Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/62026
percent food and beverage, and anchored by supermarkets and multiscreen cinemas," Tang said. Developers are cranking out new malls at a staggering pace to meet demand, but retailers have quickly soaked up any new space. Retail vacancies in the prime markets fell to 1.5 percent in the fourth quarter of 2011, from 1.7 percent in the third, according to Jones Lang LaSalle. Leasing at Shanghai malls be- gins about two years before the opening, and most of the space The China branding conundrum In China's metropolitan centers, brands struggle for the attention of shop- pers who have far less awareness of specific labels than Westerners do. "One of the greatest challenges in China now is how to catch those eyeballs," said retail real estate consultant Corbett Wall. "In a mar- ket where people don't know the brands, a lot of the things you take for granted don't count anymore." Wall heads Shanghai-based CW Associates, which helps retailers and developers ex- pand in China. As consumer-goods makers from around the world converge on China and domestic labels continue to emerge, shoppers must choose from a host of brands for nearly every prod- uct type. "It's much more inundated than we've seen even in the U.S., because you have Koreans fighting for market share, you have Europeans, you have Tai- wanese, you have the Japanese," said Wall. "The Chinese are getting so many choices here, and they're not very brand-loyal." An American jeans maker, for example, might be accustomed to competing against a handful of major brands in a given market. But in China, where no single brand controls more than 1 percent of the apparel market, the competition is greater. "For the brands that are fighting for different niches — youth culture or street wear or women's wear or whatever — it's tough," Wall said. "One strong Western brand could have 15 or 20 strong domestic competitors." Chinese brands account for roughly 80 percent of the mix at a typical Chinese mall, Wall says. The percentage may be closer to 50 percent Western in major metro- politan markets such as Shanghai, but domestic brands pose serious Liu found the prices in Shanghai's luxury fashion stores to be conspic- uously high, for example. "Luxury itself is much easier to market, because it's expensive and it's ex- clusive," Wall said. "That's a pretty simple message." SHANGHAI IFC Apparel sales in China have tripled over the past decade, reaching nearly 400 billion yuan (about $64 bil- lion) in 2010, according to The Boston Consulting Group, which predicts that those sales will triple yet again by the end of 2020 as the ranks of middle- and upper- income consumers continue to grow. competition even there. "I've been in centers where you feel like it's all Western brands, but it's not. They usually put the Western brands on the first floor, and as you go up, it's all Chinese brands," Wall said. "As you leave Shanghai and the major cities, depending on the type of center, it can get down to where only 2 percent or 3 percent of the brands in the center are Western." To overcome the problems associated with a lack of brand recognition in China, many foreign retailers have set themselves apart by targeting specific Chinese demographic groups. It was no accident that Indeed, China and other emerging markets are help- ing to drive outstanding sales growth among luxury retailers. LVMH Moët Hen- nessy Louis Vuitton reported a 22 percent year-on-year rise in same- store sales last year. Similarly, PPR SA — which owns Gucci, Yves Saint Laurent and other brands — saw sales jump 17 percent year on year. Wall says the greatest opportunities will lie in markets outside the major metropolitan centers. In a country where the lower-tier cities are home to anywhere from 3 million to 10 million inhabitants, such markets harbor immense buying power. "Opportunitywise," he said, "the lower-tier cities are definitely where the action is now." — MH 194 SCT / MAY 2012