The dynamic changing of retailing in China heats up competition
According to the Wall Street Journal and a statement by German Hugo Boss AG’s top executive, CEO Claus-Dietrich Lahrs, “it is now clear that China will be as competitive as any other market, because there is an explosion of competition”
Hugo boss who stand for fashion for men and women in the luxury sector has now 105 stores in China, and it will open an additional 60 stores by 2015. The necessity to outsmart rivals provoke new efforts, for instance to get existing customers to buy more. To reach this goal, Hugo Boss is adding women’s wear and women only sections to its China stores in order to meet the fact that women are becoming more significant consumers. The firm recently launched online sales in China and is aiming to use online data to zero in on customers, by creating newsletters on topics such as gold and other sports popular among the well off. With other words an offering with more targeted products, like polo shirts and other golfing wear. All of that should help to create brand loyalty. Another strategy is to make the latest products readily available for purchase, even on the day a fashion show is taking place, as recently happened in Shanghai, rather than giving shoppers a glance at the season ahead and making them wait to get the merchandise. The anti corruption move by the Chinese government prohibiting civil servants from using government funds to purchase luxury goods softened also the sales of Hugo Boss in an unannounced dimension, but the hope remains that the second half of the year will see a pickup.
Hugo Boss is not the only one facing the dynamic changes in Chinese retailing, and particularly in the luxury goods industry. As we remember, Burberry warned, that the company’s Asia Pacific sales are declining, the same goes for other companies engaged in the luxury business. Gucci has taken the decision to slow down the expansion of stores in China where it has now 57 stores. We recall also that there is a move to second and tier Chinese cities, because the first group of cities is almost saturated with luxury offerings. There is also a trend instead of opening new stores to renovate and refurbish existing stores.