HONG KONG—Shiatzy Chen is targeting younger consumers, plotting international expansion and looking to branch out into new product categories such as fragrance and eyewear.
The Taiwanese luxury label, started by Wang Chen Tsai-Hsia in 1978, is facing two challenges. The brand, best known for its Chinese fusion aesthetic, is seeking to expand outside of China. At the same time, it is reaching out to a younger clientele. In Taiwan, the average age of the customer is about 50 while in mainland China, the average age is about 40.
Wang said creating apparel that appeals to younger customers is an important move. The label is doing this by following certain trends and also bringing in and nurturing young talent, she said. This summer, the brand opened a store in Hong Kong with a new retail concept targeting younger consumers.
“It’s difficult but something we have to do,” she said.
The label is planning an extensive expansion overseas and intends to have 200 stores worldwide by 2020. Shiatzy Chen currently has 70 stores worldwide in Taiwan, Hong Kong, Macau, China, Japan, Malaysia and Paris and will be adding more stores in all those markets except Taiwan. Most store openings are planned for China.
Shiatzy Chen also plans to open 19 more stores in Japan, and 4 more in Hong Kong and Macau by 2020. The designer is also looking to new markets such as Singapore.
Though Taiwan is currently the label’s largest market with 40 stores, the company said it expects overseas revenue to equal Taiwanese revenue by the end of the year. The company said sales worldwide totaled $75 million last year.
Shiatzy Chen’s new retail concept was unveiled earlier this summer. The 1,300-square-foot store, located in the Elements mall in West Kowloon, opened in July. Designed by architect Johannes Harrfuss, the company describes it as “east meets west with a touch of modern chic.” The new store concept has a lighter color palette than Shiatzy Chen’s previous stores. It features honey colored marble tiles and creamy silk panels on the wall. Shelving made of dark woods and bronze metalwork from a dark ceiling creates some contrast. There is also a modernized version of a traditional Chinese screen.
Harry Wang, chief executive of the brand and the son of the brand’s designer, said the brand’s previous retail concept felt dark and needed an update.
“When we met with the designers, we told them we wanted something younger, lighter and trendier,” Harry Wang said of the brand’s fourth store in Hong Kong.
The newly-designed store concept will be rolled out in all future new store openings. Shiatzy Chen currently has 16 stores in mainland China and expects to have 22 by the first quarter next year.
Out of the brand’s 70 stores currently, about 25 are shop in shops. Wang said he¹s wary of distributing through multi-label stores in Asia, except maybe in Japan, because there is a lot of copying in China. In China, we do everything ourselves. If imitations crop up, it would hurt our brand. We’d rather open fewer stores and enhance our brand reputation than over 100 stores and risk quality control problems.
Like other luxury retailers, Shiatzy Chen is seeing sales dented by the economic slowdown in China as well as the crackdown on luxury on spending.
“We were quite lucky for the first five months of the year we still maintained 10 percent same store growth over last year. But then June and July were down 20 percent by August bounced back up to about 3 percent growth,” Harry Wang said, although he expressed optimism that things will turn around soon.
“It’s pretty bad already. It’s going to get better. I think it’s going to pick up maybe next year,” he said.
Meanwhile, Shiatzy Chen is looking to bulk up its accessories lines and lifestyle categories. The label is working on a toiletries line with L’Occitane for Taiwan, is looking into a glasses deal and has been talking to Estee Lauder about launching a perfume line. Shiatzy Chen has also launched Cha Cha The, a line of Chinese teas, teaware and sweets.
Accessories currently make up about 25 percent of sales while women’s ready to wear make up the other 75 percent. Wang said he hopes to increase accessories sales to something closer to the luxury industry norm of 60 percent.