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Category: Fashion

Retail News Asia is committed to providing both local and global retailers with the latest Fashion news throughout the Asian market. This on a daily base.

  • Parkson Vietnam shutters store

    Parkson Vietnam shutters store

    Parkson Vietnam has closed another of its stores as it continues to struggle to make its business profitable.

    The Malaysian department store operator has closed the 19,000 sqm District 7 outlet in Ho Chi Minh City, a multi-story department store beneath a commercial tower.

    The store opened in April 2011 after the company invested US$5 million in a new fitout of a small shopping mall bought from Kim Cuong Company.  But the store has never attracted sufficient customers to make it viable, despite a cinema on the top floor. The building is two blocks from the giant Crescent Mall shopping centre which opened in late 2011 in the largely expat-populated suburb some 20 minutes drive from downtown Ho Chi Minh City.

    The mall reportedly closed on Monday.

    Parkson did not give local news media an explanation for the decision – or why it persevered with the site for five years before pulling the plug. But the company did say the closure would not affect the other eight stores in its network, five of which are in Ho Chi Minh City.

    In January last year, Parkson closed another store opened in 2011, Hanoi’s Keangnam Hanoi Landmark Tower. That followed a dispute with the building’s owners over rent which Parkson said was set at a level sales could not sustain.

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  • M&S, Debenhams stand most to gain from BHS breakup

    M&S, Debenhams stand most to gain from BHS breakup

    Only the very bravest of investor should consider retaining BHS in its current dilapidated state. But if such a buyer cannot be found, and a BHS breakup ensues, with the store estate sold to other retailers, Marks & Spencer and Debenhams would be the main beneficiaries.

    As the deadline for bids for BHS looms, hopes are rising that a buyer can be found for the entire store estate and that its 11,000 employees can be protected. Even if such a buyer is found, it is likely to have to conduct major surgery to revive the moribund brand. Verdict data shows that it has consistently lost market share to its competitors in all its key sectors, and its weak multichannel offer, dated brand and underinvested store environment mean any buyer would have to think seriously about retaining the BHS name.

    BHS’ clothing proposition has become ever more irrelevant over the years, and many of its clothing shoppers have already defected to more agile competitors, leading to its market share more than halving in the 10 years to 2015.

    BHS clothing market share 2010-15

    BHS’ predominantly 45+ shopper base enjoy the convenience of shopping for a disparate variety of products under one roof, which means that department store rivals such as Debenhams and M&S would be first in line to benefit from its fallout. The grocers should also receive a much-needed boost given the similarity of their clothing proposition to BHS in terms of design and affordability.

    This is backed up by looking at where BHS clothing shoppers also tend to shop (from Verdict’s March 2016 How Britain Shops survey of 10,000 consumers) – M&S is the clear leader, and should be able to translate this into an increase in market share.

    Where BHS clothing shoppers also shop for clothing

    Clothing specialists at the value end of the market, such as Matalan, Primark and New Look are also likely to benefit; as are online pureplays such as Amazon – albeit to a lesser extent.  It is, however, those retailers that make a concerted effort to draw in BHS shoppers, through customer acquisition initiatives such as targeted promotions or local marketing campaigns that will see the maximum gains.

    BHS homewares market share 2010-15

    BHS’ unopposed trudge toward mediocrity has had a significant impact on where its remaining shoppers are likely to now go for homewares purchases. The retailer’s brand positioning means its shoppers will have also shopped at the ever growing homewares discounter set, like B&M and Home Bargains. However, it is Amazon and Argos, both value focused retailers with modern and extensive delivery/channel offers that have been the main beneficiaries of disaffected BHS shoppers in the past and will undoubtedly be so in the future.

    High street retailers M&S and Debenhams are also in line to see a marginal upswing as high street focused customers seek out alternatives. The former has the most similar customer profile to BHS and hence is more likely to be a first choice. However, M&S has made some strategic moves to appeal to younger, more fashion-conscious homewares shoppers in recent years, therefore BHS’ customers may be a little surprised about what is on offer when they visit, aside from its core bedding and bathroom offer.

    Living room textiles: Home Retail Series market share 2015

    BHS is currently strongest in softer, more aesthetic categories, such as living room textiles and lighting, as opposed to functional products such as cookware. Therefore its demise would be unlikely to have a significant impact on the grocers. Conversely, Dunelm and Next share a similar emphasis on textiles and design-led categories, and as such, their already strong performance in the homewares category is likely to be bolstered further should BHS disappear altogether.

     

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  • Shoe manufacturer Le Saunda down at heel for fiscal year

    Shoe manufacturer Le Saunda down at heel for fiscal year

    Le Saunda Holdings Limited – a company primarily engaged in the manufacture and retail of Le Saunda ladies and men’s shoes, CNE footwear (an O2O brand) and Linea Rosa high-fashion footwear brand – announced a consolidated profit of RMB122.1 million (MOP149.42 million) for the fiscal year ending February 2016, in a filing on the Hong Kong Stock Exchange. This represents a 35.5 per cent year-on-year drop for the fiscal year compared to 2014/2015’s RMB189.3 million.

    The group has a total of 896 stores, located mostly in Mainland China, with 12 operating in Hong Kong and Macau.
    Sales in Hong Kong and Macau plunged 29.2 per cent year-on-year, at RMB110.7 million as compared to the RMB156.4 million seen in the previous fiscal year, causing a change in the Hong Kong and Macau business units ‘from profitable to making loss’ – a loss of RMB10.596 million – notes the filing. Over the fiscal year eight stores in the two SARs were phased out, noting that ‘after the shop rental in Hong Kong adjusts back to a normal level, the opportunities of opening new stores would appear again.’

    The group note opines that it is ‘the pattern of consumers’ behaviour that has been changing,’ despite the fact that ‘urban disposable income is actually on the rise […] ongoing weakness is noted in consumer spending.’

    For the fiscal year in question the group’s total revenue decreased by 3.7 per cent year-on-year to RMB1.621 billion. For the Macau segment total revenue amounted to MOP16.52 million, a 47.4 per cent drop compared to the MOP31.41 million registered in the previous fiscal year.

    A total drop of 0.9 per cent was seen in the group’s retail sales in Mainland China, amounting to RMB1.51 billion, which was noted as ‘better than the overall decline in the Group’s revenue,’ in the filing, attributable to a ‘stable loyal customer base brought by the Group’s reputation of products with “sophisticated styles with top quality”,’ as well as ‘consistent moves to close underperforming stores and open new ones to drive sales,’ complimented by the ‘launch of popular casual designs with elements favoured by young people to meet the market demands . . . [and] . . . a higher ratio of repeat purchases benefiting from innovative marketing approaches on both online and offline channels to facilitate close interaction with VIP customers.’

    Future predictions note that ‘the Group anticipates the lacklustre sentiments prevailing in the retail market will last for one to two years’ and that ‘retailers will still face enormous challenges ahead.’ To conquer this, the group will focus on: ‘formal footwear for the medium to high-end market’ as well as focusing on the product mix to ‘explore the young-line products with unique functional and fashionable items’. La Saunda also seeks to transform itself from a vertically integrated offline retailer to ‘an omni-channel operator which is highly data-oriented,’ as well as to ‘introduce a new retail model with swift O2O deployment,’ notes the filing.

    The group employs 5,286 people, of whom 150 are based in Hong Kong and Macau.

  • Takeover bid of $196m. for Eu Yan Sang

    Takeover bid of $196m. for Eu Yan Sang

    A takeover bid for Singapore-based Eu Yan Sang has valued the traditional Chinese medicine retailer at about S$269 million (US$196 million).

    A consortium comprising Singapore state investment company Temasek Holdings’ unit Blanca, Tower Capital TCM Holdings and some members of the founding Eu family have made the final offer of 60c Singapore a share.

    About 63.2 per cent of shareholders have committed to accept the offer, including members of the Eu family, Aberdeen Asset Management Asia and First State Investment Management (UK), says Eu Yan Sang.

    Tower Capital founder Danny Koh says the consortium’s offer is attractive “considering the company’s recent financial performance and the current challenging environment”.

    Eu Yan Sang launched in Malaysia in 1879, expanding to more than 250 outlets in China, Hong Kong, Macau and Australia.

    Its third-quarter net income slumped to S$286,000 from S$5.45 million a year earlier, and its slide became evident in August when it lost US$3.6 million.

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  • Wasedaya Shirt brand returns, but not in Japan

    Wasedaya Shirt brand returns, but not in Japan

    A Japanese businessman has revived the established Japanese shirt brand Wasedaya Shirt – in Vietnam.

    His first outlet is in the Aeon Mall Long Bien in Hanoi, run by Japanese retail giant Aeon and its subsidiary Aeon Mall.

    Founded in 1903, the Osaka-based company provided custom-made shirts to Japanese consumers for more than a century. The founder was a graduate of  Waseda University in Tokyo.

    However, the tailored shirts gave way to low-priced shirts, and in 1998 the company became a subsidiary of a major Japanese shirt company. Wasedaya Shirt went out of business in 2009, but trading house Itochu acquired the brand and is behind the Vietnam comeback with its textile subsidiary Prominent (Vietnam).

    “I’d like Vietnamese customers to know more about Japan’s high-quality shirts,” says Hiroshi Morita, who as president of Prominent decided to revive the label.

    Its shirts are made from fine Japanese fabrics at a factory in Japan, and carry a price tag of 1.2 million dong ($54) each. Contemporary features have been added, such as photocatalyst-based deodorant and anti-bacterial technology in collars and cuffs to suit the humid climate in Vietnam.

    Itochu set up a capital and business agreement with Vietnam Kowil Fashion last year, which has helped Wasedaya Shirt obtain data about Vietnamese body shapes and preferences.

    A second Wasedaya Shirt has been opened in Ho Chi Minh City, and Morita hopes to expand its sales network to other parts of the country as well as Cambodia – and is thinking about reimporting the shirts to Japan.

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  • SSI Group profit dives

    SSI Group profit dives

    SSI Group saw its profit slashed by more than half – or 54.5 per cent – to P122 million (US$2.6 million) in the first quarter, from the same period a year ago.

    The Philippines’ largest specialty store retailer recorded a 7 per cent increase in revenues to P4.3 billion in the first quarter of 2016 – outperforming forecasts after the group added Mont Blanc to its brand portfolio and increased its network by 29 stores, SSI said.

    “SSI posted better-than-expected sales growth during the first quarter of the year as we leveraged on the strength of our brand portfolio and our store network,” said SSI president Anthony Huang.

    In the first quarter, SSI was operating 117 brands and 775 specialty stores covering more than 146,000 sqm, a 6 per cent year-on-year increase in the company’s retail footprint.

    “Through the rest of the year, we will continue to focus on top line growth and on maximizing the efficiencies of our store network,” said Huang.

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  • Babyshop mulls major GCC expansion to reach 270 stores in 2016

    Babyshop mulls major GCC expansion to reach 270 stores in 2016

    Babyshop is looking to launch 25 stores in Saudi Arabia alone in two years, says Vinod Talreja, CEO of the retail unit under Dubai-based Landmark Group.

    Retail sector data from various markets, including the US, highlights the current global economic outlook. The markets in the MENA region, the UAE in particular, have already been hit by the dip in tourist flow. What are your projections?

    The retail sector in the MENA region has witnessed strong growth over the years, driven by strong economies, high disposable incomes and increased population, and will continue to see growth in the coming years.

    Having said this, in business, there could be periods where markets and situations could be a little slower than the other highly aggressive times. Such situations only give us retailers the opportunity to fuel innovation and strive even harder, working towards improved business growth using various different channels and activities that are in sync with the objectives of the business. Enhancing value propositions while closely catering to customers’ needs and requirements is one way of dealing with situations such as these.

    At Babyshop, we are continuing to expand. We are a company that has been expanding consistently for the past many years and our growth plans will not be affected by any short-term market challenges, as our business plans are laid out with long-term future strategy in mind.

    In terms of tourism to the region and to the UAE in particular, the upcoming Expo 2020 will definitely propel economic growth, thereby boosting the overall retail sector.

    The emirate is targeting 20 million visitors per year by 2020 and this will clearly have a tremendous impact on the sales of every category, proportionate with this massive number of visitors and thus taking retail to new heights.

    In 2015 alone, Dubai attracted more than 14.2 million overnight visitors, recording a solid 7.5 per cent increase over 2014, which is double the United Nations World Travel Organisation’s (UNWTO) projected three to four per cent global travel growth for the same period.

    These numbers clearly reiterate that the region is geared and well-positioned for the expected huge numbers which in turn will surge sales to significant levels across, thus fostering growth and invigorating the local economy.

    Vinod Talreja, CEO Babyshop

    Babyshop, as well as its parent group Landmark, has an impressive footprint in the GCC. Although it has a few stores in the regions beyond MENA, the presence there is not much felt.

    Is it that the mid-market retailer is not so optimistic about those markets or is it that the “comfort zone” in the home region pulls it back?

    Babyshop, started in 1973, has 235 stores across 19 countries in the MENA region. The number is expected to reach 270 by end 2016. The brand is also well on track to achieve its target of 300 stores by end 2017, expanding into regions beyond the GCC.

    With a strong retail sector, Saudi Arabia today stands as our largest market, with 116 stores, followed by the UAE with 47 stores. We also have significant presence across the rest of the GCC and Egypt, Jordan, Lebanon, Iraq, Yemen, Libya, Kenya, Nigeria, Tanzania, Pakistan, Thailand and Kazakhstan.

    With a long-term vision of having significant footprint across the world, Babyshop has plans to expand into three new territories in 2017, with a major focus on the GCC, predominantly Saudi Arabia; Africa, with an emphasis on North Africa; and Thailand.

    We are extremely optimistic about our foray into newer markets in the MENA region and beyond, where retail sales are expected to continue and the retail space pipeline remains strong. These markets continue to be hotspots for the growth of retailers at both the regional and international levels.

    In a clear indication of the fundamental role the brand plays, this noteworthy presence of Babyshop and the aggressive expansion plans beyond this region into newer territories confirms its leading position at the frontline of the retail industry.

    What factors do you consider when choosing a new market for entry?

    Entering a new geography is a very important decision any brand can make and requires significant effort and commitment to implement an appropriate entry plan. In fact, target-marketing selection is a key part of our overall strategy at Babyshop and typically involves a significant in-depth analysis to understand various factors.

    Keeping in mind the vision and mission of Babyshop, the key factors that we consider before entering any market are the size of the market, its growth potential, the consumers and their purchase patterns and habits, competition, ease of accessibility to the local residents and, most importantly, the capital investment required to enter the chosen market.

    Is India on the list of new markets that you will be entering as part of your expansion plans, bearing in mind that it is going to be one of the fastest-growing economies this year?

    Our expansion plans set for the coming years are focused on the GCC, Africa and Thailand. These are highly favourable regions, with continued backing and support of the local governments, increased business prospects and growing population.

    As per AT Kearney’s Global Retail Development Index 2015, with a population of 30.8 million in Saudi Arabia, total retail sales grew at a CAGR of 7.7 per cent during 2010-2014 to reach $103 billion. In the next two years, we are looking to launch 25 stores in that market alone.

    India is currently not on the cards; however, with the market being a promising retail segment, we might consider it within our strategy in the future.

    Is franchising in retail by regional brands a new direction that is being witnessed? Landmark is seen to be taking the lead on this. How is Babyshop doing this?

    Franchising in general is just another way of reaching out to larger and booming retail segments, while being able to respond to local tastes, the changing needs of consumers and catering to distinct consumer groups by offering them a different product mix of high-quality products.

    Today, we are present in Nigeria, a market that we tapped into in January 2016 in a franchising model with Artee Group, along with Splash and Lifestyle, the other leading fashion and lifestyle brands of Landmark Group. We also have a presence in Thailand under the same model with Robinson, the exclusive distributor for Babyshop products in the market, as well as in Kenya, where The Junction and Sarit Centre are a franchise held with Deacons, a leading retail company in the East Africa region.

    The fresh approach adopted for the brand has showcased incredible success so far with great consumer feedback garnered. In Thailand alone, we plan to open ten stores over the next year.   We will be continuing to launch in various other regions under the franchising model in the coming years as well.

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  • SuperGroup’s stellar performance

    SuperGroup’s stellar performance

    Against a bleak background of stalling sales from major high street players such as Next and Primark, SuperGroup has posted a stellar set of full-year results.

    Strong growth was achieved across both its retail and wholesale divisions – 24.5 per cent and 13.7 per cent respectively – contributing to total group revenue of £589.5 million.

    There was no mention of poor weather affecting fourth quarter retail sales, which were up by 29.9 per cent on a top line basis and by 15.4 per cent on a like-for-like basis, highlighting how Superdry’s transeasonal ranges are more aligned with the manner in which consumers shop than many other retailers. Consumers’ shopping habits are changing, and seasonal product drops are increasingly irrelevant when shoppers prefer to buy across seasons – a lesson several clothing retailers would do well to learn.

    No doubt, the net 24 stores the retailer opened during the year were major contributors to its full-year results, but robust like-for-like growth indicates consumer demand remains strong for Superdry’s distinctive product. 2015 was a year of product development and range extensions for the retailer, with new sports and activewear ranges added, a highly-publicised collaboration with actor Idris Elba, and greater focus on womenswear – all initiatives which have driven spend from existing shoppers while recruiting new ones.

    On a slightly less upbeat note, founder James Holder has resigned as brand & design director of the business. However, he will be creating and working exclusively in SuperDesign Lab – a design consultancy where he intends to focus on innovation to support Superdry. It’s a well-thought out move especially as Verdict Retail data shows that consumers are increasingly demanding value for money.

    Incorporating fabric and technology innovation into key product ranges such as sports and activewear, will help Superdry provide more value to existing and prospective customers – thereby positioning it well for long-term growth.

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  • Indonesia & Vietnam leading Asian beauty industry growth

    Indonesia & Vietnam leading Asian beauty industry growth

    Indonesia and Vietnam are the fastest-growing markets in the Asian beauty industry.

    According to research from Euromonitor International, Markets of the Future: ASEAN in 2020, the two countries significantly outperform the most obvious contenders, Korea and China.

    Vietnam’s beauty and personal care market experienced healthy value growth in 2015. With the developing of the Internet network and online retailing, more consumers from rural areas can buy products more easily, and it also strongly boosts retail value sales of beauty and personal care due to changing consumer behavior. On the other hand, thanks to dynamic marketing activities by leading manufacturers and media, consumers are aware of the importance of using branded products from reliable sources after many scandals of cosmetics containing toxic ingredients.

    People are willing to spend more on all types of beauty and personal care, instead of using unbranded goods, in order to protect their health.

    Asia beauty chart

    In October 2015, the draft TPP trade pact was signed, which means Indonesia and Vietnam are set to open up to other nations by removing barriers and decreasing tariffs by up to 100 per cent. As a result, it will open significant change in beauty and personal care over the forecast period such as lower pricing and more international companies entering the two markets.

    Countires across Asia were ranked by Euromonitor by actual and forecast growth between 2008 and 2018, as the chart shows.

    The data was revealed by UBM Asia, organiser of Vietbeauty 2016 at Ho Chi Minh City in August, which will showcase products from more than 150 exhibitors from Japan, Korea, Australia, Hong Kong, Thailand, Taiwan, Mainland China, Indonesia, the Philippines, Malaysia, India, Singapore, the US and Europe.

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  • Paris designs for Starbucks Taiwan

    Paris designs for Starbucks Taiwan

    Starbucks Taiwan is to feature merchandise co-created with Paris fashion designer Sophie Mechaly, the founder of the international brand Paul & Joe.

    “We wanted to give our coffee-related merchandise a unique style and attitude for summer,” says Starbucks Taiwan president John Hsu.

    Starbuck - Paul & joe 4

     

    Starbuck - Paul & joe 3

    Mechaly founded Paul & Joe in 1995, and the label now has several dozen boutiques and hundreds of retail stores around the world. Méchaly designs clothing, shoes and accessories for both men and women.

    Starbuck - Paul & Joe

    Starbuck - Paul & joeSeveral of the Starbucks merchandise designs feature a Chinchilla Persian cat owned by Mechaly. Crabs and fish also feature in the artwork to represent the beaches in the Mediterranean, near her childhood home.

    Starbuck - Paul & joe 1

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  • Fast Food Aid Tokyo seeking for long term house

    Fast Food Aid Tokyo seeking for long term house

    After a short-term trial, a pioneering pill-store pop-up called Fast Food Aid is seeking a longer-term home in Harajuku, Japan.

    Billed as the “world’s first supplement shop for fast foods”, it offered free tablets to replace nutrients missing from convenience foods like hamburgers, pizza and ramen.

    Fast Food Aid Pop-up Japan 1

    All customers needed to do was trade in the receipt from their latest fast-food purchase. The pills come along with professional advice about the health issues associated with such foods.

    Fast Food Aid Pop-up Japan 8

    With the aim of educating people and discouraging them from choosing non-nutritional meals, the shop was designed by creative director Ikkyu and Junya Sato of design studio Kaibutsu on behalf of Dohtonbori, a restaurant that sells organic, healthy fast food, reports Dezeen.

    Fast Food Aid Pop-up Japan 6

    “This shop doesn’t look like other pharmacies, but the truth is it’s an educational supplement shop,” says Ikkyu. “We opened this shop in Harajuku, where there are a lot of young people who have bad eating habits.

    Fast Food Aid Pop-up Japan 4

    Fast Food Aid Pop-up Japan 3

    “Once they get in, they are surprised with the the supplements they have to intake and understand how bad their eating habit is.”

    The shop’s window featured pill pots lined in rows beneath an illuminated sign reading “For FREE”. Inside, long shelves with more containers are mounted against wire fencing along the side walls.

    Fast Food Aid Pop-up Japan

    The designers aimed to make the space feel as clinical, combining a street fell with a “mad laboratory” atmosphere.

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  • Alibaba fake fight targets Taobao vendors

    Alibaba fake fight targets Taobao vendors

    Alibaba is tightening the rules for traders selling luxury goods on its popular online platform Taobao.

    It’s one of several measures in the ramping up of the Alibaba fake fight, which is being conducted in conjunction with Washington, DC-based International AntiCounterfeiting Coalition (IACC).

    From May 20, vendors selling luxury products on taobao will have to upload an invoice or authorisation letter from the luxury brands, for examination by Taobao, as proof it has the rights to sell the products. Otherwise the goods will be removed from the website and Alibaba says payments received for such goods can be frozen.

    “To create a healthy shopping environment with a high level of integrity and to protect the legal interests of consumers and brand owners, Taobao is gearing up to regulate sales of luxury brands’ products,” the company said in a letter to traders on May 4.

    The letter coincides with reports that Chinese government agencies plan to clean up the eCommerce market, targeting counterfeit goods and trademark violations. A campaign will run from May through November with stiff penalties for offenders caught.

    Meanwhile, the IACC MarketSafe Program, an initiative started in 2013, is being opened up so that more brands and companies can participate. The MarketSafe program provides companies with an expedited process for working with Alibaba to target and take down online listings for counterfeit goods, reports Alibaba news site Alizila.

    Set to debut later this year, the expanded MarketSafe program will be free of charge to IACC members and non-members, according to Alibaba and the IACC. In addition, brands will no longer be required to provide evidence to support intellectual-property infringement complaints. The changes “will enable a greater number and diversity of rights holders to benefit from a fair, simple, and effective IP enforcement platform,” Alibaba said in a statement.

    Accused by some Western companies of not doing enough to keep listings for counterfeit products off its shopping websites, Alibaba has been trying to enlist greater industry support, arguing the problem is too pervasive and complex for any single company to fight on its own. The Chinese eCommerce giant has for several years been working with the IACC, which has members from a wide range of industries and includes brands such as Burberry, 21st Century Fox and Apple.

    Alibaba last month became the first e-commerce company to join the IACC as an official member. Its admission to membership prompted the walkout of Michael Kors and Kering-owned Gucci.

    IACC President Bob Barchiesi said the expansion of the MarketSafe program is the result of “significant contribution and commitment from both parties.”

    “Collaboration across industries is key to addressing the issue of counterfeiting at a broader level, and this is one of the first steps towards the IACC’s goal of creating a holistic model for tackling online counterfeiting around the world,” Barchiesi said.

    Since the MarketSafe program’s launch, nearly 5000 sellers’ storefronts have been closed and banned from Alibaba’s marketplaces, and more than 180,000 infringing product listings have been removed, even through a “limited number” of brands have been participating, according to Alibaba.

    “This program exemplifies the tangible and mutual success that can be achieved when brands, trade associations, governments and intermediaries work together to combat counterfeiting,” said Matthew Bassiur, VP and head of global IP enforcement at Alibaba Group, in a statement.

    “Alibaba and the IACC, together with the rest of industry, have a shared interest in building a safe and trusted internet environment and marketplace for consumers, rights holders, and sellers,” he added.

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  • Gap CEO “weighing options” for international stores

    Gap CEO “weighing options” for international stores

    US apparel retailer Gap says it is weighing options for its international Banana Republic and Old Navy store networks.

    Gap CEO Art Peck says the company won’t reveal any other details at present, but expects to comment more when it reports its quarterly results on May 19.

    “The company is evaluating its Banana Republic and Old Navy fleets, primarily outside of North America, in order to sharpen its focus on geographies with the greatest potential,” the company said in a statement.

    Gap shares fell in after-hours trading on Monday night US time after it revealed a 7 per cent decline in same store sales in April. Analysts had been expecting growth of about 0.5 per cent after signs the retailer was slowly getting back on track in recent months.

    Total sales for the month were US$1.12 billion, down from $1.21 billion last year. First-quarter sales totaled $3.44 billion, down 6 per cent from $3.66 billion year-on-year.

    While Gap did not specifically refer to Asia in its reference to reviewing the future of its international business, the company has met with mixed results in the continent.

    While its namesake brand holds its own in most markets, the success of Banana Republic and Old Navy, the higher and lower end sibling brands respectively, have been patchy.

    Globally,  during the first quarter, Banana Republic sales fell 11 per cent versus 8 per cent last year while Old Navy sales fell 6 per cent versus 3 per cent growth last year.

    This week, Peck said the company was “committed to better positioning the business to recapture market share in North America and to capitalising on strategic international regions where there is a strong runway for growth”.

    Analysts seem in concord that Gap has lost its way in its core US market.

    “Gap used to be a core, basic, apparel retailer with low prices and great product for the family,” Deutsche Bank retail analyst Paul Trussel told CNBC Tuesday. “I think there’s other retailers that frankly have taken that place within the retail sector.

    SW Retail Advisors President Stacey Widlitz added: “If you have been into a Banana Republic or a Gap, in the last six months, you know… the fits are wrong, the stripes are wrong, the florals are wrong. This is a largely self-inflicted problem. Yes, mall traffic is down; yes, the consumer is spending less on apparel, however, if you choose not to get your fashion correct, and also not keep up with your supply chain and fast fashion, that is not going to help the situation.”

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  • Furla Stays Focused on China Expansion While Luxury Scales Back

    Furla Stays Focused on China Expansion While Luxury Scales Back

    If there’s one clear example of “accessible luxury” making strides in China’s retail industry, it’s Furla. The Italian fashion house has been in the midst of a rapid evolution, going from being known globally as a playful, youthful handbag brand to capturing China’s growing middle class with a new lifestyle-centric range of products. They’re doing something right—Furla, which recently announced it will go public in 2017, posted a 126 percent global sales increase in the past five years up to 2015, the highest since its founding in 1927. Sales were up 30 percent at 339 million euros and net profit was up 41 percent last year from 2014. China sales grew 75 percent in the same five-year period, and outgoing CEO Eraldo Poletto, who will be leaving in June for Ferragamo, says he expects China to soon become Furla’s main market.

    To capitalize on this opportunity, Furla has major plans for China in 2016. Currently, there are 44 Furla boutiques in 18 cities in China, including two new flagship openings in Hong Kong and Macau last year, but the focus for the next couple of years is expansion in “fast-developing” first- and second-tier cities in the mainland, such as Chengdu, Hangzhou, Chongqing, Shenyang, and Tianjin. Of particular note, the company is preparing to reveal its flagship store in Shanghai CITIC Square this month. Creating an e-commerce platform in China is another huge priority for the company before the year ends.

    Still, Poletto says Furla is keeping in mind the need to remain exclusive in order to remain appealing to their customer in China. Tighter household budgets may be making affordable luxury more appealing to middle-class consumers, but according Poletto, the key to Furla’s success is more complicated than the brand’s price point.

    “The definition of luxury is not to be expensive, but to be unique,” he says. “Over-expansion violates this rule, this is why many brands currently are facing difficulties and have to downsize their boutique quantity.”

    Furla’s impressive performance for 2015 was also driven by the company’s new product categories, and it’s their delivery of these as part of an Italian lifestyle brand that helps them “be successful and outstanding in the worldwide downturn,” Poletto says. This year, Furla introduced a menswear collection and women’s shoes, and continued its eyewear collaboration with De Rigo. Furla is also now partnering with Ratti for textiles, and Morellato for watches, as part of a well-rounded lifestyle selection with the modern Chinese consumer in mind that “brings Furla to a new era.”

    “The Chinese customer will always be our first priority in all global projects,” Poletto says. “We consider China to be the biggest market in the next five years, so what we’re doing now is finding an easier and more comfortable way for the Chinese customer to experience the typical Italian lifestyle, which is one of the most high-quality ways of life.”

    A screenshot of Furla's global online game for customizing a Metropolis bag.

    A screenshot of Furla’s global online game for customizing a Metropolis bag.

    Furla is also catering to the Chinese consumers’ interest in acquiring bespoke goods. It will soon be offering a made-to-order service at Shanghai CITIC Square, where customers can design their “exclusive Furla dream bag.” Already, Furla fans around the world can choose from a colorfully designed selection of leather covers to dress up their bag in tune with their personality, but now, in China, customers can also customize the stitching, edges, hardware, and custom tags on the Metropolis or the IT BAG Artesia—still at accessible price points, although this varies depending on the materials. In keeping with their Italy-focused philosophy, Chinese consumers get their bags in 12 weeks—they’re made in Italy, after all.

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  • Zara India cuts prices as rival arrives

    Zara India cuts prices as rival arrives

    To be more affordable for the market, Zara India has cut its merchandise prices by 10 to 12 per cent.

    The Spanish fashion brand took this move to coincide with the entry of rival H&M into India, reports the Business Standard.

    Established in India for six years in a joint venture with Tata’s Trent, Zara has 16 stores and is planning to open more. H&M has three stores after arriving late last year.

    Though it has become the fastest fashion brand to achieve $100 million revenues, Zara has seen a slowdown in sales growth. Its prices are reportedly 30 per cent higher than H&M. It has 7013 stores internationally, while H&M has about 3900 in 61 markets.

    Both brands are in malls in India’s National Capital Region, such as Select City Walk in Delhi and Mall of India in Noida. In Mumbai, H&M is planning to open a store next to Zara in High St Phoenix and in Phoenix Market City, Kurla, where Zara also has a store.

    Zara’s sales in India were down from 43 per cent in 2014 to 23 per cent last year, according to the Trent annual report.

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