May 17, 2011

Gucci’s Low-Key Return To Guangzhou: Missed Opportunity? Or Shrewd Move?

Gucci Recently Returned To City After Seven Year Absence

Gucci returned to Guangzhou earlier this month (Image: Yangcheng Evening News)

Gucci returned to Guangzhou earlier this month (Image: Yangcheng Evening News)

After a long seven-year absence, Gucci finally made its return to Guangzhou earlier this month. As Jing Daily wrote this January, the new Gucci location at La Perle mall comes after a series of missteps that saw Gucci focus its efforts elsewhere in China as other high-end brands streamed into Guangzhou:

As early as 2006, Gucci was looking to re-open at Guangzhou’s Grandbuy Mall, but as a mall representative told China.cn, “many international luxury brands have very specific demands when looking to open a dedicated shop, and at that time Grandbuy had no way to meet Gucci’s needs.”

Since 2006, several high-end malls in Guangzhou have fruitlessly negotiated with Gucci to open a location. According to the brand, Guangzhou’s lack of a well-defined market has been the main factor in its seven-year hiatus.

Interestingly enough, for a brand that’s been absent from a fast-growing and important city for so long, the opening of Gucci’s new Guangzhou boutique shortly before the May 1 holiday came not with a bang but with a whimper. No high-profile, star-studded event, no parties, just a store opening like any other. While this kind of modest re-launch would be par for the course in most cities, it seems to have rubbed Guangzhou’s fashion and luxury press the wrong way. Coming off of a year in which the city held prestigious events like the 2010 Asian Games, according to the Yangcheng Evening News (羊城晚报), many of Guangzhou’s more fashionable residents expected to see major labels head to the city in droves, rushing to open ever more lavish flagships. While few thought Guangzhou’s luxury market would soon catch up to other top-tier cities like Beijing or Shanghai, the newspaper writes, they thought its growing attractiveness for top brands would see it approach the level of Shenzhen, at least.

From the Yangcheng Evening News (translation by Jing Daily team):

This time last year, H&M opened its first store in Guangzhou, plastering the city with marketing materials and filling newspapers with colorful ads. By the time the store opened, a flood of people flowed in and queues circled the block. Of course, Gucci’s not a fast fashion retailer, but what’s with its low-key opening in Guangzhou? Gucci opened its first store in Chongqing this March with a star-studded event that brought in celebrities like [actress] Carina Lau for the ribbon-cutting, yet its return to Guangzhou was a silent affair. According to industry analysts, this might have something to do with the brand’s withdrawal from the Guangzhou market seven years ago.

At that time, the first luxury brands to hit Guangzhou were mostly located at the Guangzhou Marriott, and after the opening of La Perle in 2004, led by Louis Vuitton, virtually every brand gradually made its way to La Perle. Gucci remained the only holdout, choosing instead to leave the Guangzhou market entirely for reasons unknown. Maybe Gucci’s strategy of leaving Guangzhou and coming back in a low-key fashion seven years later is a form of very slow marketing. Of course, Guangzhou shoppers are already very familiar with Gucci, so maybe we don’t need a lot of pomp and circumstance — we’ll make our way to the new Gucci store on our own.

Still, many are disappointed in Gucci’s quiet return to Guangzhou, thinking that the brand missed an excellent promotional opportunity. At the end of this month, Hermes will hold an event for the debut of its store expansion in Guangzhou, and many other brands are eager to have a go at this market, including Chanel, which is planning to open its first location in China’s southwest region in Guangzhou. According to a PR rep from Chanel, the company will begin a market research effort to test out the market in Guangzhou this June. What’s more important for the Guangzhou luxury scene is that Taikoo Hui [shopping mall] will finally open in Guangzhou within the next two years, which will bring with it plenty of flagship stores.

This story brings up interesting questions that many luxury brands undoubtedly grapple with in relatively developed Chinese cities like Guangzhou. Is it better to save your lavish grand opening celebrations for younger, more rapidly growing markets in inland China, such as Chongqing or Kunming, where consumers are less brand-savvy and will be more easily wowed by celebrity appearances? Is the low-key launch (or re-launch, in the case of Gucci in Guangzhou) better for top-tier cities, or is it simply too risky? Clearly, Gucci is formulating an expansion strategy in China that puts it at odds with brands like Burberry, which recently held an extravagant blowout to celebrate its new Beijing flagship, and Diane Von Furstenberg, who held an arguably more over-the-top Red Ball in Shanghai. Who’s got the right idea? That’s anybody’s guess at this point.

However, as the Yangcheng Evening News article conceded, maybe Gucci doesn’t need to bother with blowout parties anymore. Gucci’s name recognition in a city like Guangzhou means that, no matter how loudly or quietly its relaunch, wealthy Guangzhounese will still head to the store with wallets in hand.

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Tag: branding, burberry, china expansion, diane von furstenberg... , More
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