Europe's largest clothing retailer eyes China
Wednesday, 22 August 2007
MADRID, Aug 21 (AFP): Spain's Inditex, Europe's largest clothing retailer by sales, is looking to expand in China, attracted by the rising spending power of consumers in the fast- growing Asian country.
The firm, whose chains include Zara and Bershka, will focus its growth in Beijing, Shanghai and Hong Kong, Inditex chief executive officer Pablo Isla told an annual shareholders' meeting last month.
The announcement of the firm's Chinese expansion plans follows the opening in April of Swedish clothing retailer H & M's first store on the mainland, and underscores the growing appeal of China to international fashion retailers.
The Spanish fashion house has not set a specific goal as to the number of new stores it intends to set up in China, where it currently has nine Zara outlets, a spokesman told AFP.
But later this month Inditex will open its first Massimo Dutti store, which stocks smart casual items, in the Chinese territory of Macau, with another outlet set to open in Hong Kong next year, he said.
"I think that China is the next frontier," said Marian Salzman, chief marketing officer with US-based advertising agency JWT that has studied the Chinese market.
"With everyday analysts becoming savvy about the sheer demographic reality of China, there is no retailer of scope without a plan for expansion," he told AFP.
There will be 220 million households in China's cities making between 5,000 and 12,500 dollars a year by 2025, compared to 23 million in 2005, international consulting firm McKinsey estimates.
Inditex already faces competition in China from Spain's Mango, Germany's C & A as well as a raft of local brands such as Hong Kong- based Esprit in addition to H & M.
The firm faces a cost disadvantage in China since competitors source a greater proportion of their merchandise from the region, said Matthew Stych, global director for retailing research at London-based market research firm Euromonitor.
The firm, whose chains include Zara and Bershka, will focus its growth in Beijing, Shanghai and Hong Kong, Inditex chief executive officer Pablo Isla told an annual shareholders' meeting last month.
The announcement of the firm's Chinese expansion plans follows the opening in April of Swedish clothing retailer H & M's first store on the mainland, and underscores the growing appeal of China to international fashion retailers.
The Spanish fashion house has not set a specific goal as to the number of new stores it intends to set up in China, where it currently has nine Zara outlets, a spokesman told AFP.
But later this month Inditex will open its first Massimo Dutti store, which stocks smart casual items, in the Chinese territory of Macau, with another outlet set to open in Hong Kong next year, he said.
"I think that China is the next frontier," said Marian Salzman, chief marketing officer with US-based advertising agency JWT that has studied the Chinese market.
"With everyday analysts becoming savvy about the sheer demographic reality of China, there is no retailer of scope without a plan for expansion," he told AFP.
There will be 220 million households in China's cities making between 5,000 and 12,500 dollars a year by 2025, compared to 23 million in 2005, international consulting firm McKinsey estimates.
Inditex already faces competition in China from Spain's Mango, Germany's C & A as well as a raft of local brands such as Hong Kong- based Esprit in addition to H & M.
The firm faces a cost disadvantage in China since competitors source a greater proportion of their merchandise from the region, said Matthew Stych, global director for retailing research at London-based market research firm Euromonitor.