House of Fraser is planning to open 30 stores in Greater China over the next two to three years following the successful launch of its first store in the country, Drapers can reveal.
The 425,000 sq ft store, spread over six floors, opened at the end of December in the central business district in Sanpower Plaza, Xinjiekou, in the city of Nanjing, in Jiangsu province. The retailer said trade has been “very encouraging” so far.
Ka Keung (Joe) Wong, a director at HoF’s owner, Sanpower, said the expansion would depend on securing the right locations for the stores. It is eyeing all of Greater China, including Hong Kong and Taiwan.
Speaking to Drapers at the Sanpower headquarters in Nanjing last week, Wong said: “It has to be relevant regionally. It has to be the right location and the right brands for the market. We looked at Shanghai and Beijing but we couldn’t find a location that would work. In Nanjing we found the perfect one.”
The stores will be adapted for each local market with a different layout and merchandise mix. Where possible they may include adjoining stores for toy store Hamleys and gadget retailer Brookstone – both also owned by Sanpower – as is the case in Nanjing.
“There is a real synergy between the retailers in terms of consumer traffic, as it is a one-stop solution for the whole family,” added Wong. “But it depends on opportunity and location. We need to think globally but work locally and make sure each department store works for the local market.”
The next HoF China is scheduled to open in July in Xuzhou, also in Jiangsu. A third is planned for Chongqing, although a date has yet to be confirmed.
HoF is targeting middle-class customers aged 25 to 45, explained Wong: “It’s a massively growing sector in Chinese retail. The high-end or luxury market is for the 35-to-65-year-old shopper, so there is a gap to cater for that significant proportion of the population.
“A lot of young people who have studied in the UK and Europe have been exposed to contemporary brands and trends. We are targeting those consumers who want something fashionable but at an affordable price.”
An entertainment and lifestyle offer is also crucial to the store, and there are several restaurants in prominent locations throughout, many of which overlook the central atrium. A virtual reality area with flying and shooting games, and karaoke is located on the fifth floor.
“It’s not enough just to offer products, we want to create somewhere where people want to meet their friends and hang out,” said Wong. “To ensure shoppers keep coming into store we need to offer them something they can’t find online. We have to have the right shopping environment, experience, inspiring visual merchandising and excellent customer service. Bricks-and-mortar has the value to survive if we do it right.”
The addition of eateries and entertainment will feed into HoF’s five-year plan for the UK market, which will be revealed in February.
HoF China carries more than 300 brands, split between wholesale (including MM6, Vivienne Westwood and Lyle & Scott), own brand (including Linea and Biba, which is called MyBiba in China) and concessions (including Ted Baker and Barbour). UK brands Radley and The Cambridge Satchel Company made their Chinese debut through the store.
The mix of wholesale, own brand and concessions is a first for the Chinese market, said Wong: “HoF is a unique proposition in the Chinese department store market as the rest work from a concession-only model. We have control over what goes in store so we can make sure everything is right for the image of HoF from the customer experience to the pricing, product and the visual merchandising (VM).”
He added: “There is a real problem with ‘me too’ stores in China. As they are all offering the same brands, it can be quite boring. HoF is a solution to this challenge. It is the perfect marriage with Sanpower. HoF has the British style, brand resources, and strong VM. On the other hand Sanpower is a local company with a loyal following, and a deep knowledge of the Chinese market and its consumer.”