Local authority

China is now the world's biggest fashion market with new homegrown brands driving sales through omni-channel experiences and online platforms.

By 2020 China is also set to be the largest overall retail market in the world, overtaking the US, with sales exceeding $6 trillion (USD). With the ever-growing upper middle class, the intense spending power of the nation is forcing fashion retailers to find their unique place in the market.

Polarising luxury and value
Chinese spend is known to bifurcate the shopping experience, with consumers splurging on visible luxury brands to show off to their peers but also looking for value from brands associated with everyday use.

According to Bain, in 2018 domestic luxury sales growth increased 20%, with China's luxury purchases representing 33% of global spend. Chinese fashion designers and niche brands are growing in popularity, with 45% of affluent consumers intending to purchase locally designed products that share an authentic "Made in China" story.

Although traditionally unconventional, luxury streetwear is another frontier, targeting young consumers seeking self-expression, comfort and the `coolness' factor. Globally China and South Korea tie for the highest average monthly streetwear spend per person, which is evident with venture capital funding placed into Chinese-based streetwear platforms, like Yoho! (seen above).

Chinese brands also have a strong hold over value fashion, with Taobao distributing affordable fashion directly online, in many areas bypassing the entire physical retail chain. Other affordable fast fashion brands, such as Peacebird, offer multiple value lines that are targeted towards less affluent customers in suburban cities.

Mid-market is not lost
Despite the difficultly that some international mid-market retailers have had relating to Chinese customers, new entrants still remain optimistic. According to Inside Retail Asia, in 2019 fashion retailers Ralph Lauren, Ted Baker, and Uniqlo geared up for expansion across the mainland, while La Vie en Rose, Naturalizer and Sam Edelman opened new ventures. Brands are partnering with local companies to navigate cultural norms, and many have lofty goals to grow sales by double digits and expand into tier two and three cities.

Seamless experience from on to off-line
More than any other mature market, shopping for fashion in China has been driven through online platforms, most typically on a multibrand platform. To remain relevant both on and off-line, Tmall opened its first Experience Centre in Shanghai at the upscale K11. Through partnerships the centre constructs experiential popups through art, visuals, and interactive performances, directly connecting with customers on a personal level.  American footwear retailer Vans was one of the first brands to interact with customers with an exhibition dedicated to streetwear.

The Taobao platform has also opened a similar physical store, TaoStyle, which gives customers an in-store experience to look and touch clothing from brands previously only sold online.

The opportunity for western fashion retailers remains in China, but competition from local brands is intensifying. To succeed, brands must have a clear understanding of differing consumer segments, the local competition and be able to identify the best channel to market.

Elisabeth Okrainec