In March, while the coronavirus paralyzed most of fashion retail worldwide and across much of China, too, a concept store chain little-known outside of China, called SND, was having its best month ever.
Known as the Southwest’s coolest designer concept store, SND pulled off 250 percent year-over-year growth for the month to rake in 5 million renminbi, or $705,950. While the jump seems nearly implausible, it caps off an ascent several years in the making. Launched in 2013 by Will Zhang, SND is the upstart entrant to an exclusive circle of retailers in China — including SKP, Labelhood and Lane Crawford — that designers are eager to be chosen by.
But impressive sales feat aside, SND — short for “Selection of Nonconformist Design”— is also remarkable for the way it represents a different kind of inland Chinese fashionista, in contrast to the dominance of the coastal beau monde. To date, it has five stores in Chongqing, including one flagship and four lower-priced franchise SND Stance shops, and an SND in Guiyang, the capital of Guizhou province, located a five-hour drive away.
WWD can also exclusively reveal that SND is expanding into Shenzhen, the Silicon Valley of China, in the second half of 2020. The store will span over 3,200 square feet and will go even more luxe, incorporating higher price points and statement runway pieces, compared to its existing store network.
The opportunity in Shenzhen was obvious to Zhang. The city is home to some of the nation’s biggest tech giants, from Tencent to Huawei to DJI, which has created incredible wealth. Zhang’s bet is that luxury spending in the city and Guangdong province overall will soar as moneyed mainland Chinese, deterred by political protests and now COVID-19 from crossing into Hong Kong since last year, look to spend their money closer to home.
“The store will be located in Pengrui Shenzhen Bay One Central, one of the most expensive developments in the city. I am confident that brands like Nina Ricci and Y/Project will do well,” he said.
The expansion into Shenzhen will mark an entry into an entirely new playing field for the retailer. While SND holds sway in less-developed, southwestern China, Shenzhenites — used to Hong Kong’s array of shopping options a quick train jaunt away and the city’s own homegrown fashion boutiques, like Dark Moss and Angel — could prove harder to win over.
But Zhang sees a niche in the competitive first-tier city market. “Those shops that do well in Shenzhen at the moment focus on avant-garde style or target the socialites. I see a great opportunity in catering to the city’s working professionals with a discerning taste and the young and beautiful fuerdai [the sons and daughters of the Chinese nouveau riche] who appreciate a softer and feminine aesthetic.
“According to our online sales data, Guangdong is our second-bestselling region, after Zhejiang, and brands like Cecilie Bahnsen perform best in Shenzhen, and you can hardly find these kind of brands in the city,” he added.
Zhang got started in the retail business in 2006, at the age of 18, when he was a freshman at Southwest University, the top-ranked school in Chongqing.
“I was just tagging along at the beginning,” he recalled. “My friend really liked to dress up, and she was one of the most stylish girls at our university, so we opened the store Deewill together. Eventually, I began to look after the operations side of the business. I was so young, I didn’t give much thought about what I wanted to do in the future, I just went with it.”
Deewill gained traction from selling South Korean brands as their lower price point and flattering cuts were just right for young fashion lovers in Chongqing. The business did so well that Zhang still does the distribution for Korean brands like Eenk, Yuul Yie and Moontan in China.
Zhang then decided to try the designer fashion market with the launch of SND. There, he mixed brands like Rochas and Ellery with more affordable Korean brands and cheap and cheerful accessory labels to attract a wide spectrum of customers. In 2018, Zhang combined the two stores into the current SND and set up an online store on Tmall. Among the 100 or so brands it carries, around half are Western labels, a quarter Korean and Japanese, and a quarter local Chinese designers.
“SND has always carried Chinese designers from the beginning, but it’s in recent years that our customers began showing great interest and recognition in them,” Zhang said, hoping that his stores can play a larger role in promoting local talent on a world stage. “Chinese fashion designers now have improved a lot with their production and personal style.
“The concept of them now is very different from a few years back. Meanwhile, with media and influencers constantly talking about them, our customers are willing to hear the story behind the brands now. A few years ago, they would think it’s crazy that a Samuel Guì Yang coat costs 8,000 renminbi, but now, they are very comfortable with the price point,” he said.
SND’s stores in Chongqing are located in prime shopping malls with its futuristic flagship in Shin Kong Place, while its Guiyang store is run by Zhang’s sister inside the Black Hotel, a well-known boutique hotel in the provincial capital of Guizhou, catering to a small group of fashionistas in the city, as well as a growing number of tourists who visit the city for its scenic mountains. Last year, SND’s portfolio pulled in around 40 million renminbi, or $5.6 million at current exchange.
“During the COVID-19 outbreak, we pressed ahead with the spring collections,” Zhang said. “We utilized a mix of livestreaming for the public on Tmall and one-to-one personal shopping consultants to help our customers complete the purchase. By the end of March, our new season sell-through rate had passed 50 percent.”
That month, the retailer’s online business jumped from 20 percent in February to 50 percent of its total business.
SND’s success, despite wider macro challenges, comes from Zhang’s understanding of the market. “I have been dealing with the Chongqing market for 14 years. I started on the shop floor, managed stores and now when I buy, I have a clear idea of what my customers want. I know this brand is for this group of clients and that oversized coat would do well in that store,” he said.
Designers Uma Wang, Samuel Guì Yang, Ming Ma, Calvin Luo and Liushu Lei of Shushu/Tong each told WWD that SND figures as one of their biggest retail partners.
“Will knows exactly what their customers want, and he picks the looks with the best potential to see well very fast every time,” Yang said.
Wang added that SND just requested to restock a few looks last week.
The stores also benefit from being based in Chongqing. As one of China’s four directly controlled municipalities — the others being Beijing, Shanghai and Tianjin, which gives it a number of significant economic perks — the city has witnessed strong economic expansion in recent years. It jockeys for place with Chengdu, the capital of Sichuan, as inland China’s most influential city. Its mountainous terrain and growing skyscraper collection recall Hong Kong, although the city’s most recent show-stopping structure, the Moshe Safdie-designed Raffles City, draws comparison to Singapore.
Last year Chongqing ranked as the fifth-biggest city in China in terms of GDP, after Beijing, Shanghai, Guangzhou and Shenzhen. However, its average housing price is only one-fifth of Beijing’s, leaving a larger significant wallet share for discretionary spending.
The city of over 30 million is packed with affluent Millennials, many of whom have studied overseas; a leisure class aged between 35 and 45 with lots of disposable income, and a more senior gold-collar class that holds high positions at big corporations. These are the biggest spenders at SND, according to Zhang.
There’s another reason why the city has become a hotspot for luxury and fashion, Zhang opines, although this one has less to do with economics of any sort. For years, Chongqing has held a reputation as the city home to the nation’s most beautiful people — in the same way that California occupies an outsized piece of the American imagination as a playground for those with good genes.
“Girls from Chongqing and Sichuan [province] are historically considered the prettiest in China,” said Zhang. “[People believe] the unique climate and spicy diet in the region make girls have fair skin and a slender body, and they are expected to be stylish and beautiful by society. That’s why they love shopping more than anywhere else in China.”
Jonathan Lee, a senior area manager at Tomorrow Showroom, said SND is a key supporter of emerging international designers in the traditionally challenging lower-tier cities market, in which select shops usually prefer local designer brands, due to the higher price point, language barrier, and low name recognition of international labels.
“While Tmall and JD.com and department stores like Reel, SKP and Galeries Lafayette China dictate first-tier cities, SND is seen as a leader for select shops in two- to three-tier cities,” Lee added.
“SND has profound knowledge in the local market,” said Ying Zhang, founder of Not Showroom. “They are very image-conscious and have a very loyal customer base. They are willing to try new things and keep their image fresh.
“I look forward to seeing how will SND perform in Shenzhen,” she added. “Compared to Chongqing, customers in Shenzhen are more indecisive. And it takes time to build up a loyal following in the city.”
Zemira Xu, founder of Tube Showroom, said SND is one of their biggest clients and said their seasonal spending surpasses a few local department stores. “With the scale it’s at, SND is competing with some e-commerce platforms in the designer fashion category,” she added.
“To be honest, most concept stores in China have good taste in terms of brand selections, what they need to improve is store operations,” Zhang said.
“I have two very senior managers who have over a decade of experience working for Macau’s Rainbow Concept to help me run the stores,” he continued, referring to the luxury distributor that helped many designer brands — including Giorgio Armani, Belstaff, Bally, Jimmy Choo among others — break into the Macanese and Mainland China markets.
“We have a comprehensive employee handbook that details every scenario, from what kind of language sales representatives should use, what distance they should keep from customers, to how to roll up trousers. We make sure that every customer receives impeccable service every time they shop with us,” Zhang said.
“Some shops might hire former salespersons from Lane Crawford or Joyce to train their staff, but the reality is that the clientele has little overlap. The kind of people shopping at those places who are used to a much higher price point is not what we are after,” he said.
Zhang’s clients in Chongqing can be broadly divided into three tribes. One set likes the bodycon sexy look, another group prefers the sweet and innocent aesthetic, and the third prefers the low-key looks popularized by Bottega Veneta and Phoebe Philo-era Celine.
Each season, SND carries around 100 brands. Designers such as Marchen, Shushu/Tong, Y/Projects, Cecilie Bahnsen and Martine Rose perform well among affluent Millennials in step with global trends, while Lemaire, Uma Wang and Paco Rabanne are top sellers for its more discreet-leaning shoppers.
“Social media has a great impact on what our younger customers want,” said Zhang, who himself can usually be spotted in simple monochromatic outfits. “They are also more or less influenced by celebrities and brand campaigns. But people in Chongqing in general value practicality over conspicuous consumption. They will think where they can wear it and whether it’s feasible with the weather before they buy it.
“We are more conservative and low-key compared to our neighbor Chengdu, even though we are known for our carefree attitude. They prefer items that showcase personality and are more accepting of bold designs,” he added.
While the retailer has undeniable momentum, Zhang is cognizant of the challenges in expanding out of SND’s comfort zone.
“It will be crucial to assemble a reliable team,” he said. “It’s also hard to find the right buyers for SND. I am doing all the buying at the moment, but as we up the ante on our online offering, the current structure will have to change.”
But if Shenzhen is pulled off successfully, Zhang has even bigger ideas. He wants the SND Stance franchise to open across the country and open one SND in each of China’s first-tier cities. His ultimate dream? Stores in Paris, New York, Sydney and Seoul.