For years we were kept in the dark. The predicted return of multibrand stores in China never really came, but then, like most things over here, it happened almost overnight – and according to all the market players, we are looking at yet another bubble in the near future.
However, the long-awaited awakening is showing maybe even more potential than what could have been hoped for. “Only the stores with a strong marketing platform and a unique perspective on buying will survive,” predicts Ritchie Chan, Founder of Triple Major (three multibrand stores in Shanghai, Beijing, and Chengdu). Roy Xu, Founder and Chairman of the P+ Group (sixty P+ shoes and accessories multibrand stores; 200+ other multibrand and distributed brand stores), agrees: “it is an absolute necessity for multibrand stores to become brands in their own right, with a long-term vision and the ability to provide complete customer experiences.” But isn’t this what any brand wants?
The key difference between China and mature markets from the West is its fast-evolving consumer base. Unlike stores in Paris or London, which have a strong and stable identity, Chinese retailers constantly need to reinvent themselves to retain consumers. “In China, there is no mercy when it comes to loyalty,” continues Richie, who knows that the strong following he has built up since 2009 will disappear overnight if he is no longer perceived as their go-to fashion retail store. As a consequence, 30% of his range is new every season – and that’s an opportunity everyone can take advantage of.
The operator of ten different multibrand concepts, including Maria Luisa, which it purchased last year, P+ is in a position to push this logic even further. Pure product buying is not the most important part of its business model. Instead, the stores serve as brand incubators to create a customer following and, once potential has been detected, the group will invest heavily in developing a brand in China or Asia-Pacific, as they are doing right now with Neil Barrett.
At the other end of the spectrum, Ring Cao, Head Buyer for MyPlay (founded in 2010; twelve stores by the end of 2014), demands a lot of support from her brands. “The market is moving quickly, especially for men who are more and more fashion conscious but need guidance and lots of advice. There is huge demand for fresh brands with the right balance of design, quality, and price point, but the consumer also needs to be reassured that they are making the right choice.” This is why she will favor brands that are reactive in constantly providing PR and marketing material, and that can quickly deliver on a mid-season reorder. “The fact that more European brands now propose three to four collections a year is a huge plus for us, as it helps us retain consumers through constant novelty, especially in the growing segment that feels that fast fashion does not meet its needs in terms of guidance and shopping experience.”
In short, multibrand stores in China are progressively becoming the entry point that foreign brands always hoped they would be. Many will come and go, but by identifying the serious players, both small and medium-sized brands now have a perfect point of entry. That being said, getting orders in is just the first step, and providing guidance and marketing support to a range of buyers – ranging from very mature through to high-potential beginners – is key to long-term development.
Close monitoring of sales and customer feedback will be the cornerstone of successful market entry, whether directly managed or prepared in conjunction with these new-found partners.
Triple Major – Richie Chan, Founder
The 3 Triple Major stores (SH/BJ/CD) are just a window into the Triple Major platform, complemented and backed up by an in-house brand and a creative/branding studio and agency.
The core value and goal is to reinvent popular culture.
Triple Major aims at trying to broaden the definition of what a multibrand store can do, increasing value by organizing many events and non-apparel brand installations, live design studio events where VIP clients can watch designers at work, and redecorating and changing around the store layout and contents, and providing interesting concepts from the start (TCM dispensary concept in BJ, Center for Panda Studies in CD)
The fact that Triple Major host an in-house brand along with other designers is not an issue as its sole purpose is to complement the brand mix, focusing mostly on footwear and also trying to broaden the scope to compensate for the fact that some emerging designers that Triple Major supports only have very few SKUs per collection.
Unlike I.T., Triple Major is not doing the same but cheaper, the major differentiation is product type not price point. The lines are story-oriented and non-seasonal.
Triple Major has a different view of what a multibrand concept is supposed to be, and started its own path in 2009.
There is a feeling in the market that multibrand as a concept is going through a bubble, with little evaluation of viability and sustainability.
In Europe multibrands have existed for a very long time, but let’s look back also at how the Chinese market was back in the early 90s: it was also all small-scale multibrand stores, so the system has existed for a long time already – it’s the entry of major monobrands that changed the rules of the game.
There is a huge supply of independent designers in China, more than people are looking for and the market ready to absorb.
The whole system right now is prosperous on the surface, but one should expect a major reshuffle in about 2 years. Only those with a strong marketing platform and a unique perspective on buying will survive. This comment is also valid for designers who need to work in a more structured and sustainable way.
BUT there are still lots of good signals.
One of the key points of sustainability of “mature” markets is that the clientele is more static, with stable and predictable taste which enables the established multibrands to have a strong identity they can maintain without having to change too much or too quick. There is almost a certain conservatism when you go season after season to the key stores in Paris for example.
There are a couple big differences which characterize the China market:
– Unexpectability : even the consumers are lost and don’t know exactly what fits them, they sometimes might have a label of preference but barely (as a consequence there needs to be a few key opinion leaders for the model to become successful)
– Relatability : the consumers need to identify themselves to a store, to feel they will always find something that fits them there. It is indispensable to be distinct from others, to have a very personal, non-replicable style. A concern to the multibrand model as it is right now is that not so many people are aware of this critical requirement.
How about the United Arrows model in Japan?
There are a few obstacles and differences with China.
In Japan, a consumer follows a brand or given style pretty much from birth to grave, but in China they drop you the second you’re not cool anymore. “No mercy for loyalty”. This is why in Triple Major 30% of the buying focuses on new brands every season.
Uniqueness is key, cannot give a feeling of uniformizing everything and everyone. “Other people can dress like you but they will never be you”.
It is absolutely necessary to make your success abroad known and visible to the Chinese consumer. They will value this and see it as a safe sign they are making the right choice.
Take Opening Ceremony: they would need to take their successes in Tokyo, New York and replicate them here, taking their signature strengths as they are and localizing them just a little. They are for example very active on Facebook and Instagram, but these platforms are either blocked or not so followed in China so they need to switch the medium, but not the content.
Cool people like Jay-Z and Rihanna wear their clothes, they throw crazy warehouse parties as signature events — just need to do the same here!
Working with local KOLs that fit your style and using the media that the Chinese follow all the while staying true to yourself is the recipe for success.
As a buyer, Richie feels that browsing the internet can be even more efficient than going to trade shows to find new brands because the product is only a part of what a brand is. The shootings’ art direction, VI/CI are more ‘3D’, more complete in terms of branding compared to a clothing rack.
Regarding the delayed design and production cycles in China, 80% of the sales of most independent designers are still within their home market so more time is better to prepare and adjust a collection. The shift will happen but it will be gradual until they catch up on the cycles from the international market.
Uma Wang is a good example that this is possible as she is already showing in Milan although selling a lot in China. Designers will start pushing their processes and make sure that at least part of the collection is ready for international buying cycles.
P+ Group – Roy Xu, Chairman
Roy has been in the retail industry for 20 years, and started the P+ shoe multibrand chain in 2006, and then carried on to Maria Luisa last year, acquiring or creating a total of 10 multibrand concepts along the way.
P+ Group is getting ready to acquire a men’s multibrand concept, 6 to 7 of which are already planned to open from 600 to 1000sqm each. Also just signed with Bonini to bring the whole concept into China.
The true necessity to a successful market entry is the right knowledge and a strong platform to push the product through.
There is real potential and a great future for multibrands, but those who will truly succeed won’t be so numerous. Small local stores will come and go for lack of a long-term vision.
P+ is about to acquire a new format mobile APP in order to add value and points of contact with its customer base. A completely new model, different from VIP.com or Glamour Sales that will rely heavily on A-list celebrities endorsement.
There is an absolute necessity for multibrand stores to become real brands, with a strong follower base and all the marketing and PR support that a stand-alone brand would require.
Everybody keeps talking about O2O but the true meaning of this has never been implemented yet. The actual product part of the story is still disconnected from the rest.
Strength of multibrand concepts in Europe vs. mono-brand stores?
20 years ago, China was all about buyer stores. The first wave of established brands to come in (Pierre Cardin, etc.) started establishing a monobrand logic that didn’t exist until then, and that was consolidated by the massive entry of luxury brands.
In the past 2-3 years we have seen a return of the multibrand concept.
But at the end of the day, mono or multibrand is not so relevant, because we can see easily that P+ for example is a brand of itself. And at the same time is serves as an incubator: if a brand sells well its shoes in P+, and has a complete range of product, then this will call for a deeper collaboration and the opening of monobranded stores to capitalize on the brand’s potential. As a brand, opening one’s own stores is still an absolute necessity in China.
Maria Luisa is also a good example of how to implement a multibrand concept in a new way. Flagships in Beijing and Shanghai are opened already, with many more in the pipeline. But only with two stores in existence P+ Group already created a relative in-house brand called Maria Luisa Studio to better learn from the brand incubator that multibrand stores have become.
If you look closely at Lane Crawford, at the end of the day their success is not so big. The store is respected and selling well in Hong Kong, but overall the success of the model is still limited.
10 Corso Como in Shanghai is the same, but only relying on the content instead of capitalizing on the name for itself.
An in-house brand is an absolute necessity.
I.T. Already has 25 years history. Their business model of own in-house brands resembling a lot their buying brands can have an influence and be a problem for mid-market brands represented by them, whereas it is a huge opportunity for the bigger names: customers become hooked-up through the i.t. concept, and some of them will then turn into loyal I.T. clients.
When it comes to the A-list, people don’t want copies or something similar, they want the real product and full experience.
Overall, I.T. pushes the brands and solidifies the name, and i.t. makes the bulk of sales. i.t. will become a brand of itself and they are for sure getting ready for it.
The world is just one big interconnected network, at the end of the day even the biggest most famous brands also rely on smaller up-comers’ designs to feed their own collections with. People look down on China for this, but from New York to Paris everybody uses this development mode!
When P+ acquired Maria Luisa, the first move was to create the related in-house brand with its own dedicated design team in order to progressively create a brand with its own DNA.
Re/ Distribution and partner choices
Many many brands come knock at the door. The first step will be to run them through the buying and merchandising teams to evaluate the potential and relevance within the existing portfolio. Second step if the 1st one is successful, is to look into the possible operations modes and business model, and to run a detailed sales projection.
P+ as a group will not just buy products anymore, they will carefully select high-potential brands, and become real partners that will invest heavily in them.
Traditional distribution models have been dead in China for 5-6 years already, and P+ does not open the door to this model except for very rare exceptions like Neil Barrett, but in return will obtain the full APAC region instead of just China.
License opportunities are still big in China, P+ even has a whole team solely dedicated to licensing brands as an incubator. The M&A team is also very active, and helps better define the best fitting collaboration mode, from license to JV or full Asia representation.
MyPlay – Ring Cao, Head Buyer
How do you look for new brands?
Media and online platforms quite important to get double feedback.
Collaboration with showrooms also very deep in order to play on the safe side as you know them well already, and can rely on their designer choices.
Celebrity collaborations also important: celebrity friends like some brands and will tell MyPlay about them to help pushing the product.
Fashion weeks, international trade shows and personal travels are also a very important part of this in order to get a more direct, personal connection with the market. Trade shows are an interesting one-stop solution because they are curated and bring many brands under the same roof.
Price is very important when it comes to a new brand. The Chinese consumer is hungry for new things, but for them you need more than something that looks good: the balance between design, quality and price is key to the decision.
How to attract your attention as a new brand?
The brand support and reactivity is key to collaboration. Whenever something is needed must get immediate reaction and feedback.
Many European brands’ production cycles are very long, vs. a shorter and shorter cycle for many Asian brands which can deliver within 4 to 5 months from design to production delivery into the stores.
The market changes are very fast right now in China, so it is necessary to have partners and point of contact that are very quick and supportive.
Do you plan to make changes to your buying or make it evolve?
Most Euro brands only have 2 collections a year, but more and more will get out 3 to 4 collections. This helps a lot adjust the buying on a safer basis.
MyPlay’s background is very street and cool fashion style. But there are more and more male customers in MyPlay who request more brands that correspond to what they want. They don’t feel that fast-fashion brands can answer their needs and really want more options and support.
How do you see the future of the menswear segment in China?
The market is huge, and the demand is very high. High-level, rich or evolved guys will always find what they need. The focus has to be on slightly less complex men who have high needs in terms of support and advice. They don’t need very complex pieces, it’s a matter of finding basics with a twist that will make them feel both safe and fashionable at the same time.
The level of fashion understanding is increasing very quickly in China, so it is necessary to accompany their evolving.
They are beginning to have more and more precise requests and tastes, which is why it is important to stay close enough to them to be able to anticipate the needs.
Is the answer with local brands or international cool stuff?
Classic menswear is very strong in China, but fashionable, cool things are still mostly coming from abroad. It thus remains key to keep bringing in more and more brands that can answer these needs.
Any plans to create an own brand?
Thinking about it, but it is still too early. Need to gather more feedback and better understanding.
The market potential is very big, so this can be a way of attracting more purchasing power.
MyPlay would most likely create lifestyle brands – accessories, coffee shops, etc. – not necessarily apparel lines. The idea is to bring a more complete experience to the consumer and provide a more 360 degrees
If a brand is doing so good with you would you distribute?
This could be considered, but at this stage the focus goes on building up the MyPlay brand as itself in order to not jeopardize the original platform’s strength.
Need first to see which brand would be so strong that this could be justified but until now no candidate has emerged.
The way P+ operates is very safe because you first create a strong brand following before taking it one step further in its development.
The most successful brands in MyPlay are those that have been sold for the longest time like Boy London (UK), Glad News (JP), 5Preview , Ground Zero .
Eleven Paris still needs more time. It will be a specially promoted brand for 2015 hope the results will be good – for now going through Hong Kong to get product. The big attention Eleven gives to final consumer price by making the right steps in controlling the price for the consumer is very important and should yield good results in the longer term.