Changes are taking place as China’s retail business evolves.
Both retailers and owners of shopping centers are actively looking for ways to transform and innovate as business continues to be affected by e-commerce and the overall economic slow-down. “User Experience” is increasingly becoming a magic bullet for survival. Nowadays, instead of just introducing tenants of big guns into their space, many high-profile projects have started to realize the important of providing unique experiences for their customers. To achieve this, they have incorporated new experience-oriented elements to attract foot traffic and more importantly, to build a competitive edge for the business. Such examples include “Dancing with the Sharks” bar in Chongqing Tiandi, Line coffee and Fangsuo new concept bookstore in Sino-ocean Taikooli Chengdu, and G+ urban harvest restaurant in K11.
Rather than solely relying on the brand names of the retailers, more and more shopping centers are now working relentlessly to embrace new and fresh ideas by introducing more interactive and diversified tenants. By incorporating new visual elements such as art, technology and ecology, these shopping centers are also renovated to create a place of comfort and style for customers.
Currently, a number of leading brands including Gucci, Chanel, Prada, Cartier and Dior have all cut their sales prices in China. Gucci’s promotion covers both Hong Kong and major cities in mainland China including Shanghai, Chengdu and Nanjing, and some products are even sold at 50% discount. How to address the deteriorating performance in China is a significant challenge that these luxury retailers face. Is price-cut the only way out?
Fair Fan, Director, Retail Services, CBRE Eastern China, commented:” In addition to delay expansions and be more cautious with location selection, luxury retailers are keen to deploy a ‘cross-sector revolution’. In China, the young generation, or people who were born in the 80s and 90s, is rapidly expanding and becoming a fundamental driving force for consumption. Unlike the post 80s who are mature, post 90s tend to be more stylish and individualistic. They pay more attention to the unique experience that buying brings to them, not just the products they buy.
To meet the new trends and tastes of these young consumers, traditional retailers need to take a completely new approach in strategizing their retail space and tenant mix. In fact, quite some retailers have taken bold steps, and for example, Gucci, Versace and Vivienne Westwood respectively opening an café area within their stores in IAPM, Grand Gateway and K11, Bvlgaria launching a hotel business and Hermes setting up a home accessory branch. Through these initiatives, retailers look to differentiate their brand, reinforce their market profile and create better shopping experience to attract the younger generation buyers.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.