Caixin
Dec 22, 2016 07:26 PM
BUSINESS & TECH

House of Fraser Unveils First Shop in China

A House of Fraser department store is on Oxford Street in central London's shopping district. Photo: Shutterstock
A House of Fraser department store is on Oxford Street in central London's shopping district. Photo: Shutterstock

(Beijing) — British retail giant House of Fraser unveiled its first store in China on Wednesday, marking the start of its expansion into the world's fastest-growing retail market.

The store, located in Nanjing, the capital of the eastern province of Jiangsu, brings the total number of House of Fraser stores worldwide to 61.

The move comes two years after Chinese conglomerate Sanpower Group Ltd. bought an 89% stake in the retail giant.

Sanpower, which also acquired American specialty retailer Brookstone in 2014, will use some of Brookstone's resources to support the new venture, according to Kong Jun, CEO of House of Fraser's China operations. Brookstone opened its first store in China earlier this year.

The opening of the new House of Fraser store comes as its Western peers, including Marks & Spencer PLC and Tesco PLC, are leaving the market after failing to appeal to local tastes and struggling to compete with online retailers.

Nearly 85% of all listed department store operators in China saw their revenue decline in the first quarter of the year, according to retail information provider LinkShop.

In a bid to buck this trend, the new House of Fraser store will combine offline business with online services, Kong said.

Online shopping dominates China's retail industry, with 73% of Chinese consumers using phones to make purchases, compared with 40% consumers globally, according to an Accenture report.

However, consulting firm iResearch predicts that the sector will secure annual growth of only 16% in 2018, far less than the 70% gain seen in 2011.

E-commerce companies, on the other hand, have started to roll out offline services in a bid to improve user experience and reduce the proliferation of fake goods circulating online.

Online shopping firm Alibaba Group Holding Ltd. plans to invest in supermarket chain Sanjiang Shopping Club, while competitor JD.com Inc. has invested in supermarket operator Yonghui Superstores Co. Ltd.

The future of China's offline retail sector is looking reasonably positive. Last month, the State Council, China's cabinet, issued guidelines supporting the sector, and at the same time, the consumer price index is expected to continue to see a moderate improvement, said Xu Wen, a retail analyst with Sinolink Securities.

Contact reporter Coco Feng (renkefeng@caixin.com)

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