Neiman Marcus Makes First China Play With $28 Million E-Commerce Investment

Strategic Investment In HK-Based E-Commerce Company Glamour Sales Holding In a development rumored since last October to take place some time in 2012, the American luxury retail group Neiman Marcus is finally set to kick off its China expansion with a US$28 million investment in the privately held e-commerce company Glamour Sales Holding. As Jing Daily noted last year, Neiman Marcus has been researching the rapidly growing (but increasingly crowded) China luxury e-commerce market aggressively over the past year, with the company dispatching teams to "investigate both brick-and-mortar and e-commerce opportunities" in the country. However, Neiman Marcus will, for the time being, hold off on the physical locations, instead focusing on e-commerce in China and accommodating the "influx" of outbound Chinese tourists that Executive VP Neva Hall recently noted at her stores in Hawaii, San Francisco, Los Angeles, New York, and Las Vegas. Discussing her company's non-controlling investment in Glamour Sales Holding, Neiman Marcus Group President and CEO, Karen Katz, said this week that the move is being made to make the company an "international brand," adding, "Our strategic investment in Glamour Sales gives us a tremendous partner and a strong foothold in a rapidly expanding luxury market.” Through Glamour Sales Holding, Neiman Marcus plans to launch a new e-commerce website by the end of this year, which will include an "expertly curated mix" of full-price, current-season offerings. Like Net-a-Porter's new China site, Outnet.cn, Neiman Marcus will pack its e-commerce site with editorial content, fashion advice and expertise, and behind-the-scenes videos. While most of this is becoming par for the course as e-commerce "brands" like Net-a-Porter and Yoox expand in China, the important thing here is that Neiman Marcus hopes to position itself solidly as a luxury retailer by avoiding the heavy discounts that Chinese platforms like 360Top, Taobao's T-Mall and Shangpin have made central to their business. According to a company release, the $28 million investment that the Neiman Marcus Group is set to make in Glamour Sales Holding will first be used to "help fuel the growth of Glamour Sales’ existing and successful flash sales business in Asia and build a new branded e-commerce business." At the same time, the two companies plan to combine talent to create a new team in China that will oversee the development, launch and management of the new e-commerce site. As Olivier Chouvet, CEO of Glamour Sales, put it this week, the combination of these two companies represents "the coming together of two pioneers." Said Chouvet, “Neiman Marcus was the first luxury retailer to go online and Glamour Sales was the first to bring authorized flash sales to China." Karen Katz, remarking on the century-long history of her company's two brands, Neiman Marcus and Bergdorf Goodman (which recently hosted a group of high-net-worth Chinese as part of New York's Dragon Week), said, "We believe that our vast experience and history of success in luxury and fashion, customer service and e-commerce, combined with Glamour Sales’ keen understanding of the Chinese market, presents us with a unique opportunity to build a vibrant full-price, multi-brand, luxury online business in China." Chouvet added that an added value of the Neiman Marcus name is providing customers the "peace of mind" that all goods to be sold on the new e-commerce site are "authorized, authentic and sourced directly from the manufacturer.” Neiman Marcus is choosing a good time to enter China’s booming luxury e-commerce market. Despite concerns about overcapacity, the market surpassed 10 billion yuan (US$1.59 billion) for the first time last year, a nearly 70 percent leap over 2010, and is expected to post 30 percent annual growth over the next several years. Though it lags far behind the e-commerce markets in the US and Japan, the 10.73 billion yuan in revenue the Chinese luxury online retail market pulled in last year is expected to surge to an impressive 37.24 billion by 2015. As Chen Xiao of the Chinese luxury website ihaveu.com said last month, “So far, China’s online luxury market has remained small. We are waiting for it to explode.”

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Neiman Marcus Makes First China Play With $28 Million E-Commerce Investment