Warc, 18 August 2014
BEIJING: Many Western fashion brands seeking to enter the Chinese market are opting for a digital first strategy, but some may still require brick-and-mortar outlets to succeed.
Topshop and Miss Selfridge, two well-known fast fashion brands from the UK, have recently joined the growing ranks of foreign brands jostling for a position in this competitive market, opting to launch on fashion retail site ShangPin.com.
"Putting Topshop on ShangPin.com is quite sensible," Richard McKenzie, director of OC&C Strategy Consultants, in Hong Kong, told the Financial Times, as it then becomes associated with more upmarket brands.
At the same time, however, he thought the small size of the site – it has around 5m customers but claims they are amongst China's most fashionable – meant that "potential in the long run is relatively limited".
Other fashion brands, such as Asos, have chosen to establish themselves with an online store on the much larger Tmall site, which claims 250m customers over the past 12 months. This brings its own set of problems, however, as it is no simple matter to achieve visibility.
"It's difficult to build a brand that way online," McKenzie said. "It's like having only one small shop in the world's largest shopping mall."
Ultimately brands like Topshop and Miss Selfridge may have to invest in physical stores to gain traction. As McKenzie noted: "There are so many fashion brands in China that you need to find a way to stand out, and having a good-looking store is one way to do that."
For Chinese shoppers, price is the main reason for shopping online rather than in-store, but many still like to see and feel goods before buying them according to a PwC report, China's Surprising Shoppers.
The report said that 43% shopped weekly and 35% monthly in stores, with two thirds (68%) wanting to see, touch or try the merchandise.
PwC also noted how consumers generally, but Chinese consumers especially, were making less distinction between manufacturers and retailers. While 22% of global consumers had not bought directly from a brand online, just 6% of Chinese consumers had not.
This trend was most marked in the clothing and footwear category, where 68% of Chinese shoppers had bought directly from brands online, compared to 51% of global shoppers.
Data sourced from Financial Times, PwC: additional content by Warc staff