New Look China plans 500 more stores
His plan is to make most of the clothes in China so they meet local tastes and can reach stores quickly, similar to Zara owner Inditex’s strategy in Europe. In the meantime, H&M and Inditex are already battling slower growth in China, fierce competition for real estate and the cost of investing in eCommerce. China is H&M’s second-largest market. The company buys about a quarter of its garments there, but does not make a point of adjusting its ranges for local buyers. It has opened 47 stores in China in the past nine months, taking its total to 400, while Inditex plans to add 60 stores in the next few years to the 582 it already has in China, serving them from its logistics centres in Spain.
Western brands that have struggled in China include Abercrombie & Fitch, Gap Inc and Marks and Spencer, which decided last year to close five stores in smaller cities.
“Most of the Western fashion labels that are mid-range fail in China. A large part of it is that the styles and the fit are so completely different,” says China Market Research founder Shaun Rein.
New Look, founded in 1969 and bought last year by Wiese’s investment vehicle Brait SE, seeks to avoid this mistake. It has 94 stores in China, out of a global total of 852, and hopes to have up to 150 by March.
While it is adding a “London” tag to its logo for its Chinese stores and website, it is also catering for local tastes. New Look international business MD Sven Gaede says the firm has an advantage over many European rivals as 85 per cent of what it sells in China is sourced locally and more than a third is designed exclusively for China.
“South Korea and Japan drive a lot of the trends the Chinese customer seeks, so our ability to be able to identify those trends, source them locally and get them into our stores quickly is key,” says Gaede.
New Look is not the first Western retailer to take this approach. Denmark’s Bestseller, which runs brands like Jack & Jones and Vero Moda, says that more than 90 per cent of its products sold in China are also made there, with most of the designs adjusted to local preferences. It has more than 6800 stores in 300-plus cities, giving it a 2 per cent share of the market, according to research firm Euromonitor.
Anders Kristiansen ran the China business of Bestseller before taking over as New Look chief executive in 2013.
New Look is currently available on JD.com and TMall, but plans its own transactional site in the next 12 to 18 months.