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Omni Channel Retailing Conference: China Daily Asia Leadership Roundtable

During the China Daily Asia Leadership Roundtable, a co-branded session with the Omni Channel Retailing Conference at Retail Asia Expo 2013, a panel of four leading retailers and retail space asset managers shared their views on a variety of issues facing retailers in Asia today.

Dr Peter Lau, chairman and chief executive of Giordano International said that China is entering a phase of normalising spending and that the free spending of two years ago probably is not the norm now. His advice to retailers was to maintain high discipline in managing every single aspect of the retail operation from understanding consumers, spending trends, implementing fast product development, adopting just-in-time manufacturing and delivery to communication with consumers through marketing and the in-store experience.

Lau’s theory is that the online retail business is not just successful because it is on a consumer’s computer: it’s due to the amount and relevance of the information about the products and services that consumers can get at their leisure which is a great deal more than they get at the store. “When you pass the store clerks, or the sales person, half the time they don’t know what they are talking about,” said Lau. “But on the internet or the e-shop you can see the type of fabric, the colour and look at details a lot more closely before making a decision.”

According to Lau, people have been spoiled with information. They are so hungry for it that they take it for granted that all the service providers, such as retailers, should be able to give them complete product information and when and where to buy. In-store information and the in-store experience are still relevant customer exchanges but the consumer should still wnats to be able to control the information flow.

“To be successful in China or around the world the discipline of managing all aspects of the retail operations is fundamental because Chinese consumers are not engaging in frenzied selfish spending any longer,” said Lau. “Just because certain customers are so rich and have so much money they can’t spend it fast enough is no longer happening in China.”

Lau added that China is a diversified consumer market and has definite differences in regional tastes and spending habits. A one-size approach to marketing does not fit all. Consumers in the country’s third- and fourth-tiered cities could still be irrational spenders easily allured by retailers – though this is changing as more travel abroad, but consumers in the country’s first- and second-tiered cities are much more rational.

Roy Ho, head of general asset management and managing director of commercial platform at GCP Retail Management Ltd, agreed with Lau. Having worked with many brands over the years in China, saying that only two-thirds of the known brands still survive in the Chinese market. Ho said, “For retailers to survive in China, they must understand the market, maintain good logistics support and be good at creating an in-store shopping experience for consumers.”

Ho was former general manager of Plaza 66 Shanghai developed by Hang Lung Properties, and highlighted the success of high-end retail brands to shopping mall operators. In 2011, Plaza 66 Shanghai had more than 160 shops that contributed RMB3 billion (US$490 million) in sales and that 20 of the top retail brands out of that contributed 70 percent of those sales.

Tom Gaffney, Jones Lang LaSalle’s national director and head of retail, emphasized the importance of tenant mix to mall operators and that this should be wide-ranging and include a variety of brands. He stated that he was bullish on the Asian retail market because some regional markets such as Hong Kong are the beneficiary of the recent influx of US and European fashion brands with Thailand as another Asian retail market that is set to boom as it relies on regional tourist arrivals from China, Russia and the Middle East. Retail markets in Singapore, Bangkok and Jakarta will also supply strong opportunities for retailers in the future.

Gaffney said that the major problem facing retailers in Asia is the soaring cost of retail rental space that will impact margins. Hong Kong’s retail rental space is currently the highest in the world, especially in areas of Causeway Bay due to the competitiveness of the retail environment.

Gaffney commented that Canton Road in Kowloon will continue to be the prime brand-shopping district in the city. Retailers are looking at the peripheries of these areas and even locating further afield into secondary locations such as Shatin which are nearer the Hong Kong-Mainland border crossings.

Agreeing with Lau, Francis Cheng, Occasions PR & Marketing’s CEO, said tailored-made services are important to capture consumers’ attention and that prime locations still influenced Chinese consumers. Brands should focus on geographical and cultural proximity to maintain their popularity and that brands that host regional fashion shows and manufacture specifically for the local market, such as apparel in Asian sizes, are finding more success.

 

Photo: China Daily

(Source: Retail in Asia Managing Editor)