Besides her five Otte stores in New York and one in Malibu, founder Kay Lee has built an online following for the retailer’s mix of up-and-coming designers, cult labels and house Otte collection. Now, Lee, who is Korean, has found a market for her aesthetic in China, where she’ll open a store in Shaghai this year. With almost half of Otte’s online business coming from Chinese-speaking people, Lee plans to open units in other Chinese cities and grab as much business as she can.
“Our e-commerce business is a great leading indicator of our global trends,” said Nancy Zhang, vice president and chief operating officer of Otte. “Mainland China and Chinese shoppers consume content in Chinese whether they live in China or not. We have a large following in the U.S., Europe and China. China is a big opportunity for us.”
Otte, which had more than $10 million in sales in 2014, is partnering with a Chinese company that will handle local operations. The New York team will focus on pricing, buying, branding and marketing, while sales and training will be a joint effort.
Part of Otte’s appeal is Lee’s Korean background and the fact that she knows how to shop for Asian bodies, which tend to be smaller. Otte’s styling is very feminine, which suits Chinese shoppers who prefer dresses and tailored looks. “Chinese consumers like everything that is Korean,” Zhang said. “Korean pop style has a big influence on Chinese fashion. They like Kay’s taste.”
In addition to Alexander Wang and 3.1 Phillip Lim, Otte will present emerging designers at the Shanghai store. “We can’t compete with the Lane Crawfords of the world,” Zhang said, adding that other key labels will include Vanessa Bruno, Tara Jarmon, Ryan Roche and Opening Ceremony. “We capture midlevel luxury. We’re not considered an edgy store in New York.”
Smaller multibrand specialty stores are a relatively new phenomenon in China, where department stores dominate and luxury retailers build massive monobrand flagships.
While Otte units average about 1,000 square feet in the US., the Shanghai store will have 1,500 square feet of space. The U.S. stores do between $1.5 million to $2.5 million in annual sales. Zhang didn’t give sales projections for the Shanghai store. “We want to show that we’re a smaller neighborhood boutique,” Zhang said of the unit at 88 Tong Ren Road, across the street from Jing An Shangri-la West Shanghai.
“Our neighbors are Chinese retailers, independent boutiques, contemporary design stores, restaurants and bars,” said Zhang. “It’s more of a lifestyle location.”
Otte is considering opening a store in Beijing. “We’re looking at multiple cities in China,” Zhang said. “Chengdu is a big one. Women in Chengdu are willing to spend a lot on fashion. We’re looking to establish a retail presence in China and [own] the market for the feminine and international look. Multibrand retail is so new. Chinese shoppers are not really logo-driven.”
Zhang, who joined Otte three years ago after working at Citicorp and Google, built a social media plan for the Chinese-speaking audience, with Chinese content for Otte’s Weibo and WeChat accounts.“Half of our followers live in the U.S. and half abroad,” she said. “The response has been amazing. Our e-commerce revenue has doubled every year in the last three years.”
The Web site was translated into Chinese in March, and in July will begin accepting payment in the local currency, yuan.
Otte isn’t neglecting its U.S. business, however. The retailer will renovate its New York stores this year with the help of architect Steven O’Neil and is looking for store locations in Dallas, Boston and Connecticut.