Customers check out outfits at the fast fashion chain Topshop’s first retail outlet on the Chinese mainland. It opened in Galeries Lafayette’s store in Beijing this summer.
French store Galeries Lafayette has come up with a new approach to entice customers with affordable, exclusive labels from the likes of Topshop
Fast fashion chain Topshop’s first retail outlet on the Chinese mainland opened in August, with lines of young women eager to see what the British brand had to offer.
But this was not just another store opening in one of the countless malls that have sprung up across urban China during the past decade, it was an indication of the subtle shift in the nation’s shopping culture.
The brand chose to make its first foray into the Chinese mainland on the sixth floor of Galeries Lafayette (China) Ltd, a 50-50 joint-venture between French department store veteran Galeries Lafayette and I.T Apparels Ltd.
“The introduction of Topshop here sends a strong message,” Paul Burke, chief executive officer of Galeries Lafayette China, said in an exclusive interview with China Daily.
“A message to bring more traffic here for people to see something else, because people are not frightened by the price of Topshop.”
The French department store opened in Beijing in September 2013 just as China’s department stores?aimed at wealthy and high-spending consumers-started to feel the pinch from the central authorities’ anti-extravagance campaign.
Since then, it has been trying to find its place in Beijing’s Xidan area, a bustling shopping district traditionally associated with younger consumers with relatively low spending power.
Targeting customers aged between 18 and 35, the store has been left relatively unscathed by the impact of the anti-corruption clampdown.
“The young customers are not really involved with these things and they live on true incomes. Whatever they earn, they can spend some on food, clothing and other things to feel good about themselves,” Burke said.
Galeries Lafayette has moved into this market niche to distinguish it from traditional Chinese department stores, which have been in decline this year.
The rising middle class and the government’s promotion of consumption stimulated their business, said Burke of his peers in the sector, but as far as Galeries Lafayette is concerned, “we are different”.
“We are French, fashion forward, affordable and fun,” Burke said. “When we think about business, these four elements are in our thinking all the time.”
These four factors are the key elements deciding whether the firm will bring a brand to China. Creating a unique and diversified brand mix is also key to what sets it apart from other department stores in China.
Burke found that Chinese young women prefer to shop freely and have a greater choice of brands. Therefore, Galeries Lafayette’s Beijing store was designed with no walls separating the many labels on offer.
“People can experiment with different brands and shop freely in our store without being followed by sales staff,” Burke said, pointing to something that clearly sets his firm’s retail culture apart from those of its Chinese competitors.
And accompanying the introduction of Topshop’s first outlet in China, the department store has introduced other elements, which make it stand out from the crowd.
All Chinese department stores have the same brands, the same level of service and similar cafes, but they do not have the French cafe Angelina, Burke said.
Galeries Lafayette’s business model has concession brands, which the company directly buys, as well as its own labels and I.T’s products.
The concession model allows it to choose brands that are not already in China or Beijing yet. For example, it can select different lines from Red Valentino, which means customers can buy items that they will not find anywhere else in the country.
This means that Galaries Lafayette can fine-tune the range of merchandise and mix of brands to suit local consumers’ tastes. In addition, Galeries Lafayette constantly updates its stores and changes the brands on offer.
“You don’t want another five years of a brand which everybody hates,” Burke joked.
Galeries Lafayette has also discovered young Chinese designers in Paris and introduced them in Beijing, including Chi Zhang, Fiona Chen and Chictopia. The store cooperates with the Beijing Institute of Fashion Technology and showcases some of its designers’ best work.
“If customers like them, they stay,” Burke said. About 40 to 50 Chinese designers now work with Galeries Lafayette.
These local designs sell well because they are interesting and exclusive. There is also less chance that customers will experience the embarrassment of finding someone else wearing the same clothes.
And the quality of service on offer is what makes customers shop here instead of going online, Burke said. “The traditional department stores’ service level is quite low,” he added. “We have to make sure our environment is more interesting.”
Galeries Lafayette has introduced a VIP room and personal shoppers who will bring clothes that meet customers’ requests.
According to I.T’s financial report, Galeries Lafayette’s revenue increased about 30 percent in the first quarter of 2015 compared to the same period last year. Detailed financial figures have yet to be released.
But the department store is eager to increase its share of China’s retail industry, which has continued to expand during the past five years.
The store is also trying to attract more domestic tourists by working with major agencies, airlines and hotels, as its data show a large number of its customers are from outside Beijing.
Strong awareness of Lafayette labels among Chinese outbound tourists is a massive benefit to its expansion plan in the country, according to Burke. It will seek to cash in on the brand by opening 15 new department stores in China, with two due to be rolled out each year. As yet, the company has not revealed exact locations.
The new stores do not necessarily need to be of the same size as its first one in Xidan. “It could take two or three floors in a shopping mall or do things without food or beverages,” Burke added.
Guo Zengli, president of the China Shopping Center Development Association of Mall China, pointed out that Galeries Lafayette stands out among foreign department stores, such as Parkson Group, a division of the Malaysia-based Lion Group, which has performed poorly.
“Having a very different model from Chinese department stores, Galeries Lafayette has the patience to cultivate the market and it will see an increase in its sales as consumers in China become more mature and more diversified,” Guo said.
By working with its suppliers rather than only making money by renting out space, Galeries Lafayette has developed a competitive edge.
“To be responsible for the merchandise, pricing and consumers, means that once it gets a feel for the market, it will thrive,” Guo said.
