My keynote at the China Department Store Summit
“We must learn from our American friends.” I kept hearing this during my recent stay in Beijing, from retailers of all sizes. The China Commerce Association for General Merchandise (CCAGM) had invited me to deliver a keynote address at their 8th annual China Department Store Summit, which draws around 300 executives from China and surrounding countries. I spoke about the state of retail in the States and the characteristics of US retailers who are thriving in the downturn. I was one of several “state of” keynotes, including Japan, Korea and Malaysia. (I was terrified, of course — but I shouldn’t have worried. I had them at “Ni hao.”)
Turns out, we spoke the international language of retailing. Chinese department stores are facing the same issues that US retailers are: maintaining customer service standards under economic pressures; differentiating product from the competition; competing against foreign retailers entering the market. American brands have cachet in China, and they know that in order to attract these brands to their stores, their customer service standards must improve. They understand that assortment localization is one of the best ways to differentiate as a department store retailer. And they know that Chinese retailing must reinvent itself to defend against the onslaught of foreign stores who have identified the fastest growing middle class in the world. China is the last best hope for the comeback of the “Aspirational Shopper.” (I spent some time in a luxury mall, Shin Kong Place. Coach is rocking over there.)
Coach in Beijing
So when I talked about how Nordstrom modified their product mix to quickly capture market share in the downturn, I saw nods of approval in the audience. When I talked about Kroger‘s disciplined approach to customer loyalty, they took notes. When I talked about Amazon.com‘s commitment to innovation, they took a picture of the slide. And when I spoke about all the cool stuff that Best Buy is doing both here and in China to drive sales using mobile, their faces lit up with recognition. (The US is really behind when it comes to mobile, but NRF is trying to move the needle on that a bit.)
They asked what the biggest challenges would be for the future of department stores in the US. I asked one of my traveling companions, Kimberly Grabel (SVP of Saks Fifth Avenue), what she thought, and her first response was “differentiation.” It will be interesting to see how China department stores like Beijing Wangfujing develop their differentiation models in the face of growing global competition. I know one thing for sure, it’ll develop quickly. Everything over there is changing at lightning speed.
One thing is permanent, though: our Chinese friends have great respect for NRF, and NRF has great respect for Chinese retailing. In fact, the NRF Foundation launched an exciting new venture in China this past December – certification and training for store managers. Kathy Mance (the NRF Foundation’s Executive Director), Kimberly Grabel and I got to attend a training class, held at the headquarters of one of our partners on the ground, the China Chamber of International Commerce (CCOIC). It was thrilling to see the fruits of NRFF’s labor made real in a classroom setting. (We felt like rock stars. Well, rock stars in suits.)
To our new friends: xie xie for the memories. And to the rest of the world: expect to meet our new friends at the 100th Anniversary of NRF’s BIG Show, this January in New York. CCOIC will be sending a group to the Show, to learn more from their “American friends.” I look forward to giving them the same warm welcome when they visit New York as they did when I traveled to Beijing.
3 Comments
As my first exposure to retailing in China, I find it interesting that the Chinese are curious about learning to be competitive in a controlled economy. Sounds like a tremendous opportunity for NRF to meets in mission in being the global voice of retail and offering value to its retail members – in whatever country they may operate.
The Chinese market is certainly not as monolithic as it might appear from outside. After a few decades of artificial homogeneity, Chinese consumers are seeking their own expression through shopping (among other things), and giving birth to different segments like any other dynamic consumer market.
Recognising this, Chinese retailers are looking to evolve their own positioning to clearly distinguish themselves from competitors, and to meet the needs of specific segments.
Ms. Brasse’s comment about copious note-taking is interesting, but there’s a twist. These retailers are also evolving from blindly (and often poorly) copying western business models to intelligently adapting specific components, practices, processes to the business environment in China.
I’ve been fortunate to conduct a graduate seminar in International Retailing at a university in Beijing for the last five years. Over that time, the change, not only in the retail landscape, but more importantly in the sophistication of the customer base has altered tremendously. Not only do some segments of the population appreciate foreign brands, particularly those between the ages of 25-35, they covet them. Yes, aspirational buying has definitely arrived. The question of whether they shop in a department store setting is a different one entirely. The draw is the brand name and as such, department stores will need to sell themselves as entities to the consumer base.