Luxury Retailer Stresses Commitment To China, Ups Investment In Local E-tail Site
U.S. luxury retailer Neiman Marcus has scaled back its operations in China as a possible response to the country’s retail slowdown, but the company is stressing that it’s not planning to leave anytime soon.
The retailer will be cutting its China-based staff by half and closing down its Chinese warehouse, opting instead to ship goods ordered online in China overseas from the United States.
The company’s officially stated reasoning for the move is that the U.S. location “can offer a wider breadth of assortment and the orders are more timely” as opposed to being based in China. Though this approach may seem counterintuitive, Steven Millward at Tech in Asia believes this approach does have logic to it, noting that orders shipped from the United States, despite having a longer way to travel, will “no longer [be] held up by local bureaucracy.”
Its online retail site is still localized in China, and new U.S. staff will reportedly make up for the number cut in China, according to Neiman’s vice president of corporate communications Ginger Reeder in a Women’s Wear Daily interview. The retailer actually recently upped its stake in Chinese luxury e-tailer Glamour Sales, of which it now owns 44 percent after an initial $28 million investment last year.
This investment marked the retailer’s entrance into the China market, and its presence was later expanded with the launch of its Chinese-language e-commerce site in December 2012. The site was promoted in April with a Shanghai runway show with an audience made up of potential customers, artists, musicians, and socialites. The company has also made its way onto Chinese social media, holding promotions on Sina Weibo such as a ticket giveaway for the show.
The retailer originally pegged the e-tail site as a success, stating that the average Chinese customer spent more per order than the average American, and noting particular growth from second- and third-tier cities. Because this statement was made so recently, it is highly possible that the reasoning for the location shift was indeed red tape. It is also not unlikely, however, that the company is responding to the luxury slowdown.
Customers on the mainland certainly aren’t the retailer’s only source of Chinese revenue. Neiman Marcus has made efforts to appeal to Chinese tourists visiting its U.S. store locations, including Bergdorf Goodman, which in the past have hosted exclusive events for Chinese customers.