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SHANGHAI — California-based Cherokee Inc. has officially launched its namesake brand in China through a distribution deal with RT-Mart, the country’s largest supermarket chain by sales volume.
This story first appeared in the November 4, 2010 issue of WWD. Subscribe Today.
“This is one of the biggest launches we have ever had in a huge country and with a very aggressive company,” Cherokee chief executive Henry Stupp said at a recent launch event, which featured a runway show of the fall-winter collection. “We felt right from the beginning that RT-Mart had a long-term vision for where they wanted to take this brand, and they respected the culture, the history and the legacy of Cherokee.”
Cherokee inked the exclusive, multi-year international licensing deal last November with RT-Mart, a division of Ruentex Industries Ltd., a Taiwan-based textile company. French retailer Groupe Auchan SA also owns a stake in the hypermarket chain, which first opened in China in 1997 and now has 134 stores on the mainland.
By April, RT-Mart had Cherokee’s children’s line in 67 locations. The hypermarket introduced the women’s line in all of its stores last month and will expand to a men’s collection by the spring. There are also plans to extend the brand to footwear, denim, beauty, jewelry, sports and home collections, said Peter Huang, chief executive of RT-Mart China.
Executives declined to give a sales forecast.
While RT-Mart sells a hodgepodge of Chinese labels in stores, including its own private label called Bes Carol, Cherokee is the first foreign clothing brand RT-Mart has introduced into its apparel mix.
The goal, said Huang, is to adopt a “smart fashion” concept whereby consumers can buy high-quality yet cheap clothes while purchasing commodities in hypermarkets.
“We need fashionable brands [in RT-Mart],” said Huang, who said he became interested in Cherokee after seeing its products in Target during a trip to the United States. “Supermarkets always pursue low price, but consumers also seek fashion. We found this brand in an American hypermarket and wondered how such high quality products can be sold at such low prices. It was unbelievable.”
No doubt Cherokee stands out in RT-Mart. At the RT-Mart in Yangpu, Cherokee’s clothing is promoted with slogans like “Famous brand in America, sold in 35 Countries” and “Very fashionable and yours to buy!”
On the floor, the brand sells near RT-Mart’s Bes Carol line and other Chinese labels with names like Chericom, Casnor Vogues and Louies Berry. A salesperson said one recent weekday morning she had sold around 5,000 yuan, or $735, worth of Cherokee products the day before. Prices range from 399 yuan, or $58, for a jacket to 149 yuan, or $21, for a flannel shirt
The Yangpu store is located in what was once a poorer district in northeast Shanghai that, in recent years, has become more middle class with the openings of numerous mid-tier shopping malls and a Wal-Mart.
Yet just how well Cherokee will ultimately sell in RT-Mart is a question many are asking. While China’s growing middle class frequent hypermarkets for food, electronics, cosmetics and other consumer goods, analysts say it is not likely the stores will be places where the country’s nouveau riche will want to by fashionable clothes that are cheap, or at least, cheaper.
“They may go to RT-Mart for groceries, but most upwardly mobile young white collar workers are not going to a place like that to buy clothes,” said James Roy, a senior analyst with China Market Research in Shanghai.
“The question for them [Cherokee] is how do you avoid being pigeonholed as a supermarket brand?,” Roy said. “If that is something they are going for, I have doubts about how successful that will be. China’s middle class is not shopping in the same way that middle class consumers in the U.S. do.”
Yet Cherokee executives say they expect this to change. RT-Mart will become more like Target where America’s middle- and upper-middle classes go to buy fashion-forward clothes that they are proud to wear, they claim.
“I think you are going to see a change in the middle class,” said Larry Sass, Cherokee group president and managing director. “[RT-Mart] is the leader with this, and they are going to say you can still buy Louis Vuitton, of course, but you can wear your Louis Vuitton bag with your Cherokee jeans, and that is ok. That is what they are trying to change.”
Cherokee said it will advise RT-Mart on marketing, design and product development strategies for the brand and will open up offices in Shanghai sometime early next year.
In 2002, Cherokee signed its first international licensing agreement in China for its Sideout brand with Shanghai Bolderway Fashions Co. Inc.