MSGM Opened A Store In China Amid COVID-19: Now What?

    As China reopens, the Italian high-end streetwear brand MSGM decided to open its tenth store in Zhengzhou, China. What’s behind this strategy?
    As China reopens, the Italian high-end streetwear brand MSGM decided to open its tenth store in Zhengzhou, China. What’s behind this strategy? Photo: MSGM Spring 2020 Campaign.
    Ran BiAuthor
      Published   in Retail

    As China entered a post-coronavirus period, businesses commenced commercial activities across the country on a step-by-step basis. It was during this moment that MSGM, the Italian high-end streetwear brand, decided to open its tenth store in Zhengzhou in central China.

    The 75-square-meter store, which is located on the second floor of the Grand Emporium shopping mall, features a broad selection of MSGM products, including men’s and women’s ready-to-wear collections and a full range of accessories. The store features MSGM’s signature design concepts of neon, logo clusters, and graphics, bringing a modern version of the traditional Italian vibe to Chinese youngsters.

    It isn’t hard to recognize MSGM’s ambitions in this mainland China expansion strategy. After the Italian investment fund Style Capital acquired a 32-percent stake in the label in 2018, MSGM’s direct retail network began to develop rapidly. It launched a store on the Chinese e-commerce platform Tmall during the fall of 2019, which the brand followed by opening an official e-store on during the COVID-19-heavy month of March 2020.

    Chinese consumers responded with positive feedback on the brand’s high-end street designs. Celebrities like Yang Mi (杨幂) and Victoria Song (宋茜) frequently wear logo-clad MSGM items at social events, media gatherings, and on the town. Yang even drove ten times the sales of a certain MSGM logo sweater featured on by wearing it publicly. Social media stars with massive, young fan bases are also endorsing MSGM by wearing the brand on many occasions.

    When Chinese people were forced to stay inside during COVID-19, watching livestreams featuring fashion icons became their primary way of inspiring their purchases. Streetwear is popular with everyone in China from movie stars to high school girls, and heavily-logoed shirts and boxy-silhouette hoodies are necessary for any brand like MSGM that wants to seize this trend.

    “MSGM logo shirts and skirts are always on the bestseller list,” said Yuena Lin, an MSGM store manager in Guangzhou, adding that customers would usually choose signature pieces that were hot on social media platforms. Once the millennial audience realizes the label is cool and affordable, the brand will be able to sell itself, “but the market needs time to target and cultivate the right group of customers,” Lin explained.

    But will MSGM cash in on this opportunity?

    The Chinese market seems to be ready for a classy-yet-contemporary label like MSGM. The brand’s modern, youthful, and European DNA embodies what Chinese Gen-Z customers are all about. While street culture has already had a strong moment in China, Chinese people now want to make fashion statements in a more casual way. So, the timing is perfect for MSGM’s expansion. The era of pursuing international luxury logos is already over in China, but today’s fashion fans love the flair of logos while wanting more self-expression, effortless style, and a new kind of social buzz. MSGM fills the vacuum between traditional high-end fashion and street style.

    As part of its product categories expansion, MSGM is also building a new shoe collection. In the Asian market, the sneaker industry is growing fast, and mainland China’s athletic footwear market is expected to reach 10 billion in 2025, according to a Grand View report. For MSGM, sneakers will make up 80 percent of the brand’s footwear collection, and a more Asia/China-focused shoe line will surely bring the brand more possibilities.

    MSGM is a clever brand that's quick to translate trends into ready-to-wear garments. Electric neon colors, bike shorts, gigantic bows, and unisex floral prints are all trends that have helped make MSGM a success in Milan, New York, Tokyo, and Shanghai, while its Italian elegance continually sets the tone. Now the young brand must figure out how to leverage its retail resources inside China.

    Fortunately, MSGM’s competitive retail pricing has attracted lots of Gen-Z consumers in China. “MSGM and Acne Studio come to my mind first if I want to buy something cool and versatile,” said Maggie Huang, a Gen-Z fashion enthusiast who works in Shanghai. She added that the price is not only acceptable but that the clothes also satisfy her cravings for high-quality, made-in-Italy pieces. “Good design plus good price” could be one of the best ways to engage young Chinese customers, aside from the lure of MSGM’s already-trendy streetwear.

    According to Priscilla Liu, the branding manager of China’s top online fashion retailer, Secoo, MSGM’s performance this year has been very competitive thus far. However, MSGM currently only collaborates with offline retailers in mainland China, which means that the brand isn’t arousing enough attention online. This won’t work in the long run in post-COVID-19 China. “Although its products were within the brand list on some fashion retail platforms like Farfetch and Secoo, that was only temporary, and a mature retailing mode has yet to be established,” Priscilla explained. “MSGM’s current expansion is relying on its own boutiques and offline buyers’ private stores. That isn’t sexy if you want to appeal to young fans.”

    Aside from its challenges with e-commerce channels, another tricky factor for MSGM is that the lifecycle of China’s streetwear phenomenon is getting shorter. Major trends in China tend to last about five years, and most streetwear brands have struggled to maintain their coolness or avoid repetitive designs. This could also be a problem for MSGM. “Domestic streetwear brands are unexpectedly popular among Gen-Z customers,” said Liu, who also suggested that less popular streetwear brands from Europe and East Asia were now ready to enter China and could lead to an even more diluted market.

    Undoubtedly, the competition from high-fashion brands is strong. When Jimmy Choo co-branded with Off-White — like Supreme did with Rimowa and Alexander Wang did with Adidas — high-end luxury brands soon realized that they needed to stretch past their limits and embrace street culture. Those brands can afford to employ top marketing resources for tailormade social media campaigns in China, and the stickiness of their loyal fans can make for terrific online buzz. Surely, coping with this stiff competition will be the next hard lesson for fresh, young brands like MSGM.

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