US apparel and footwear company VF Corporation is betting big on China, but with a heavy focus on digital channels.
The owner of Vans, Timberland and The North Face, having opened 160 stores in Greater China in the past year, said it will continue to open several more to boost sales, shrugging off rising US-China tension and the impact of the coronavirus outbreak.
“China has done an amazing job of very quickly containing [the coronavirus] outbreak to keep consumers confident and [offers] fantastic opportunities for retailers to think about expansion in China,” said Kevin Bailey, executive vice-president and group president, APAC and emerging brands. “We have prioritised investing in Asia with a specific focus on China.”
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The China expansion will revolve on digital retailing as seen from its latest tie-up with internet and social media giant Tencent Holdings.
The 120-year-old company, which has a dozen other brands in its stable, is opening its first Vans flagship store in mainland China – its sixth overall after three in its home market of the US and one each in London and Seoul. The outlet will open in Shanghai's buzzing East Nanjing Road, the city’s busiest shopping strip in December.
The 717-square metre store offers a peek into VF Corp’s China strategy, blending online shopping with traditional bricks-and-mortar retailing. The Shanghai flagship store will allow shoppers to customise their purchases with the help of in-store artists.
The store will also include a zone featuring some of Tencent’s most popular online games and a dedicated WeChat mini program linking to its online store. The company did not reveal details, but said “consumers will be provided immersive interaction and self-service shopping experiences” on WeChat.
Burberry also recently tied up with Tencent to leverage WeChat’s popularity and its billion users to reach out to the mainland Chinese customers.
Last month, the UK luxury label opened its first “social retail store” in Shenzhen designed to inspire and entertain shoppers. A WeChat mini program allows Burberry customers to unlock exclusive content and personalised experiences and share them on their social media network. All products are labelled with QR or quick-response codes that connect to a customer’s mobile phone.
Bailey said VF Corp’s China digital strategy through tie-ups with large e-commerce partners like Tmall and JD.com has resulted in a 36 per cent gain in revenue from digital channels in the quarter ended June 30.
Its brand Vans also has a presence on TikTok where it has racked up over 5 million followers globally. The video-sharing app and Tencent’s WeChat are in US President Donald Trump’s crosshairs, who on Friday ordered ByteDance, the TikTok owner, to sell or spin off its US assets within 90 days, citing national security concerns.
Analysts believe VF Corp’s China plans could be affected by the growing US-China conflict. Stoked by nationalism, the country’s younger generation, the engine of China’s consumption economy, would buy Made in China brands, they say.
Michael Cheng, consumer markets leader for Asia-Pacific at PwC, said it is a good time for international retailers like VF Corp to invest more in China, where further expansion and market share growth is possible. Collaboration with local tech giants like Tencent “is what a retailer must adopt in China,” he added.
VF Corp’s eagerness to build on its China strategy is driven by a slump in sales last quarter. For the quarter ended June, the retailer reported a 47 per cent year on year decline in revenues because of the Covid-19 pandemic. Yet, sales in mainland China rose 9 per cent – the only market to chart growth.
China’s gross domestic product expanded by a stronger-than-expected 3.2 per cent in the second quarter, becoming the world’s first major economy to rebound from historic slump caused by the Covid-19 shock, while other countries struggled to revive their economies.
Bailey said that China was now the best bet for global retailers, given the rebound and Beijing’s new economic strategy to rely on domestic consumption. He expects to see 20 per cent revenue growth for the full year in the country.
VF Corp has no plans to expand in Hong Kong. Last year, Vans was criticised for removing entries from its annual Custom Culture sneaker design contest that alluded to the social unrest in the city.
More from South China Morning Post:
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