On the last day of NRF 2022: Retail’s Big Show, Deborah Weinswig, CEO of Coresight Research, moderated a session, “Chinese shopping festivals — how to prepare and capitalize on this growth opportunity.” Joining her were Harlan Bratcher, global business development head, JD Fashion and JD.com, and Nick Woodhouse, president and chief marketing officer, Authentic Brands Group.
To start off the conversation, and to give the audience a sense of the scope of the Chinese market and the opportunities it presents for non-Chinese brands, Bratcher gave a brief statistical overview of JD.com. Ranked No. 59 on the Fortune 500, JD.com, with $114.3 billion in net 2020 revenue, is the largest Chinese internet company, and the third-largest internet company in the world. The largest retailer in China, both online and bricks-and-mortar, it has 552 million active customers.
Take a look at the NRF 2022: Retail’s Big Show event recap to learn more about this year’s sessions.
There are, in short, a lot of Chinese consumers, and they like to shop. They particularly like to shop on particular holidays or festival days, among which are Chinese New Year (in January), Women’s Day (March 8), the 618 Festival (June 18), and Singles’ Day (Nov. 11). On 618 last year, for example, JD did just under $50 billion in sales, and nearly the same on Singles’ Day.
Bratcher emphasized that these holidays present a significant opportunity for non-Chinese brands — but making the most of that opportunity requires some understanding. For example, Bulgari launched in China on Chinese Valentine’s Day last year. (There are two Valentine’s Days celebrated in China, one on February 14 and the Chinese one in August.) You can’t discount a brand like that, so how do you differentiate it for the launch? The answer was to launch a special collection for the occasion — which sold out “in minutes,” Bratcher said.
Turning to Woodhouse, Weinswig asked, “What have you learned in China and brought back to the U.S.? What do you think the opportunity is for domestic brands in that market?”
To provide some background, Woodhouse noted that Authentic Brands Group, with annual sales of around $20 billion, is an 11-year-old company “founded on the premise that there was a lot of intellectual property whose value needed to be unlocked,” he said. “We tend to buy amazing brands with broken models.”
An example he gave was Reebok, which ABG has just acquired from Adidas. Noting that Adidas is a terrific company that does a good job with its brands, he commented, “I just think we have a little more free time to think about Reebok.”
Turning back to China, he said he had observed that the Chinese consumer wants a quick transaction. “Never make people wait to take their money,” he said. Bratcher seconded this observation, pointing out that of the $118 billion or so JD sold last year, 90 percent of it was sold via mobile phone.
That led to a discussion of shipping logistics in a country with 1.4 billion people. First, Bratcher said, you have to look at the statistics: The 10 largest cities in China range in population from 31.24 million to 10.85 million — all of them larger than New York. “In the U.S., there are 10 cities with populations of over one million,” he said. “In China, there are 165.”
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JD delivers to 99 percent of the country — to get an idea of the company’s logistics wing, Bratcher said, imagine a combination of UPS and Facebook — and offers, nationwide, the “two eleven” promise: Orders placed before 11:00 a.m. receive delivery by 11:00 p.m. the same day; orders placed later than that receive delivery by 11:00 a.m. the next day.
There are challenges in addition to opportunity in the Chinese market. To close the session, Woodhouse offered brands considering China a piece of advice and a prediction. The advice? Let the locals help, and let them explain things to you. “Don’t try to run the whole thing from New York. It won’t work.”
The prediction was this: Approached correctly (including festival observations), there’s a lot of opportunity in China. “For non-Chinese brands that do it right,” he said, “their year-over-year numbers will be huge.”