consumer’s engagement through social media by fashion bloggers and KOCs (key opinion consumers) who frequently take pictures and post them on Wechat, Webo, Xiahongshu and even Instagram.
Closing Remark
Multi-brand boutiques tend to draw knowledgeable and enthusiastic consumers, frequently drawn from the local community of KOCs. The significance of these nano- and micro-influencers is dilating, by association with KOLs, who are now and again perceived as less than the real thing in their brand affiliations. By moving into those small boutiques, brands get to an audience of KOCs and influencers.
The popularity of multi-brand stores among trendsetters and industry insiders is a critical boost for featured brands, particularly those new to the Chinese market, delivering a level of local credibility not so easily fostered by a presence in a general department store or shopping mall. Being in a multi-brand space can give a leg up to a brand entering the market for the consumer’s insight. The more assortments are based on the value of the curator and the support of the audience, the more you can build up brand awareness and brand loyalty.
In this trend we see a couple of multi-brand fashion boutiques on the rise.
The first type comprises of department stores transitioning from the traditional renting model to build their own multi-brand fashion boutiques. This is regularly done through purchasing, joint venture, or consignment models. This trend hits China’s fashion scene a couple of years ago. Chinese contemporary brands move alongside with international brands like Vivienne Westwood and United Nude.
The second type comprises of multi-brand fashion boutiques work by the large retail groups.
The third type of Chinese multi-brand spins around powerful local trendsetters and key opinion leaders, like those in Chengdu, which has its own share of highly distinguishing multi-brand fashion boutiques.
Collectively, China’s new wave of multi-brand boutiques are purchasing a fascinating mix of local designers, hard-to-track down international designer labels and the unique edition of big luxury brands.
Fashion has always been known to push the envelope. The new technology, customer’s behaviour and demands always transform the industry. There is always a makeover of luxury fashion format.
Reference
– Vogue business. March 31, 2021
– WWD , Aug 28, 2019
– BOF, Feb 7, 2017
– Cambridge university press, March 17, 2020
– Jingdaily, June 23,2021
– Forbes, Dec 3, 2020