Branding the man: why men are the next frontier in fashion retail

This week marks the official beginning of China’s National Holiday, one of the biggest travel periods for the Chinese and a time when Hong Kong in particular becomes a major target for mainland tourists. Dubbed by HK retailers as “Golden Week” (guess why), it has grown into an all-out phenomenon of manic Chinese consumerism as thousands flock to the city and literally shop until they drop.

Why Hong Kong? Mainland China’s regulated economy includes taxing foreign goods as high as 50 percent (but generally 30-40 percent), which means luxury stores in on the Mainland become just a place to kick the tires before consumers make the trek to Hong Kong for the big purchase. But recent studies have shown that Mainland Chinese are increasingly become more confident in traveling abroad, and with soon-to-be relaxed visa restrictions, the numbers of tourists visiting — and shopping — the United States will likely triple in number by 2013.

A recent study from the CLSA, a brokerage and investment group, suggests that the PRC will account for 44-percent of global luxury sales by 2020 and reach that level through an annual growth rate of 23-percent. Certainly nothing to sneeze at, which is why Hong Kong retailers have unabashedly begun to tailor their operations to servicing the mainland customer.

Rolling Out the Red Carpet

Case in point, Lane Crawford, the uber-luxury department store which several years ago, rebranded itself from dowdy to deluxe, has steadily resigned itself to making the mainlander their primary target. However, that was not always the case. As recently as 2006, the brand went to considerable lengths to distance itself from its local Chinese heritage with complicated visual merchandising “installations” and advertising campaigns featuring Caucasian models. For the most part, signage and printed collaterals were in English and had a distinctly Western tone of voice.

Now that is changed. For more than a year, the brand’s advertising has featured Chinese celebrities and models, and their most recent campaign showcases highly stylized Chinese models that look decidedly….er… mainland. Truth is, it’s about time luxury brands bagged the white-washed approach of using caucasian models and hire some of the fabulous faces available in China: Liu Wen, Fei Fei Sun, Shu-Pei Quin, and Lily Zhi are just a few who have shot to stardom and are featured in Lane Crawford’s campaign.

At Lane Crawford’s IFC flagship, an entire section once allocated to small leather goods and accessories has become a luggage center — since it is not unusual for mainland shoppers to buy suitcases in which to store their purchases. On a recent Wednesday at Kowloon’s Harbour City, the mall corridors were crowded with shoppers carting large roller suitcases in which to carry their treasures.

Some skip the suitcases altogether and are buying apartments in Hong Kong, —- one of the most expensive cities in the world. Hong Kong real estate developers have begun creating commercial projects created expressly for the mainland customer. Outside subway stations and malls, young men in suits hawk colorful photos of apartments for sale.

An Endless Hunger

With such exponential wealth being earned — China boasts an ever growing number of billionaires, that number doubling in two years to 271, second to the United States — it’s no wonder they’re looking for ways to show off. Last year alone, Chinese consumers shelled out $US 9.4billion for luxury goods, coming in second behind the United States. Which is why brands are investing heavily into expanding their retail reach into second and third tier cities. Burberry will expand its China network from 57 to 100 stores in the next three to four years, while Roberto Cavalli — hardly a household name in China — is set to add 85 stores in a deal with Shanghai’s UCCAL group.

For it’s part, Lane Crawford, which opened it’s first major China flagship in Beijing in 2007 (after some feeble attempts at licensed stores), boasts that it will add three more stores in China starting next year, with a second store in Beijing, a store in Chengdu, and a massive 14,000 meter flagship in Shanghai.

On a recent Friday night in the always- bustling Tsim Sha Tsui, lines stretch down the street in front of Chanel, Louis Vuitton, Gucci, Hermes and Cartier — with a second Cartier store just around the corner. By 10 P.M., the lines have barely diminished nor has the energy of those who waited somewhat impatiently for their turn to enter the store. An exhausted family — parents with their son and daughter — sit on the ground in front of Gucci, surrounded by shopping bags, while nearby,  a woman struggles with stuffing yet another purchase into her overfull suitcase.

And it’s not just the big foreign names who are profiting. Local Hong Kong jewelers like Luk Fook and Chow Sang Sang (among others) are crowded with shoppers buying mostly gold and jade pieces. Mainlanders tend to believe that these jewelers will have higher quality gold than what they would find at home, and these venerable HK retailers are respected by Mainlanders, often more than foreign jewelery brands.

This manic shopping behavior isn’t simply an act of making up for lost time — although that certainly is a factor when you consider China’s twentieth-century history. The symbolism and psychology of gift-giving in Chinese culture means that many of these purchases will become tokens of respect for in-laws, bosses, or for those one needs to impress for the purposes of guanxi — influential connections — potentially opening the golden doors of opportunity and power.

The Big Apple in Hong Kong

Hong Kong is still the benchmark for retail operations in Asia, with some of the best examples of branded experiences available in the world. That said, challenges persist in motivating employees and ensuring consistency in service and product knowledge. At last Saturday’s opening of Hong Kong’s first Apple store at the IFC mall, that didn’t seem to be much of a problem — but then, this is Apple.

The glittering store was brimming with blue-shirted staff, with a surprisingly high ratio of employees to customers. That apparently is intentional, with a brochure boasting of  “One to One” services including “Personal Setup,” “Personal Training, “and  “Personal Projects.” Sounds pretty personal to me.

Customers eagerly tried out merchandise and an enormous Genius Bar was swamped with consultations. “I don’t want to buy anything, I actually have everything already. I just want to feel the experience,” said  27-year old Henry Men Youngfan, to a reporter from the Washington Post. He traveled from Beijing just to see the store.

Apple has five stores in China and plans for 25 more by 2012. The Hong Kong store is strategic in positioning the brand and its technology towards a customer who is generally more apt to buy a PC than a Mac. But all that will most likely change.

The U.S. Challenge: Getting Ready for the Deluge

However, the challenge continues to be how to get the Chinese shopper to shop at home rather than just in Hong Kong.  According to shoppers we spoke to, the allure of Hong Kong is not only the considerable discount on products but also the level of service. Indeed service continues to be the Achilles Heel of most luxury retailers in China. There is the story of a Louis Vuitton executive who, in the late 1980’s, walked into one of the first LV stores in China to discover the sales staff eating their lunch on the display cases.

The U.S. Commerce Department reported that Chinese tourists spent $5billion in the U.S. last year, up 30-percent over the previous year. Despite the major obstacle to obtaining visas, 802,000 Chinese visited the U.S. last year — more than four times the number who visited in 2003.

So why aren’t retailers here doing anything about it? Good question. In France, department stores like Galleries Lafayette have signage in Chinese as well as dedicated staffers to handle Chinese groups and individuals, but U.S. stores are curiously devoid of any programs. Nevertheless, that’s changing. The fact is, Chinese visitors spend roughly $6,000 per person when they shop in the U.S. — more than twice that of say, people from the United Kingdom. “You look at Printemps or Harrods and 30 to 35 percent of the business is Chinese tourists,” says Saks CEO Stephen Sandove in a recent WWD interview. “It’s unbelievable … I’d like to see visa issues eased up so they’ll come here.” The typical Chinese tourist had to wait up to two months to receive a visa to the U.S. Retail lobbyists and hospitality professionals are working hard to change that.

b. on brand is currently advising Saks Fifth Avenue’s San Francisco store with a pilot program for this year’s Chinese National Holiday featuring custom window signage, advertorials in Chinese language magazines, discount cards and gifts, and designated Mandarin-speaking staffers at the ready.

It should be noted, though, that a China program should not be just a once-a-year marketing activity, and with forecast growth in Mainland Chinese shoppers, more and more retailers will need to commit marketing dollars to customized programs designed to support this growing consumer market.

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With a roiling stock market and warnings of an impending double-dip recession, you’d think some would do what they did back in 2008 — or even last year: hunker down and see what shakes out.

Not so here in Silicon Valley, where the sun seems to be shining for more than a few start up firms. These aren’t “me-too” companies — those seeking to replicate the Facebook and Groupon formulas. These are bona fide innovators who are finding new ways to get your attention and your dollars.

What’s the biggest trend? Online advertising and marketing is making bold inroads into a terrain that has had its share of turmoil. But dollar for dollar, internet advertising sites and applications — and I include social networking sites dedicated to pushing retail sales — are still an open opportunity for business.

TrialPay (www.trialpay.com) is an online advertising start-up based in Mountain View, California is just one which has found new ways of making transactional advertising a means of building a customer base, drive traffic to specific sites, and then build incentives to add on purchases through post-transaction marketing.

Loffles (www.loffles.com) is another start-up created by two Brown University grads that makes a game out of watching online advertisements. The more you watch, the greater opportunity you have to win prizes, from a electronics to apparel, and even discounts on “experiences” like a 7-day resort pass or a free meal at a restaurant.

Are we heading into another internet boom such as we saw in the mid-1990’s? A look at the numbers certainly makes it seem like that. According to the New York Times, “twenty-two tech companies went public in the second quarter alone worth $5.5billion,” the highest dollar amount since 2000. Almost 1,000 raised $7.5billion from venture capital in the second quarter, that’s up 19-percent from the first quarter and just over sixty-percent from the same period in 2009.

What’s that mean in terms of consumer sentiment — will people still spend even if they’re watching their pocketbooks? I think they will. The internet offers an insulated bubble where purchase decisions are made in a different way than in a real-world environment like a store. Online retail and incentive-based advertising also allows key information and comparisons to be made by the consumer that might not be made in a bricks-and-mortar situation. Add to that social media testimonials and uploads and you have a potentially rich opportunity to rally a consumer to push that purchase button.

Read my post, “Social Shopping Application Offers Compelling Way to Connect with Customers.” Click Here.

Read “In Silicon Valley, the Night Is Still Young,” from the New York Times. Click here.

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Brian Spaly is one man who sees opportunity in men’s retailing – if it’s done right. In 2007, along with business partner Andy Dunn he founded Bonobos, which became one of the biggest start-up success stories to come out of the recession — especially in fashion retail. Together they created a men’s clothing brand that became instantly famous for having the best fitting pants on the planet.

 But for Spaly, It wasn’t enough to sell 40,000 pairs of pants (as Bonobos did in their first two years of business), or raise $18.5Million in capital (as the company did in 2010.) Even today, Spaly is forever focused on how to make the shopping experience even easier for Everyman.

 His “Big Idea”? What if all a guy had to do was have an online or telephone séance with a stylist and then, Voila: a box of perfectly fitting clothes arrives in the mail? Welcome to Trunk Club. Founded in 2009, Trunk Club is quietly making inroads in an area most ordinary stores have never bothered to push: personal styling for men.

Bertrand Pellegrin: What is it that sets Trunk Club apart from other personal styling services, i.e. ones one might find in a department store, or even a private service?

Brian Spaly: I think many other personal style services can still be intimidating for a lot of guys from both a style and a price perspective. At Trunk Club our consultants are all experts on a wide range of men’s style but even more importantly, they are great listeners. We’re not here to tell you what your style should be. We’re here to understand your personal style and provide you with all the right clothes to knock that look out of the park.

At the same time, there are no fees for the service and no minimums for purchase, so there’s nothing for guys to lose by giving it a try. I think most guys view the personal stylist as a province of the rich – but we’re hoping to change that.  We’re not pushing couture, we’re just selling high quality clothes that fit well and flatter you.

BP: Who is the Trunk Club customer — what is their profile?

 BS: We have found that Trunk Club has resonated really well with 30-45 year old urban professionals like lawyers, consultants, and bankers. A lot of these guys don’t have [the] hours to spend shopping and while they often have dressing for work and formal events covered, they appreciate our stylists help putting together outfits for first dates, nice dinners with the wife, getaway weekends, or nights out on the town.

BP: What was your “Aha” moment when you realized your concept for Trunk Club?

 BS: A lot of the inspiration for what we do comes from my experiences at Bonobos, where I learned first hand that guys simply don’t like to shop and don’t want to invest the time to learn how to find great clothes.  At the same time, it became clear to me that more than ever, guys loved looking good.  We know there’s a better way to get guys awesome clothes.

BP: Do you think most contemporary men’s stores are still missing the mark? If so, what is it that they are overlooking?

 BS: I think most contemporary men’s stores continue to sell clothes in a very traditional approach – establish a brick and mortar presence, lay out what they have to offer, and have customers browse their products during set store hours – and have not thought enough about whether or not a customer enjoys this experience.  For some customers, this may be perfect.  But for a lot of the guys we have been talking with having to go to multiple stores, being overwhelmed with choice, and not getting personalized service is not a great experience.

BP: A lot of attention has been paid to brands like J. Crew, Brooks Brothers, and Club Monaco for trying to modernize their merchandising and buying strategies. Does this “curated” approach resonate with you?

 BS: Sure, it resonates with us.  We admire all of these companies – they are some of the best in the business.  What doesn’t resonate with us is the service, the location, and the shopping experience.  I recently checked out a J. Crew men’s outpost in SoHo on a Saturday.  It was a mad house, I couldn’t find anyone that worked there, I couldn’t tell who worked there, it didn’t look like there were any dressing rooms — the place was a mess.  Were the “curated” clothes cool? Absolutely.  But I will never go back and I didn’t buy anything because the experience sucked.  

 BP: Is Trunk Club planning to expand beyond online services to actual storefront locations (or will this only be located at the Chicago HQ)?

 BS: We haven’t made any firm plans at the moment.  We are always looking for the best way to serve our customers and will evaluate opportunities as they come up.

 BP: What is the pattern you notice most in terms of the difficulties/obstacles men find with shopping for themselves? How does TC address those hurdles?

 BS: Just because men don’t like to shop doesn’t mean they don’t want to dress better. Guys settle for baggy, boxy shirts and stale style because they don’t have the time or interest to track down better fitting, more stylish clothing. At Trunk Club we handpick a selection of awesome clothes to match each customer’s unique style and fit preferences. When a customer receives his first trunk, all that’s left for him to do is the fun part: choosing favorites from a personalized selection of great looking, great fitting clothes.

 

 

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