The Battle Is On Between High-End & High Street Brands In China

Mainland Chinese Tourists Line Up Outside Hollister As Well As Chanel

Abercrombie & Fitch will open its first Hong Kong flagship on August 11

One topic that has recently been on the lips of many Hong Kong residents is the upcoming flagship launch of the American high street fashion brand, Abercrombie & Fitch, on August 11.

People aren’t just excited to gawk at the half-naked guys who will be flown in to Hong Kong for the opening, but are also keen to find out if A&F will survive after taking over its spot at the historic Pedder Building from long-time resident Shanghai Tang, paying a reported HK$7 million (US$900,000) per month in rent.

The debut of Abercrombie & Fitch in Hong Kong is quite interesting, as it reflects how major high street brands are, in some ways, outdoing luxury brands by taking over some very prominent locations in key cities. Another example in Hong Kong is Forever 21. According to the company, Forever 21, which opened its first Hong Kong store this January, is paying US$1.4 million per month — its highest rent in the world, both in total terms and per square foot. It even pays less in New York’s Times Square.

With over 28 million mainland Chinese tourists passing through Hong Kong last year, many international brands (both luxury and high street) see Hong Kong as the gateway to China, and are now competing fiercely for every last yuan.

Yes, long lines of mainland Chinese tourists are a regular sight outside the Louis Vuitton, Chanel, Burberry and Gucci stores on Tsim Sha Tsui’s Canton Road in the Kowloon peninsula, due to the significantly cheaper retail price of those brands in Hong Kong. But more rarely mentioned in the media is the long line that snakes outside the door of Hollister’s store at Festival Walk.

Forever 21 made its Hong Kong debut in January

With Chinese consumers wising up and becoming more discriminating, the slowdown in luxury spending in China is dragging Hong Kong retail sales growth to its weakest pace since 2009. Sales increased 8.8 percent in May to HK$36 billion ($4.6 billion), the smallest increase since September 2009 (with the exception of seasonal distortions every January and February).

Are Chinese people really spending less, or are they just choosing to spend their money on other brands that are less luxurious? With more international fashion brands streaming into China, competition is heating up, both on- and offline.

High street fashion brands were among the earliest adopters of social media marketing, using the medium to engage directly with their young target consumers. This marketing strategy has, by and large, been highly effective, leading many luxury brands to realize they could no longer ignore the trend. Now, the majority of top luxury brands are investing heavily in their digital marketing efforts.

The main difference between the way high-end and high street brands use social media is that luxury brands tend to use it as a platform for “free” marketing — showcasing their latest collections and educating potential consumers on brand history — while high street fashion brands generally use social media to interact with their consumers. Forever 21 launched a “fashion hunt” on Facebook earlier this year as part of its Hong Kong flagship launch, while Abercrombie & Fitch recently wrapped up a Sina Weibo contest in preparation for its grand opening.

High street brands have used social media effectively for consumer engagement

While most luxury brands live-stream runway shows and promote their collaborations with celebrities, they still have a long way to go to find a balance between maintaining a luxurious and exclusive brand image and interacting with fans in more creative ways.

Studies show that Chinese netizens regularly use Weibo to show off, but that’s starting to change as well. Tighter scrutiny of corruption and last year’s Guo Meimei Red Cross scandal have made people more aware that showing off might be a quick way to get themselves in trouble. And, as consumers become gradually more brand-savvy, online “showoffs” put themselves at risk of being derided as brand worshippers with no taste when flaunting mainstream luxury brands. So, as a result, we’re seeing more Chinese netizens sharing items from more reasonably priced brands, rather than big names.

The battle is on in China, between the high-end and the high street. Which side are you taking?

In addition to her work as a social media and PR professional, blogger and brand consultant, Hong Kong-based Elle Lee now hosts the new online program Weibo Today. Check out Elle’s personal site at elleiconlee.com and follow her on Twitter at @ElleIconLee or Sina Weibo at @ElleLeeHK

(Opinions expressed by Jing Daily columnists do not necessarily reflect the opinions of the Jing Daily editorial team.)

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