High-end underwear sales are exceeding China’s normally downbeat luxury market, and warming up competitors in between global brand names and regional competitors wanting to go upmarket. U.S. brand name Victoria’s Secret will open its first store, and business including Italy’s ultra-luxury La Perla and Germany’s Victory are adding stores and moving beyond China’s mega-cities to tap a lingerie market that has actually more than doubled in 5 years to $18 billion, according to Mintel Group. Chinese consumer tastes are maturing, females are more positive about purchasing for themselves and President Xi Jinping’s drive versus noticeable usage is most likely diverting spending from flashy branded bags and accessories to sports and ath-leisure wear and the more discreet lingerie. “Luxury is … not about purchasing to show off, it has to do with buying products that make you feel good,” says Chiara Scaglia, La Perla’s Asia chief. China’s females’s underwear market is expected to have a retail value of $25 billion by next year – double that of the United States – and will grow to $33 billion by 2020, according to Euromonitor. Chinese firms such as Beijing Aimer, Maniform and Ordifen are likewise chasing that cash, targeting higher-end customers and raising their quality. “That means foreign brands will have to out-compete local brands not simply on quality, but also innovation,” stated Matthew Crabbe, director at Mintel. In the meantime, the marketplace is highly fragmented, with none of the prominent firms having more than around a 3 percent share. International brands see China as a concern to help boost total sales given a relatively bleak global outlook. La Perla, which sells bras priced around 2,000 yuan ($ 300), has 8 shops in China and plans added outlets in Chengdu and Chongqing within the year. It likewise aims to open a males’s store in Beijing. “The perception of the lingerie sector has altered,” Scaglia informed Reuters. “At the starting lots of people we spoke to were confused as to why anybody should invest over $1,000 on panties for something nobody sees.”
EXPANDING FOOTPRINT Victoria’s Secret will open a 20,000 square foot (1,860 square meter) flagship shop in Shanghai this year, taking control of a prime downtown location that utilized to house a Louis Vuitton shop. “I think it will reveal our arrival in China in an extremely substantial way, and ought to be the start of an enormous business for us,” stated Martin Waters, L Brands International President. Victory, which already has 1,000 China stores, plans to open in 5 new cities this year and as much as 11 cities next year. Cosmo Lady (2298. HK), a Chinese firm that has actually focused on the mass market, selling bras from 50 yuan ($ 7.50), in 2014 purchased Ordifen to increase its existence in the high-end market.
” We would like to slowly step into the high-end market,” stated Peter Lam, Cosmo Lady’s assistant chief financial officer. Gao Qiannan, a 22-year-old Shandong student who states she spends upwards of 1,500 yuan a year on underwear, doesn’t think there’s a huge difference between Chinese and foreign brands. “If I can buy a domestic brand, I will, but if I particularly like the worldwide brand name’s design, I’ll get that,” she stated. The global brand names say they don’t offer items specifically for the Chinese market, though La Perla keeps in mind that some colors – red and infant pink – sell far much better in Asia than in Europe or the United States. The Italian brand name has actually likewise used Chinese supermodel Liu Wen in its projects. Japanese and South Korean brands are also growing in appeal in China.
Yin Huijuan, 23, who spends 800 yuan ($ 120) on underwear every 3 months, said she chooses Japanese brands such as Wacoal and Narue. “I feel foreign brands’ style is more in-depth and diversified, these are areas where domestic brand names fail,” she stated. CUSTOMER CARE, ONLINE COMPETITION Even in the lingerie market, though, there are bumps. Cosmo Woman, which has 8,600 outlets consisting of Ordifen’s 550 China shops, saw robust development in its mass market sales last year, but has warned about its revenues for the first half of this year, pointing out China’s slowing economic growth, customer care and contending online sales. Hong Kong-listed Embry Holdings (1388. HK), which owns the Embry Form underwear brand, stated its group retail sales slipped by almost a 5th in April-June on harder competitors and the economy. In spite of those bumps, the underwear sector keeps a strong appeal, said Eugene Mak, an analyst at China Merchant Securities in Hong Kong, and firms like Cosmo Woman are still exceeding other garments sellers. He anticipates the market will strike a consolidation phase at a long time. “It’s an extremely young market, but in the near-term it’s going to be untidy,” he said. (Reporting by Farah Master, with extra reporting by Giulia Segreti in Milan, Shanghai newsroom, and Sharon Shi and Joyce Zhou in Hong Kong; Editing by Ian Geoghegan).