Home > Uncategorized > 3 rules to succeed in China retail

3 rules to succeed in China retail

Here’s a great post by someone who knows how to win in Retail.

Renee Hartman, is the founder of  eno named by Fast Company as one of the 10 most innovative companies in China for 2010.

Renee says that one of the keys in winning in China is ditribution. Given lack of an existing strong distribution network brands often have to create their own. This results in many own/single brand stores. Apparently brands like Nike and Li Ning have over 6000 own brand stores across China.

She points out 3 maxims for brands operating in China.

1.) Act like a retailer – whether you want to or not : Given low expertise it is important to get down and dirty and contribute and participate in every aspect of retailing. From store design to fixture units to merchandising layouts. Great for brands that are particular about managing the customer experience down to the last mile. A unique feature here seems to be the need for marketers to provide on going support on maintaining the store design and look and feel.

2.) Retailers are not long term investors – make money for them now :  This seems to make complete sense. They are running a business so they need to maximise returns. However, I imagine unlike more developed markets their goals are more short term, and like many big brands are focused on today’s sale to tomorrow’s margin. They know more about their environment and so are far more willing to participate in brand business conversations. Rich resource to tap into.

3.) Look pretty in Tier 1 cities, make money in Tier 2 and 3: Finally, it is about segmentation. Use Tier 1 markets where there is affluence and competition to raise the brand profile, through ‘fashion street’ retail. It’s going to cost more for not adequate immediate returns.  But use the size of the country to generate the volumes and thereby the revenues.

Renee goes on to say that while these maxims are meant for single brand operators , the essence is still relevant for categories that operate in multi brand outlets like electronics and health and beauty. In these categories the challenge is more around getting noticed amongst clutter .

So to win in China it is important to assume nothing and start with the basics of building your retail infrastructure ground up, recognise that retailers are great business men, not brand ambassadors and tier the approach to the type of city.

All good advice and in detail here.

Wonder how different this is in the other developing economies.

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