From Disney stores to Legolands, Starbucks Roastery to Taco Bell China, Shanghai has really attracted a rojak of multinational corporations into the retail scene this year.
After opening a flagship store in South East Asia, Singapore, on 18 Nov 2016, premium lingerie brand Victoria’s Secret is expected to open not just one but two stores in China this month. The first Chinese Mainland flagship store opens at Lippo Plaza, Huaihai Road, Shanghai on 23 Feb 2017. The other store will soon be opened in Chengdu.
“Victoria’s Secret store, together with some other new commercial projects to be launched this year, will reinvigorate the commerce environment of Huaihai Road and help it to restore its former glory,” said Chen Yong, director of the Commission of Commerce for Huangpu district, at a media briefing on Thursday.
A video from the “Angels” was posted on Victoria’s Secret (VS) Weibo page, indicating that they will be flying down on March 8th to greet fans.
Earlier in 2016, Martin Waters, L Brands International President mentioned: “I think it will announce our arrival in China in a very significant way, and should be the beginning of an enormous business for us.”
Taking over the 20,000 square foot retail space that Louis Vuitton used to be in, the brand only started with a series of beauty and accessories products in their stores back in 2015. With their first fully-stocked retail store of lingerie, fragrances, and accessories, it might spark off new Liu Wen wannabes and inspire many upcoming Chinese supermodels.
According to Euromonitor, China’s retail market for women’s underwear reached 139 billion yuan (US$20.1 billion) in 2016 and is expected to have a retail value of US$25 billion by end of 2017. It will continue to grow to US$33 billion by 2020. This is the key reason why the brand is bringing its entire range including Victoria Sports and PINK to meet the market’s demand. This move ensures that women in their late teens and early 20s will also have a greater choice to their selection.
So, it comes as no surprise that other labels want a piece of the pie. High-end labels like Agent Provocateur and La Perla have been aggressively expanding in China, while French competitor Etam also recently opened its first mainland store in Shanghai. Agent Provocateur, which sells bras for over US$200, said sales at its four China stores were 25 percent above expectations for the year 2014. During the same year, La Perla saw a 42 percent Greater China sales growth. La Perla probably saw the higher increase in sales, due to a newly added target demographic, with the opening of a men’s store in Shanghai. Boxers in the store there goes for US$200 and silk robes for US$3,000.
In U.S., Amazon’s rumored plan to introduce its own $10 bras was seen as a play against Victoria’s Secret. However, according to a note published by Morgan Stanley, it pointed out that Victoria’s Secret continues to own approximately 27% of the market, and that the lower-priced intimate apparels belong to Walmart and Target, given that big box retailers account for roughly 50% of the US market.
This indicates that intimate apparel products have to meet custom fit and possibly multiple style requirements, that caters to each individual. So it would be safe to assume that the people who shop at Victoria’s Secret are unlikely to be price-savvy, and are more concerned about service and product quality.
With foreign lingerie brands’ showing their strong interest in China, these market forces in the industry has caused luxury lingerie brands to see significant China growth. Victoria’s Secret has made the right judgement to expand into this market.
Will Victoria’s Secret focus on fashionable luxury comfort be able to take the lead or build a different market segment from China’s local giant Aimer, who emphasizes on fit and comfort? Time will tell if the high end luxury lingerie target segment truly exists. Alternatively, we might see VS adapting to the Chinese market introducing a touch of fusion in the market.