No 'Sure Thing' in Global Retail
January 2, 2006,
New York — China and India offer virtually unlimited retail growth, particularly for home fashions retailing, but to reach that promised land merchants will have to travel through unknown and often dangerous territory.
Among the venues the group toured were the Golden Resources Mall — the largest in the world — in Beijing, and the Super Brand Mall in Shanghai, across from the Oriental Pearl Tower.
“They are examples of the large amount of investments that have come pouring into China,” noted Badillo. “They also show that for all their promise it's still too easy to get it wrong in China.
“The Super Brands Mall already appears to be in decline. It seems poorly designed for foot traffic and large parts of the mall are unoccupied. Meanwhile, the Golden Resources Mall has just recently opened but its immensity really makes you wonder just how it's going to fare in the long term.”
Still, the opportunities seem compelling across retail and particularly for home, still largely dominated by small local merchants with a few developing larger retailers.
“There are very few competitors in the home furnishings and home fashions arena,” Tackett explained.
One noteworthy operation was Home Way, an operation owned by the Home World Group. The retailer uses orange signage, likely to create some confusion when Home Depot enters the marketplace, but of perhaps greater import, the retailer makes liberal use of product vignettes, suggesting uses and settings for the products, Badillo noted.
“A lot of this has to do with the fact that China is more of a 'do-it-for-me' market than a do-it-yourself market,” he said. “Home owners typically come to these stores with a contractor or designer, and the displays make it a lot easier for them to give their hired help an idea of what they want to do in their home.”
At least as fascinating was that the merchant was part of a three-store complex owned by Home World. Home Way is next door to a Home World supercenter and between the two is a home fashions store with an Ikea-type appeal.
“The complex is something a little different in a China home goods market that is not yet very well developed,” Badillo offered. “Much of home goods retailing in China is very much dominated by local home products specialists that line the neighborhood main streets — and that's even more the case in India.”
The tour also highlighted critical differences among consumers in the two countries. While Chinese shoppers focused more on brand names — even counterfeits — consumers in India were quite happy with product mixes dominated by private labels.