Brand Agreement In Italiano
Kering`s work will not stop when the new stores open next year. This is far from the case. Then begins the work of predicting the future needs of the brand. China`s spending on luxury goods is increasingly shifting to the domestic market, including the reduction of tariffs on luxury goods, following a series of measures taken by the Chinese government last year. These moves encourage people to stay at home to shop, while giving growing regional population centres economic access to the luxury market. As a result, real estate professionals are locating sites, creating sets, designing plans and assembling all the elements needed to create a retail experience that will bring luxury brands within reach of Chinese customers. “This deal with Hang Lung gives us access to the full spectrum of Chinese luxury shopping,” says Villar, “from traditional luxury consumer to emerging prosperous buyer.” An agreement of this magnitude also requires a strategic balance. “We had to make sure we didn`t have too many doors,” Villar says. “Not only in the big cities, but also in the regions around those cities. For example, we were initially concerned that the Wuxi project could have an impact on Shanghai`s business. But Wuxi`s Center 66 Mall is a successful development in a local mall, and in aningeating customer behavior, we found that Wuxi would not divert the attention of Shanghai customers; it would add new customers to the brand mix. “Retail development is a mix of strategic vision and opportunity,” says Sergi Villar, Kering`s real estate manager. The mix came together in July 2019, when the group signed a global agreement with one of the region`s largest real estate developers, Hang Lung, to open 14 new stores for five brands in six mainland Chinese cities.
“It was the hard part of dividing the houses.” Finding the right space and then negotiating the best possible terms for each brand was the hardest part because you involved many stakeholders,” says Villar. And timing is crucial. If you finish the discussions and contracts, you may find that you need something other than what you originally imagined. China is a rapidly changing market that is changing rapidly, so you have to be flexible. Leasing contracts reflect this: unlike European leases, which can last 15 years, the normal duration in China is 2 to 3 years. “It`s a moving goal that`s constantly in the river,” Villar says of the challenges of China`s retail landscape. “The simultaneous signing of all these agreements this summer was an important step in Kering`s development in China and an important step in relations with this important developer.” Villar continues. Chinese buyers account for one-third of the world`s annual luxury spending of $260 billion (source: Bain and Company) and Kering has increased its presence there since opening its first store in mainland China in 1997. The new Hang Lung agreement promotes this strategy, as the new sites will be opened in some of mainland China`s fastest growing urban centres: Dalian, Kunming, Wuhan, Shenyang and Wuxi.