Retail news from around the world

Chemist Warehouse opens store in China

Australia’s largest pharmacy chain, the privately owned Chemist Warehouse, is opening its first bricks-and-mortar store in Zhengzhou City, Henan Province, and launching on a new online marketplace in China, as cross-border demand for its beauty and mums-and-bubs products continues to drive strong sales growth.

“It is an [online-to-offline] self-pick-up store where customers can actually shop in the store, like a real Chemist Warehouse shopping experience,” Chemist Warehouse China chief operating officer Nancy Jian told Inside Retail.

The new store, located in central inland China, will be a “pilot store, and we hope to be able to replicate this in other cities of China as well once we get everything right,” Jian said. “It will be a real Chemist Warehouse store, which is 100 per cent devoted to Chemist Warehouse products.”

Chemist Warehouse is the number one cross-border retailer on Alibaba’s Tmall Global site, partnering with the marketplace in 2015. It had a hugely successful Singles’ Day on November 11 last year, selling more than $20 million worth of products to Chinese consumers in the first seven hours of the annual 24-hour sale, Jian told The Australian newspaper.

Year-on-year sales for Chemist Warehouse’s flagship store on Tmall grew at a rate of 52 per cent, with the main growth coming from its beauty and mums-and-bubs categories.

Alibaba Australia and New Zealand managing director Maggie Zhou recently told Inside Retail this was because, in China, Australia is perceived as clean and natural. 

“For things to eat, to drink, to use on your skin, [Australian products] are really well thought of by the Chinese consumer,” Zhou said. 

Jian said the store will utilise learnings from Alibaba and Tmall to ensure it is stocked with products tailored that are locally tailored: “Store setup and merchandising of the store will be very similar,” Jian said.

“The difference will only be currency and pricing structure; some product range and brands we keep in this store will be different as we started global sourcing this year – sourcing more cross-border brands globally that are more suitable for the Chinese consumer.”

Jian noted that shopping online can be distracting to customers, and that a physical presence would give buyers more confidence in cross-border products – as they will be able to see, touch and feel the products prior to purchase. 

“We are hoping to create a more real shopping experience for our customers,” she said.

“Consumers walk in the store, grab a basket, shop around the store, and when they come to purchase the product, they show their ID to finalise the purchase and walk away with their shopping bag after a few minutes of custom clearance,” she said.

Chinese law dictates that customers purchasing cross-border products are required to provide a valid Chinese ID, which will be provided by the vendor to China Customs electronically to complete the purchase. 

The discount pharmacy retailer also announced that it had extended its partnership with Alibaba for two more years, and would expand beyond Alibaba’s Tmall marketplace onto its recently acquired Kaola, as well as Lazada.

While Kaola is a marketplace that focuses solely on cross-border brands in China, Lazada trades within other regions of Southeast Asia, expanding Chemist Warehouse’s reach into Singapore, Malaysia and the Philippines. 

“The exciting part for us is to continue growing our cross-border business, not only in China but hopefully soon in Southeast Asia,” Jian said. 

LVMH weathers Hong Kong storm

France’s LVMH, the conglomerate behind luxury brands like Christian Dior, Louis Vuitton, and Veuve Clicquot champagne among others, has beaten third-quarter sales forecasts, despite the unrest in Hong Kong, where it traditionally does a great deal of its trade. 

The news should encourage other luxury goods producers, which have been facing store closures and much reduced foot traffic due to the pro-democracy mayhem that has overtaken the city in the past four months.

LVMH, which is kicking off the reporting season for luxury firms, has stood out for several years now as one of the top performers in an industry where not all labels are benefiting to the same degree from booming Chinese appetite for branded goods, according to Reuters.

Overall in the quarter, LVMH’s sales were up 17 per cent to €13.3 billion ($21.7 billion), bolstered by strength in mainland China and Japan.

Links of London enters administration

Well-known UK jewellery maker Links of London has collapsed into administration,  putting about 350 jobs at risk and adding to the list of high-profile retailers to run into trouble on Britain’s high street.

Administrator Deloitte says it will continue to run Links of London and will explore options for a sale. It also says no job losses were being announced at this stage and the company’s international operations were not directly affected.

The chain, which is owned by Greek group Folli Follie, operates 35 stores and concessions in the UK and Ireland and some 330 stores worldwide. It has been seeking a buyer since last August. The Guardian reports that Sports Direct owner Mike Ashley and Hilco Capital, the owner of Homebase, were reported as potential bidders.

In the most recent available figures, Links of London’s UK business reported a pretax loss of £20.5 million ($37.7 million) and revenues of £42.9 million ($78.9 million) in 2017.

Levi Strauss profit falls 4 per cent

US clothing company Levi Strauss, known the world over for its classic denim jeans, has reported a 4 per cent drop in third-quarter profit, which it sheeted home to distribution problems and other difficulties in the wholesale business in the Americas, its highest revenue-generating market.

“US wholesale is challenged,” CEO Chip Bergh said in an interview with Reuters,

“particularly the legacy department stores and chain stores, where the much publicised traffic declines have negatively impacted our business.”

He said Levi’s is now focusing on its own stores and online.

Analysts told Reuters that in the long run, Levi’s D2C model would yield results, but issues in the wholesale business remained a concern.

Levi’s revenue from D2C business in the US rose 7 per cent in the quarter ended August 25, driven by the strength of its flagship brand, while that from wholesale declined 4 per cent.

Ikea to build in Slovenia

Swedish furniture giant Ikea has expanded again, starting construction on its first store in Slovenia this month, with completion expected in about one year.

Ikea said it would invest €90 million ($146.4 million) in the Ljubljana store, which will employ about 300 people.

Ikea already operates stores in several neighbouring countries, including Italy, Austria, Croatia and Hungary.

Target to power Toys ‘R’ Us online

Target has announced a partnership with Tru Kids, the parent company of the Toys ‘R’ Us brand, to power the toy retailer’s US online business just in time for Christmas.

The move, says Forbes, makes Toys ‘R’ Us “more social influencer than retailer”, using its well-known brand to steer sales to its retail partners, for which it will receive a small cut of the proceeds.

The partnership with Tru Kids builds on Target’s earlier efforts to boost its toy sales. Earlier this month, it opened 25 new Disney stores inside select Target locations with a “shop-in-shop” layout, near its kids clothing and toy section.

Last year, Target added nearly a quarter of a million square feet of new space to its toy business across 500 of its stores, to notch up more toy sales, Reuters reports.

Putting the boot into Vans

US shoe brand Vans, known for its skateboarding culture and popularity among youth, is facing a backlash from consumers the world over for its handling of a controversial entrant in its Custom Culture shoe design contest. 

The contest – to design a new pattern for its Authentic skate shoe – attracted at least one problematic entry:  a design featuring a red Hong Kong Bauhinia symbol, and a group of masked individuals bearing goggles, mask and a yellow hard hat – all representations of the current Hong Kong protest movement. 

Vans, fearing the wrath of China, quickly disqualified the entrant, saying the company “had never been political”. 

Its trendy customers quickly responded, with memes and satire and community action, including organising a boycott of Vans, its parent company VF Corporation and its other subsidiaries.