PARIS — Stella Luna is keen on extending its reach beyond Asia.
Having tested the waters with a flagship in Paris’ Saint-Germain district, which opened in December 2012, the budding Chinese footwear brand is gearing up to add three more units in the French capital. Two flagships are planned to open in September: one at 318 Rue du Faubourg Saint Honoré (across from Colette), and another at 64 Rue François 1er near the Champs Élysées, both areas buzzing with an international clientele. A corner at Galeries Lafayette is due to launch at the end of August.
“Paris to me is one of the hardest places to start: If you can survive here, you should be able to survive anywhere,” Stephen Chi, the brand’s chief executive officer and creative director, explained. “With Saint-Germain, Saint Honoré and François 1er, we are building a triangle, and we want to make sure we are doing it right.”
The company plans to tackle other parts of Europe about three years down the line, with London coming first, Chi noted.
Stella Luna currently counts 225 doors, 200 of which are located in China. Most of the units are spread across department stores; 10 percent are stand-alone.
It also has opened wholesale orders to seven European countries — France, Italy, Belgium, Netherlands, Luxembourg, Germany and Spain — via a local partner this year.
Designed by the English architect Jamie Fobert, the new Paris flagships will be 800 and 430 square feet, respectively, and stock Stella Luna’s main collection along with a capsule line, created especially for the Paris, Shanghai and Beijing boutiques — “three to four exclusive styles, which pop up in between the seasons so the stores always have something new to offer,” explained Chi.
With prices ranging between 230 euros, or $316, for a pair of leather pumps and 800 euros, or $1,100, for a pair of over-the-knee suede boots, the brand targets predominantly women in their thirties, “independent and well-established, who know fashion,” Chi said, adding that all products are crafted from Italian leather but are manufactured in China.
The executive said the days when brands used to target either the Asian or the European client are over. “Chinese customers are much more demanding than they used to be — and they are very fast learners. Before they used to buy just for the sake of buying, now they focus on quality and price value — they travel abroad, they see what’s good; before, their vision was limited,” he said.
The traveling has taken a toll on the Asian market, however, lamented Chi. “Everybody knows, overall business in Asia is not growing like before. Even in Hong Kong it’s going down” — a fact he links to the high numbers of Chinese taking their money abroad where it’s cheaper to buy fashion and luxury products.
Consequently, it has become vital for companies to diversify. “It’s about being international, you can’t just be in one place. In Asia, this means we are going back to the fundamentals,” he said.
Over the last 12 months, the group closed about 60 locations, mostly for its other brands: What For and JKJY by Stella, while closings of Stella Luna doors accounted for about 10 percent. “The goal is to increase the efficiency per store, not necessarily generate growth from new venues,” he noted.
Stella Luna is part of Stella International Holdings Ltd., whose main business is contract manufacturing, with a client list stretching from Timberland to Prada. In 2012, the company added a joint venture with Pierre Balmain to its portfolio, which today counts two points of sale.
The group posted sales of $1.5 billion in 2013, with the retail division representing about 8 percent, or $121.2 million.
Chi allowed that the firm is still learning as it’s moving its retail division forward.
To wit: Stella Luna makes between 300,000 and 400,000 pairs of footwear a year, which is about the same as four years ago. “We are manufacturers, not retail specialists,” he noted. “I also think people overbought. There was no proper forecast; the projections for growth were very high — 150 percent; people didn’t really calculate the business.”
Still, Chi argues, the biggest challenges in retail lie in the myriad of “interesting rules,” which are specific to Asia. He cited among other shifts the odd practice of department store owners to take at times drastic managerial decisions, as they face economic hardship. “That’s very Asian, whoever takes over can say: ‘OK, today I want only cheap brands in the store to create revenue.’ And they will change the mix of brands and we will not fit in anymore. Also, unlike in Europe, the leases can be very short, six to 12 months. You need to stay very alert. It’s kind of like the old Wild, Wild West — anything goes; people try things, if it works, fine, if it doesn’t, stop, change. That’s very tiring,” he said.
As for manufacturing, Chi said business is good but beset by growing difficulties of finding and paying for human resources. “When I joined the company some 20 years ago, every day there was a huge line outside the gates — like in Disneyland; at least 300 to 400 people would be waiting, praying to have the opportunity to come in to work. Now, there are none. There are not enough workers,” he lamented.
Chi said that in an environment where labor costs are growing by “70 to 80 percent, and wages are rising at double-digit speed per year,” the group is focused on spreading the risk. “You cannot have all the eggs in one basket,” he said. “We already have locations in Vietnam, Indonesia and a little operation in Bangladesh. We will continue to expand in Vietnam and are looking into Philippines to diversify geographically in Southeast Asia.”
He said he’s convinced “China will continue to grow,” but “you need to provide good product and good services” to realize gains.r