Despite Store Closures, Niche Brands Can Still Make It Big in China

SHANGHAI — Off-White is the latest international fashion brand to scale back its China operations after the country’s key cities went through months-long COVID-19 lockdowns.According to local media reports, the label founded by the late Virgil Abloh recently shut down four stores in Shanghai, Chengdu and Xi’an.
The brand still operates seven stores in Beijing, Shanghai, Hangzhou, Tianjin, Shenyang and Chengdu.
The store inside Shanghai’s upscale Réel Mall has been replaced with Totême, WWD observed on Tuesday. The only store that remains open in Shanghai is located in Galeries Lafayette Shanghai, which is operated by I.T, the same local retail partner as Off-White.
Both Off-White and I.T did not respond immediately to WWD’s requests for comment.

Industry experts believe the brand remains popular in second- and third-tier cities, but as its China franchise operator I.T goes through a retail reorganization post-lockdown, Off-White’s retail future remains up in the air.

Related Galleries

When Off-White entered the market in 2017, the pop-culture association quickly ignited the interest of young hypebeasts.
The brand expanded to 16 stores by the end of 2020. Its marketing initiatives included a focus on exclusive and limited product offerings in China. But at the time, local media outlets discovered that Off-White-related content is highly associated with keywords like “discount” on Xiaohongshu, the popular social-commerce app.
According to local retail insiders, despite quickly expanding its retail network, the brand fell short on localized branding and content creation.
“Shoppers didn’t truly get the vibe of Off-White to begin with, and in China, the cost of forgetting is extremely low,” said a fashion buyer of a well-known retail operator in Shanghai.

Backstage at Trussardi RTW Fall 2022

Daniele Mango/WWD

But Off-White isn’t alone. Italian luxury label Trussardi also decided to suspend direct operations in China recently. The brand is in the process of closing one directly operated store but retains its franchise and wholesale business in China.
“The strategy has evolved in light of the changing context in the market,” Sebastian Suhl, the brand’s chief executive officer, told WWD at the time.
“The pandemic impacted the whole retail landscape for brands in every segment. That’s the negative side of the story,” said real estate operator URF’s chairman and founder Dickson Szeto.
“But on the other hand, we see brands with a positive attitude that have taken branding and storytelling to the next level. That’s why we also see companies like OTB doubling down on the market. They can capture the opportunities presented by clients who couldn’t travel abroad to shop,” added Szeto.

A look from Nanushka for resort 2023.

Courtesy

Samuel Ross’ fashion venture A-Cold-Wall, Sequoia Capital China-backed South Korean fashion brand We11done, as well as Alexandre Mattiussi’s Ami, British handbag brand By Far, Polish underground club kid favorite Misbhv, and Hungarian label Nanushka under Vanguard Group are some entrants gearing up for brick-and-mortar store launches in the Chinese market this year.
Meanwhile, Holzweiler, the Scandinavian brand recently backed by Sequoia Capital China, plans to open a Tmall store this fall, according to market sources.

Angelica Cheung, venture partner at the firm and founding editor of Vogue China, who just relocated from Beijing to Hong Kong with her family, believes Holzweiler has “a huge opportunity to expand to other parts of the world, especially at a time when audiences value nature, the outdoors, and human connection more than ever before.”

Suzanne, Andreas and Maria Skappel Holzweiler.

Courtesy of Holzweiler

In a post-lockdown China, shifts in consumer attitudes have created space for new players that can fulfill shoppers’ changing style needs.
“Consumer’s emotions are increasingly complex and volatile after the pandemic, leading to more eclectic aesthetic needs,” said Xueying Sun, WGSN China’s senior editor. “We see a return to classics and practicality, and at the same time a call for extremely trendy and artistic designs.”
Sun thinks niche brands need to produce products with “flexible design elements with traffic driving features.”
Szeto said brands “can’t ‘lie flat,’ but must aggressively maintain a positive online attitude, or online storytelling approach.”
For Shanghai-based Julio Ng, executive director of the fashion showroom Seiya Nakamura 2.24, which represents more than 40 brands including Rick Owens, Christopher Kane, Dion Lee, Ganni, Marine Serre, Peter Do, Stefan Cooke and Tomo Koizumi, niche brands must also constantly reinvent their hero products to keep the surprise alive.
“Consumers in China right now have the money to spend. The best way to improve and experience fashion is to spend the money to buy it, wear it and try it,” said Ng.
“But once it’s been worn, its photo has been taken or posted on social media, the value of the pieces decreases. So designers have to reinvent their so-called signature pieces constantly. That’s the most important part,” he added.

Eli Russell Linnetz of ERL.

Dominique MAITRE/WWD

To maintain momentum, Ng thinks brands need to pick up the pace with fresh product releases.
“When the market is saturated, and a brand has not been able to reinvent those bestselling styles, it very often leads to a decline in wholesale. And once that happens, it basically just collapsed everywhere,” said Ng.
Both Szeto and Ng suggest young niche brands take on “short-term activities” such as pop-ups or brand-related in-store activities to make some noise in the market when it reaches peak influence.

For example, the Shanghai-based concept store ENG plans to launch a pop-up for Eli Russell Linnetz’s namesake label ERL this September, while Marine Serre is looking into similar activations in the market.
“But we realized that an installation at a store is not enough. What’s more important is how these installation or community programs tie back to the brand and each of the retailers, VIP customers, or followers,” said Ng.
Initial brand building means maintaining a healthy relationship with seed customers, which includes local celebrities, influencers and VIPs, who will become an asset for niche players to help with organic growth.

Marine Serre, spring 2023

Courtesy of Primexposureimage/Ma

“The brands need to make these people feel like they are a part of the brand family, they are cared for, this is also an important attitude to communicate,” said Szeto.
When the brand sees enough traffic on social media and e-commerce sites like Tmall, there’s a window of time to establish a permanent retail presence in the market.
“Normally, I would say if you reach 1 million euros in wholesale orders in China alone, you can consider finding a Taobao Partner company to set up a Tmall International or Tmall Local online store,” said Ng.
“But if you don’t reach that amount, I would say don’t even think about it, because even though if you set it up, you know you end up spending a lot of money for digital and offline marketing. And you might not even see any sort of payoff,” he added.

SHANGHAI — Off-White is the latest international fashion brand to scale back its China operations after the country’s key cities went through months-long COVID-19 lockdowns.

According to local media reports, the label founded by the late Virgil Abloh recently shut down four stores in Shanghai, Chengdu and Xi’an.

The brand still operates seven stores in Beijing, Shanghai, Hangzhou, Tianjin, Shenyang and Chengdu.

The store inside Shanghai’s upscale Réel Mall has been replaced with Totême, WWD observed on Tuesday. The only store that remains open in Shanghai is located in Galeries Lafayette Shanghai, which is operated by I.T, the same local retail partner as Off-White.

Both Off-White and I.T did not respond immediately to WWD’s requests for comment.

Industry experts believe the brand remains popular in second- and third-tier cities, but as its China franchise operator I.T goes through a retail reorganization post-lockdown, Off-White’s retail future remains up in the air.

Related Galleries

When Off-White entered the market in 2017, the pop-culture association quickly ignited the interest of young hypebeasts.

The brand expanded to 16 stores by the end of 2020. Its marketing initiatives included a focus on exclusive and limited product offerings in China. But at the time, local media outlets discovered that Off-White-related content is highly associated with keywords like “discount” on Xiaohongshu, the popular social-commerce app.

According to local retail insiders, despite quickly expanding its retail network, the brand fell short on localized branding and content creation.

“Shoppers didn’t truly get the vibe of Off-White to begin with, and in China, the cost of forgetting is extremely low,” said a fashion buyer of a well-known retail operator in Shanghai.

Backstage at Trussardi RTW Fall 2022

Backstage at Trussardi RTW Fall 2022

Daniele Mango/WWD

But Off-White isn’t alone. Italian luxury label Trussardi also decided to suspend direct operations in China recently. The brand is in the process of closing one directly operated store but retains its franchise and wholesale business in China.

“The strategy has evolved in light of the changing context in the market,” Sebastian Suhl, the brand’s chief executive officer, told WWD at the time.

“The pandemic impacted the whole retail landscape for brands in every segment. That’s the negative side of the story,” said real estate operator URF’s chairman and founder Dickson Szeto.

“But on the other hand, we see brands with a positive attitude that have taken branding and storytelling to the next level. That’s why we also see companies like OTB doubling down on the market. They can capture the opportunities presented by clients who couldn’t travel abroad to shop,” added Szeto.

Nanushka resort 2023

A look from Nanushka for resort 2023.

Courtesy

Samuel Ross’ fashion venture A-Cold-Wall, Sequoia Capital China-backed South Korean fashion brand We11done, as well as Alexandre Mattiussi’s Ami, British handbag brand By Far, Polish underground club kid favorite Misbhv, and Hungarian label Nanushka under Vanguard Group are some entrants gearing up for brick-and-mortar store launches in the Chinese market this year.

Meanwhile, Holzweiler, the Scandinavian brand recently backed by Sequoia Capital China, plans to open a Tmall store this fall, according to market sources.

Angelica Cheung, venture partner at the firm and founding editor of Vogue China, who just relocated from Beijing to Hong Kong with her family, believes Holzweiler has “a huge opportunity to expand to other parts of the world, especially at a time when audiences value nature, the outdoors, and human connection more than ever before.”

Suzanne, Andreas and Maria Skappel Holzweiler

Suzanne, Andreas and Maria Skappel Holzweiler.

Courtesy of Holzweiler

In a post-lockdown China, shifts in consumer attitudes have created space for new players that can fulfill shoppers’ changing style needs.

“Consumer’s emotions are increasingly complex and volatile after the pandemic, leading to more eclectic aesthetic needs,” said Xueying Sun, WGSN China’s senior editor. “We see a return to classics and practicality, and at the same time a call for extremely trendy and artistic designs.”

Sun thinks niche brands need to produce products with “flexible design elements with traffic driving features.”

Szeto said brands “can’t ‘lie flat,’ but must aggressively maintain a positive online attitude, or online storytelling approach.”

For Shanghai-based Julio Ng, executive director of the fashion showroom Seiya Nakamura 2.24, which represents more than 40 brands including Rick Owens, Christopher Kane, Dion Lee, Ganni, Marine Serre, Peter Do, Stefan Cooke and Tomo Koizumi, niche brands must also constantly reinvent their hero products to keep the surprise alive.

“Consumers in China right now have the money to spend. The best way to improve and experience fashion is to spend the money to buy it, wear it and try it,” said Ng.

“But once it’s been worn, its photo has been taken or posted on social media, the value of the pieces decreases. So designers have to reinvent their so-called signature pieces constantly. That’s the most important part,” he added.

Eli Russell Linnetz of ERL

Eli Russell Linnetz of ERL.

Dominique MAITRE/WWD

To maintain momentum, Ng thinks brands need to pick up the pace with fresh product releases.

“When the market is saturated, and a brand has not been able to reinvent those bestselling styles, it very often leads to a decline in wholesale. And once that happens, it basically just collapsed everywhere,” said Ng.

Both Szeto and Ng suggest young niche brands take on “short-term activities” such as pop-ups or brand-related in-store activities to make some noise in the market when it reaches peak influence.

For example, the Shanghai-based concept store ENG plans to launch a pop-up for Eli Russell Linnetz’s namesake label ERL this September, while Marine Serre is looking into similar activations in the market.

“But we realized that an installation at a store is not enough. What’s more important is how these installation or community programs tie back to the brand and each of the retailers, VIP customers, or followers,” said Ng.

Initial brand building means maintaining a healthy relationship with seed customers, which includes local celebrities, influencers and VIPs, who will become an asset for niche players to help with organic growth.

Marine Serre Spring 2023

Marine Serre, spring 2023

Courtesy of Primexposureimage/Ma

“The brands need to make these people feel like they are a part of the brand family, they are cared for, this is also an important attitude to communicate,” said Szeto.

When the brand sees enough traffic on social media and e-commerce sites like Tmall, there’s a window of time to establish a permanent retail presence in the market.

“Normally, I would say if you reach 1 million euros in wholesale orders in China alone, you can consider finding a Taobao Partner company to set up a Tmall International or Tmall Local online store,” said Ng.

“But if you don’t reach that amount, I would say don’t even think about it, because even though if you set it up, you know you end up spending a lot of money for digital and offline marketing. And you might not even see any sort of payoff,” he added.

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