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China Department Store Summit (part three)

posted: 24 April, 2013

Perhaps I should have thought twice before agreeing to speak at the China Department Store Summit this March. I’d never spoken at a conference before. In fact, I’d never really done any public speaking before, except for a memorably awful best man speech I made a few years ago – please, don’t ask.

Safe to say I had a few demons needing to be laid to rest if this was going to be a success.

But I didn’t think twice. The CCFA (China Chain Store and Franchising Association) was on the phone sometime in January and I heard my own voice – disembodied – agreeing to this, that, and the other thing.

Would I be happy to speak in front of 500 leaders of the Chinese retail sector? Of course!

In less than two months’ time? No problem!

And do you have thoughts on what you would like to talk about? No, but I’ll think of something!

And so it was, in a fit of hubris, that I agreed to speak at the China Department Store Summit.

I’ve known the CCFA and its sister organisation, the China Commerce Association for General Merchandise (CCAGM), for a while now. Between them, they are the two most powerful retail trade associations in the country, so that gave me some peace of mind. Not that I really had anything to worry about… other than dying on stage in front of some of the most influential retailers in China, of course!

The theme of the Summit was “Retail Revolution & Breakthrough in Minimal Growth Age“, something retailers in Britain have learned a thing or two about over the last five years; I felt I had something of a home advantage!

The two topics that most interested delegates were how British retailers have adopted multi-channel strategies, and learning what can happen when retailers realise they have too many shops.

In a market such as China, where the real estate and retail sectors are so intimately connected, and where there remains a pronounced incoherence between online and on-street channels, it’s perhaps unsurprising that these were the two issues that provoked the most questions.

Many on-street retailers in China have adopted an “us and them” attitude to their pure-play online peers. As a consequence, very few have what we would call an integrated approach to selling on- and offline, but it became clear to me that attitudes are beginning to soften and that pragmatism prevailing. Certainly, they were fascinated to learn about how retailers such as Aurora Fashions has innovated in this area in recent years.

Explaining the rewards of Aurora’s “Anywhere Everywhere” strategy to the delegates, I began to feel like I was witnessing a retail version of the five stages of grief: denial, followed by anger, then bargaining, depression and finally acceptance.

Discussing this with delegates after dinner really brought it home to me just how innovative the “Anywhere Everywhere” concept really is, and how revolutionary its application could be in China.

One feels that Chinese retailing is entering an incredibly exciting phase in its development.

But if genuine, seamless multi-channel strategies do prevail and succeed in China, what will this mean for landlords and developers? The British experience shows that multi-channel retailing reduces both the size and the number of stores a retailer needs to penetrate the market. Implied in this is the tantalising (or terrifying, depending on who you ask) prospect of retailers gradually gaining the upper hand over their landlords.

This news divided the conference room rather neatly; thrilled tenants on one side and appalled department store and mall operators on the other. Looking out at the audience, I felt I sensed a storm brewing, but the battle lines will emphatically not be drawn along the current online/on-street barricades.