Italian Handbag And Footwear Designer Planning Double China Locations#
Sergio Rossi is planning a broader China expansion in the next few years
Over the past year, one of the trends we've seen shaping up in the China luxury market is international brands buying back control from local franchise partners or brand agents, in an attempt to better control brand image and avoid over-expansion. Burberry's success in mainland China since buying out its local trading partner, Kwok Hang Holdings, for £70 million (US$107.65 million) last summer has become something of a case study in how to expand while keeping a tight lid on brand image and unifying brand message, one we've recently seen emulated by non-luxury brands like Starbucks.
This week, the Italian footwear and handbag brand Sergio Rossi announced plans to buy back five China franchises from its local partner, Kutu Trading Co., and double its mainland China locations within the next several years. The five franchises acquired by the brand are located in Beijing, Shanghai, Ningbo and Shenzhen, indicating the company may have plans for a major push in China's larger cities -- possibly entailing something akin to the star-studded events recently held by Diane Von Furstenberg and Burberry. However, Sergio Rossi is apparently in no rush to control every aspect of its China operations, as the brand announced that it plans to maintain its partnership with Sichuan Lessin Department Stores in order to prepare for expansion into more second- and third-tier cities.
As Sergio Rossi CEO, Christophe Melard said this week, "We've been in the China market for five years now, and we're ready to develop even further. We plan to double our China locations in the near future." Melard went on to say that he feels that Chinese consumers are maturing quickly, paying more attention to quality and comfort than simply price tag and logo. Melard also added that Sergio Rossi has made localized collections for the China market, taking into account the colors and materials preferred by Chinese consumers.
While acquiring these franchises, and prepping for a larger-scale push into second- and third-tier cities, is likely a good step, the trend of re-acquiring licenses appears, on a global scale, to be the way forward for luxury brands. As Lanvin CEO, Thierry Andretta, said at the recent FT Business of Luxury Summit in Lausanne, Lanvin only has two existing licenses in Korea and Japan, and the brand is looking to buy back control within a matter of years. If the five locations purchased by Sergio Rossi see a significant increase in sales, and the brand can heighten its visibility among Chinese consumers, we might just see the company buy back complete control at some point.