SHANGHAI — The state-owned Bailian Group, one of China’s largest retailers with more than 4,700 units, is launching its own multilabel store in Shanghai on Sept. 2.
Called The Balancing, the store features a mix of international and local, avant-garde and commercial brands, fashion and lifestyle products aimed at both men and women, a mix overseen by international buying director Echo Zhuang, an alum of international and regional multibrand retailers such as 10 Corso Como in Milan and Lane Crawford in Hong Kong.
Bailian Group’s decision to experiment with a multibrand and wholesale model with The Balancing was a reaction to the struggles facing China’s department store sector as consumers move online and cookie-cutter brick-and-mortar retail operations attract fewer shoppers.
“They are reaching a point where they need to change. Before it was a very strong market, but things are changing rapidly and it’s a good time for them to make some changes,” she said.
According to the “China’s Department Stores Report 2016-17,” from Fung Business Intelligence, last year marked a “tipping point” for the sector, as low quality operators closed their doors and those remaining actively explore new business models and retail formats, including online-to-off-line retailing, emphasizing experience and diversifying the product offer.
Overall, the department store sector witnessed a slowdown in sales in 2016, but showed some signs of gradual improvement with growing net profits and lower operating costs. A survey of 85 key department store operators conducted by the China Commerce Association for General Merchandise saw total sales for the sample up 5.45 percent year-on-year and core operating profits down 0.69 percent.
More than half of the sample — 55.3 percent — witnessed a drop in sales in 2016, while among those who registered positive sales growth, only 5.88 percent enjoyed exceptional sales growth, classified as growth of more than 20 percent year-over-year.
Bailian Group has been visible in adapting to China’s new retail reality, most notably by partnering with Alibaba Group in February in an agreement that would see the two groups co-operate on everything from retail store design, to research and development, customer relationship and supply chain management.
“Our partnership with Bailian is an important milestone in the evolution of Chinese retail, where the distinction between physical and virtual commerce is becoming obsolete,” Daniel Zhang, chief executive officer of Alibaba Group, said at the time.
According to Echo Zhuang, Bailian Group’s inspiration for The Balancing comes from researching the diversity of international department stores, whose wholesale model is completely different to the traditionally concession-style model that is dominant in China.
“We wanted to introduce this new business model to China, after doing research in America and Europe, they saw stores like Barneys and Le Bon Marche exercising direct buying and wholesale models, which are not common in China,” Zhuang said.
Describing the aesthetic of The Balancing as sharing “a lot of DNA” with 10 Corso Como, Zhuang is working with brands still not widely available in mainland China, from Maison Margiela and Jil Sander to more commercial propositions like Maison Kitsuné and Acne Studios, as well as a few Chinese brands such as Xu Zhi and Shushu/Tong. But Zhuang is quick to say that promoting local designers isn’t her focus.
“I don’t think the customers will be coming in for these designers, but it’s all about the design. I have sold two Shushu/Tong dresses already,” she said.
This first store, 5,380 square feet for a women’s store and 6,450 square feet for men’s in the Oriental Department store in the busy shopping district of Xujiahui, is an experiment that Zhuang isn’t sure will be replicated in any of Bailian’s other 26 department stores around China. She is confident The Balancing will find an audience among fashion-forward young consumers looking for inspiration.
“When I go to Paris, I frequently visit stores like The Broken Arm and when I talked to the staff, they told me the Chinese girls style references are getting more sophisticated. Their store offering is not common brands — Carven, Phillip Lim, Balenciaga, Comme des Garçons — and the Chinese girls really appreciate this and love the design,” Zhuang explained.
“This gives me confidence, the Chinese new generation understand brands and the philosophy behind these more design-led stores.”