China’s consumers, who hunger for upscale Western goods more than homegrown brands, aren’t so easy to reach, according to market experts speaking at FN Platform.
Top footwear players, who specialize in developing retail businesses in China, gathered in Las Vegas Wednesday morning to discuss China’s fast-growing consumer market, local shopping habits and major obstacles.
Sterne Agee analyst Sam Poser moderated the panel that included James Wong, president of 8co International; Pat Devaney, SVP of Stella International Holdings; Angelito Tan, owner of luxury consultancy RTG; Renee Hartman, co-founder of China Luxury Advisors; and Courtney Harold, VP of international development for Advanstar.
For proof of the country’s challenges, panel members pointed to the plights of Home Depot and Best Buy, two American giants that have struggled to replicate their successes overseas.
Both companies opened stores only to quickly shutter many doors after realizing the consumer demographic was different than their American counterparts. For instance, China’s consumers are not familiar with the do-it-yourself renovation idea Home Depot champions. As a result, store sales suffered.
One takeaway from that is to first understand the Chinese consumer and how they shop, said panelists. Retailers must complete exhaustive due diligence for 18 to 24 months before opening a store, they added.
Tan said many brands have failed in China because they assumed an understanding of the consumer.
“You have to put in the time, either by yourself or with a reliable partner,” he said. “You need to find that white space, where there is opportunity. You can’t assume because consumers love us here or in Japan that the Chinese consumer will love us the same. You have to come up with localized positioning.”
Added Harold, “Know your entry strategy. Are you going to do your own thing? Will it include e-tail? Are you willing to invest? The barrier to entry is rising. The consumer is so different there. They don’t shop like Westerners shop.”
For example, China’s consumers shop by brand, as opposed to category. And many of them are accustomed to haggling over product prices.
Once retailers bow a location, panelists advised, they should be open to altering their strategy based on what’s working.
Devaney noted that Stella International constantly tweaks its marketing, as well as the opening and closing of stores. “You have to be on the ground and be on your toes,” he said.