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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If you blinked, you missed it. Hordes of fashionistas and just plain ordinary people bewitched by all those bold Missoni prints and colors, descended on Target stores this morning long before the 10 A.M. opening time.

At dawn, the Target website was already crashing from so many people trying to grab any one of the pieces from the sizeable collection. Compared to other collaborations (last year it was Liberty of London), the Missoni for Target collection is one of the largest, with 400 pieces in total. The collection was slated to sell at all 1,762 Target stores in the U.S. and online through Oct. 22. Whether Target will restock is yet to be determined, according to one customer service employee.

By the time we got  to the Target at the Serramonte Mall in Daly City at a little after 10:15 A.M., the shelves were completely bare and the store oddly quiet.

Staff reported that within minutes items were torn from shelves and some even damaged in scuffles that included raised fists. In housewares, a martini glass was all that was left — it had a chip on the rim.

Latecomers picked over the lonely leftovers, which included one dishtowel and three eyemasks. A women’s wide-wale corduroy coat was left hanging in the candy aisle, while a pair of Missoni print ballet flats were discarded near the umbrellas.

Two fashionable women sauntered in at 10:30 trying their best to look only casually interested: one wearing all black, a large black sunhat, and black glasses, while the other wore her own Missoni top with a Louis Vuitton Suhali bag. After a brief tour through the empty shelves, they smartly went to customer service, where carts of “go-backs” held a few discarded Missoni pieces. They fingered the baby jumpers and left.

Meanwhile at the Target in Colma, A posse of five young women were just finishing a solid two hours of trolling the aisles and were now idling before checkout deciding what to keep and what to toss. Their cart was heaped with Missoni goods from virtually every department.

Those less fortunate circled nearby like sharks, eying any items which might get tossed away. “This was worse than Black Friday,” said one sales associate. “It was just crazy in here.”

By 11 A.M., Target staff were already pulling down the Missoni displays and filling shelves with other miscellaneous merchandise from their own in-house brands. Missoni accomplished.

See what you missed. View the entire collection here.

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When Karl Lagerfeld collaborated with H&M in 2004, it was hailed as a marketing coup and both critics and consumers alike universally praised the collection. It was the dawn of the “designer collaboration” which by now has become nearly ubiquitous from virtually every name-brand designer.

Macy’s was late to the collaboration party but nonetheless, has churned out several in association with its Impulse department. You would have thought Macy’s would lead their efforts with Lagerfeld rather than with Matthew Williamson, who’s collection launched the Macy’s Impulse collaboration series on April 13. One had to wonder if the Macy’s customer was even remotely familiar with the designer.

At yesterday’s launch of the Karl Lagerfeld for Impulse Collection, which will be available in 235 doors, it was hard to tell if the collaboration would make as much of an impact as it did when the designer famously launched a sold-out collection at H&M.

While pieces like the crisp, white blouse were instantly identifiable as a “Chanel-like” look, other pieces — like an extremely heavy coatdress with the texture of an oven mitt — did not seem to win anyone over.

You simply had to wonder what they were thinking when, with a simple LBD, a very Lagerfeld white collar was ruthlessly tacked down to the dress itself, instantly turning it into a See’s Candies uniform.

The winners were few but they went fast: a soft chiffon dress in a burnt brown with a starched white collar; a ruched black dress with a high neck; or one of several super-soft t-shirts and tanks with a sketch of Karl on the front.

And just in case you forgot you were shopping at Macy’s: racks were merchandised with the large sizes on the outside rather than on the inside. With price-points starting at $50 and hovering at $100, this will most likely be Macy’s most successful collaboration to date.

The Karl Lagerfeld for Impulse Collection is available at select Macy’s stores and at Macys.com.  See the entire collection here.

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