Multi-brand shops reimagine Chinese retailSeptember 19, 2018 / By
In recent years, multi-brand stores have emerged as a way for China’s retailers to cater to the diversified tastes of the country’s rising cohort of millennial consumers. Mall operators have embraced multi-brand stores to add novelty to their tenant mixes. Though still small in absolute scale, multi-brand stores are growing more prominent, and have adopted a range of innovative strategies for attracting and maintaining consumers’ attention, which could prove instructive for China’s broader physical retail landscape.
Source: JLL Research, JLL Leasing, Magmode, Any Shop Style, Winshang, EEO
JLL recently has studied two major models of multi-brand stores, which we call “fashion incubators” and “online-to-offline” (O2O) stores. Fashion incubators curate nascent brands and give them a platform to grow. Brands that succeed in cultivating mature customer bases can leave the incubator and set up independent storefronts. For example, the incubator chain Magmode has incubated brands such as Sean by Sean (which now has 40 of its own stores), Art atelier (5 stores), MATTITUDE (30+ stores) and Seeingman. Fellow incubator chain Any Shop Style successfully incubated Yes by Yesir. Meanwhile, O2O spaces such as Redhome and Kerr&Kroes provide venues for online retailers to bring brick-and-mortar experiences to existing and potential customers, boosting brand awareness and loyalty.
A common feature in both types of multi-brand store is their ability to collect and utilize consumer data. Many chains profile consumers’ online and offline shopping habits to understand their preferences and purchasing power. This insight enables them to make educated judgements about merchandise selection, site selection, targeted promotions, and more. For example, one fashion incubator chain streamlines operations and inventory management with “reverse distribution” – instead of stocking stores with a pre-set variety of goods and hoping that customers will consider everything, they analyze customer behavior data to determine the ideal number of SKUs (stock keeping units) a shop needs to maintain consumer interest without wasting space. O20 chains take advantage of data from their online operations to optimize their brand selection, which in best cases can enhance customer interest and boost the share of customers who make purchases (rather than merely browse).
Another feature of multi-brand stores is their ability to present products of different brands under unified themes that enhance their attractiveness beyond what they could achieve in single brand stores. A wider selection also permits customers to shop by occasions – work, weekends, holiday, party, and more. In pursuit of selling specific lifestyles that transcend individual brands, some O2O shops go beyond fashion to also sell stylish stationery and appliances.
Challenges remain for multi-brand stores, who still need to contend with the usual retail challenges of site selection and intense competition, along with ensuring they make effective use of their bounty of available brands and consumer data. That said, their efforts to leverage new technology and other strategies demonstrates valuable innovation in China’s bricks-and-mortar retail scene, which is often depicted as supine in the face of rising e-commerce. Recent efforts by multi-brand shops show how the sector can survive and even thrive.
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