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Macy’s Invests $15M in China E-commerce Firm

Retailer joined Intel Capital and others in acquiring a minority stake in VIPStore, which will begin carrying Macy’s private label brands next spring.

Omei's Web site.

NEW YORK — The INC Inter-national Concepts brand is living up to its name.

This story first appeared in the May 24, 2012 issue of WWD.  Subscribe Today.

Macy’s Inc. has invested $15 million in VIPStore Co. Ltd., a Chinese-based e-commerce company that will begin carrying Macy’s private label brands next spring, starting with INC.

The move is another signal that the fashion world is leaning toward China as it ponders its future. And like Nordstrom Inc.’s roughly $270 million acquisition of online private sale firm HauteLook last year, it underscores the need for established department stores to explore growth opportunities wherever they find them.

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Macy’s joined Intel Capital and others in acquiring a minority stake in VIPStore, which will carry the Macy’s brands on Omei.com. The Web company also operates the flash-sale site Jiapin.com, and the two sites together serve 2.5 million members. Shares of Macy’s gained 1.6 percent to $37.05 Wednesday.

“Our relationship with VIPStore will allow us to gain additional experience in the fast-growing Chinese market, and to better understand how consumers across China interact with Macy’s and the products we sell,” said Terry J. Lundgren, the retailer’s chairman, president and chief executive officer.

Lundgren noted that the store’s Thanksgiving Day parade and its starring role in “Miracle on 34th Street” have helped give the Macy’s brand international exposure, but that the company still has “a great deal to learn about the shopping patterns and merchandise preferences of consumers in China’s very diverse and rapidly emerging consumer marketplace.”

Lundgren said the company’s Macy’s and Bloomingdale’s brands both have significant long-term opportunities abroad. Bloomingdale’s already has a store in Dubai.

Orders placed through Omei.com will be filled locally through VIPStore’s facilities. The site will also link to macys.com; items ordered from that site would be handled in the U.S. Macys.com began selling online in China and more than 100 other countries last year through a deal with international e-commerce firm FiftyOne.

The Macy’s investment in VIPStores follows a similar investment by Neiman Marcus Group in March, in which it invested $28 million in the Chinese e-commerce site Glamour Sales. Neiman’s hopes to use Glamour Sales to launch its own full-price e-commerce site in China by the end of 2012.

At the Morgan Stanley Retail & Restaurant Conference in Boston on Wednesday, Macy’s chief financial officer Karen Hoguet painted the deal with VIPStores as a chance to hone the company’s knowledge of the market.

“We’ve been trying to figure out how can we learn more about our consumer in China besides reading and doing research because we know from here where we compete that what people say and what people do is very different,” Hoguet said. “We’ve been trying to figure out a way we could sort of test the waters a little bit and learn.

“Down the road there’s a huge opportunity for both Macy’s and Bloomingdale’s internationally,” she said. “I wouldn’t call it our top priority today. But we want to learn a lot before we would go in in any more significant way.”

The cfo said the monetary investment in the site gives the company a “seat at the table” and the ability to see what’s happening with the brands and how the business is run.

As Macy’s inches further into the online game, Hoguet, in response to a question, took a swipe at the biggest player on the field.

“I worry about Amazon because it’s a very successful company and a lot of customers like it and use it as their sort of go-to place for whatever they need,” she said. “Having said that, I don’t think…the product is there.…And between the private brand, the exclusives, the limited distribution, at this point at least, I would say, they’re not going to have the quality of fashion that we have.”