While growth in the UK stagnates, retailers are increasingly looking overseas to build their top line – but to succeed you need to do more than transplant the formula to another country.
China has been on everyone’s agenda for some time now – earlier this month it released better-than-expected GDP figures and even though the country’s growth may not be what it was four years ago, there can be no argument that compared to the western world it presents a golden opportunity.
The luxury sector has, of course, made hay while the new breed of Chinese multimillionaires are shining. But in the mainstream sector others are also keen. Philip Green is eyeing the country up for future Topshop expansion, for example – while closing stores in the UK. Over at Asos, Nick Robertson similarly has plans afoot for a Chinese-language site this year.
But it doesn’t work for everyone, as today’s news about Marks & Spencer missing its internal targets by up to 30% shows. While there is much to be said for exporting “British cool”, or perhaps more in M&S’ case British heritage, businesses need to tailor their offering to this vastly different market to ensure it doesn’t get lost in translation.
One industry source indicated that M&S, however, had gone into the country with the mindset of an old-fashioned colonialist. The retailer had used the same Western models it uses for its ad campaigns here – including, I understand, 5ft10 model Lisa Snowdon. My source tells me people were simply put off by marketing that made the retailer seem irrelevant. But the produc wasn’t right either - sizes and colours had not been adapted to the local market. Prices were too high for a mid-market offering.
Some businesses have made the decision that launching into China is not the right move for them – certain value players, for example, who recognise that they can’t compete on price against domestic retailers.
But this is not the case for M&S, which can still make it work if the management adapt the business to the market’s needs. The middle class is ever-expanding, with a disposable income at their fingertips and a government encouraging them to spend it. With 14 stores already in the country, M&S should be well placed to reap rewards.
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