Guiding Lane Crawford’s continued expansion, president Andrew Keith is giving a leg up to British brands looking
to break into China.
Talk among Hong Kong professionals has of late been dominated by two things: the Chinese economic slowdown and the corruption scandal engulfing the mainland, both of which are hitting the region’s luxury businesses.
Anecdotally, some brands - particularly those operating in the jewellery and watch markets - are expecting to see a serious drop-off in growth as a result of the Chinese government’s move to stamp out the widespread practice of business leaders gifting public officials with luxury goods following numerous instances of corruption.
The country’s economy has meanwhile become relatively sluggish, growing 7.5% in the second quarter of 2013, continuing the longest run of sub-8% growth in at least 20 years. In the UK, that level of growth would still be something to shout about, but it means that Chinese businesses can no longer rest on their laurels; if they are going to succeed, they have got to pull out all the stops.
Department store operator Lane Crawford, which has been in business for 163 years and is seen by many as a vital stepping stone into the Chinese market, has in its time shrugged off revolutions, handovers and more than a few downturns. Andrew Keith, president at Lane Crawford and its luxury sister chain Joyce, does not appear fazed by this latest development.
It helps that, because most of its shoppers are self-buying, the group’s exposure to the gifting scandal is minimal. It also helps that it is outpacing the wider economy and has ambitious expansion plans ahead.
As a private company Lane Crawford doesn’t publish any results, and Keith, who has worked for the group in various roles since 2000, gives little away other than confirming that stores are reporting double-digit sales growth, which he modestly describes as “meeting expectations”.
Online, the business is “exceeding expectations” with monthly rises of 150% in sales, around two-thirds of which are to consumers in Greater China, with click-and-collect also showing healthy signs of growth.
As with so many businesses, Lane Crawford has been able to determine from its online growth the geographical areas where consumer appetite could sustain further stores, with this month seeing the launch of the company’s Shanghai store, its second in mainland China and fifth overall. At 150,000 sq ft, the store is double the size of its Hong Kong flagship in the IFC mall and will boast the largest assortment of shoes and accessories in Greater China (“if not Asia”, according to Keith), in a 25,000 sq ft space that will feature everything from Uggs to Christian Louboutin.
The womenswear department will stretch across 40,000 sq ft, and the store will also feature a “platinum suite” for card holders, who will be indulged with trunk shows, product launches and intimate dinners.
There will also be a platinum suite just for men, as well as made-to-measure services, and a menswear floor that will combine gadgets and homeware that should appeal to the modern Chinese man.
“Men here shop for themselves and they quite enjoy shopping together, so we wanted to acknowledge that and make sure they had a real space,” says Keith.
The ground floor will be home to a food and beverage area that will also act as an “art hub”, hosting installations by local and global artists.
Following the launch of Shanghai, Lane Crawford will open a 100,000 sq ft store in Chengdu next spring. The Sichuan capital is home to more than 14 million people, many of whom are, thanks to booming tech and pharma industries, young and hungry for more high-end product.
Along with Lane Crawford’s existing Beijing site, these two stores will be the chain’s “anchor cities”, from which it can further grow its online business. “In most Chinese cities we don’t have the luxury of space,” Keith says.
But what Lane Crawford does have the luxury of is the pick of the brands. With so many Western companies clambering to enter Greater China, a Hong Kong-based business with the size and status of Lane Crawford offers a more simple entry point to the market, instead of what could otherwise be a messy and complicated affair.
And crucially for UK businesses, with the proliferation of megabrands such as Louis Vuitton and Gucci throughout China, Lane Crawford is taking a more exclusive approach to the labels it buys in. Although it has all the big names, many of whom have standalone stores close to the IFC mall flagship in Hong Kong, Keith stresses the importance of offering something different.
“Brands that have been widely distributed are no longer seen as aspirational,” he says. “Customers’ taste levels have become more sophisticated, they are more globally informed, and they are looking for product that is not widely available.
“Exclusivity is not a prerequisite for us but it does guide a lot of our decision-making around buying new brands. We invest heavily in marketing, shoots, providing editorial and training staff to sell the product, so we are working with a view of having a long-term relationship.”
British-born and Kingston University-educated Keith says there is a global mix to the brands that Lane Crawford’s 85-strong buying team brings on board. Whistles is one of its recent additions, having joined the line-up for autumn 13, with in-store editorial explaining what it is and why it has been included.
“That’s a good example of the type of thing we’re doing - it’s just one of a number of new brands we bring in on a regular basis.”
At premium trade show The Hub, held in Hong Kong last month (see p40 for Drapers’ report), British brands were eager to speak with buyers from the department store, with many telling Drapers just how essential the store was - or would be - to their Chinese strategy.
Menswear brand Penrose London has been in Lane Crawford’s Hong Kong stores for five seasons, and commercial director Michael Whitby-Grubb said he was “blown away by their merchandising, their understanding of the market and what works there”. He is now hoping to roll out into Beijing and Shanghai. “If you’re going to have a partner in China, I’d much rather be with an established business like Lane Crawford,” he says. “It’s a great window into China.”
Chris Amoroso, sales executive at resortwear brand Orlebar Brown, echoes this. “They are beautiful stores, wonderful retail environments with highly trained staff supported by great buying teams,” he says. “Ask anyone in the Western world who you’d want to work with in Greater China and Lane Crawford would be their choice.”
Orlebar Brown, which has been in two of Lane Crawford’s three Hong Kong stores since 2009, is also launching in Shanghai and Beijing. Amoroso says he is “keeping a keen eye” on the Chengdu development.
“They were one of our first 30 accounts when we launched the brand, and they are the ones who introduced us to the region. They are an integral part of our strategy for China,” he adds.
As well as brands that are new to the Chinese consumer, Lane Crawford is also looking to unearth emerging local design talent, giving shoppers something entirely new while also supporting the country’s nascent creative scene.
The Shanghai store will launch three contemporary designers this autumn: Helen Lee, a womenswear designer who presented her collection at the city’s fashion week this spring; Central St Martins-trained Christine Lau, whose Chictopia label is four years old but still emerging; and Ms Min by Liu Min.
“Increasingly there is a sense that China should nurture its creative talent and our role in that is very important,” Keith says. “There is huge interest now in establishing what China’s modern voice is, [and] there is a growing national sense of creative pride.”
Of course it would be wrong to see a nation of 1.36 billion people (and counting) as homogeneous in their tastes, and Keith notes the difference in lifestyle, cultural interests and general taste between Beijing and Shanghai consumers.
But running throughout the country is a pattern of increasingly adventurous consumerism - “towards a sense of discovery”, as Keith puts it - and this is happening at a pace that makes even the dynamic Hong Kong resemble the relatively staid and mature markets of the West.
The Lane Crawford Academy
As part of Lane Crawford’s Shanghai launch it has put 400 new members of staff through its academy, a six-week training course designed to instil the department store’s values - and those of the brands it sells - into every shop assistant. The course includes classroom lessons, on-and-off job training and e-learning programmes. “You have to be able to train your own talent and get them in line with what you want to be,” says Lane Crawford president Andrew Keith.