Hong Kong-listed French skincare brand L’Occitane China is planning to use eCommerce to help it expand into lower-tier cities.
“We’ve probably reached close to maximum capacity in Beijing and Shanghai,” says vice-chairman and Asia-Pacific MD Andre Hoffmann.
He says opening physical stores in China’s second- and third-tier cities will help create brand awareness.
L’Occitane has 187 stores in 65 cities on the mainland, and of the 50 to 60 stores planned globally for this year, most will be in China, Japan and South Korea. The group added 79 stores globally last year, with about a third of those in China, 12 in Japan and 11 in Brazil.
L’Occitane says it will use its marketing partnership with Tmall to reach out to China’s emerging middle class. Globally, its eCommerce channels grew 14.5 per cent last year, compared with a rise of about 10 per cent in retail sales.
Mainland China was L’Occitane’s main contributor to growth last year, beating out Brazil, France and Russia. Its China sales grew 16.8 per cent, contributing nearly 30 per cent to the group’s overall profit.
The group had a modest 8.9 per cent rise in sales to €1.28 billion (US$1.45 billion) in the 12 months ended March. Full-year net profit fell 9.8 per cent to €113.6 million, mainly because of foreign exchange losses of €6.9 million plus settling tax disputes with French authorities, which cost €14.6 million.
Meanwhile, L’Occitane has closed one store in Macau and will shutter another in Hong Kong in September.