Posted On 2016/05/25 By In News, Destinations, Fashion, Luxury, Retail, Shopping With 441 Views

McArthurGlen’s Success Strategy: Chinese Tourists in Europe, Not Store Expansion in China

For a massive number of Chinese travelers to Europe, hitting the the luxury outlet malls is a must-do activity on par with visiting the Eiffel Tower or Colosseum. Because of this, many European outlet malls making big gains from the Chinese tourist market are opting to expand their presence into mainland China itself, but retailer McArthurGlen is taking a decidedly different approach.

“Our plans are predominantly for expansion and new development in Western Europe,” said McArthurGlen Group CEO Julia Calabrese in a recent interview with Jing Daily in Beijing when asked about the possibility of China expansion. At a time when outbound Chinese traveler numbers are growing annually yet luxury sales remain in decline within China, the company is opting to focus solely on the Chinese travel market.

Calabrese noted that this strategy is in major contrast with that of competitors such asValue Retail and Florentia Village, which have each invested big in massive mainland China retail expansion projects. Most recently, Value Retail opened a new 55,000-square-meter-location connected to the new Shanghai Disney Resort site.

“I never like to say never, but I think that because we have so much actually on our plate over the next three to five years, that we’ll probably spend our time developing or expanding seven or eight projects that we currently have [out of an existing 22 properties globally] and building four or five in new markets such as Istanbul and Belgium,” she said.

McArthurGlen does have a corporate presence in mainland China, however: it employs an on-the-ground China marketing team to oversee both online and offline efforts to attract Chinese tourists in Europe. Its Chinese marketing strategy has earned it the “Best Overseas Shopping Centre of the Year” award from travel trade publication Travel Weekly China two years in a row.

That’s because the Chinese travel market is vital to the company’s growth. “The Chinese international traveler is our number one customer in terms of international travelers,” said Calabrese. “They’ve increased by 74 percent from the number the we got through 2014 in 2015. They represent a third of all of the money that we actually get from our international clients, so they’re very, very important for us.”

The company’s China office works with the Europe locations—especially those most popular with Chinese tourists, including five in Italy—to offer cultural training, employ Mandarin-speaking staff, and set up Chinese payment methods such as Alipay.

In addition, digital marketing is crucial for reaching Chinese tourists—especially through mobile devices. “When they’re in Europe, it’s all mobile,” said the company’s head of tourism Anthony Rippingale, who stated that the company is active on WeChat and Weibo with campaigns targeted at traveling Chinese shoppers. “It’s absolutely essential—it’s mandatory.”

One of the company’s most successful digital campaigns was one it launched with fashion site Haibao for Chinese New Year that saw 1.4 million views on social media and earned 150 percent growth in social media followers for McArthurGlen. The brand launched a contest through Haibao to give users the chance to win a trip to Europe sponsored by McArthurGlen when they followed the company’s WeChat account through a QR code posted by Haibao. To promote the campaign, the company worked with Haibao on creating co-branded content that included curated street style photos from Europe and fashion tips. It also offered digital coupons and teamed up with top WeChat KOL accounts based across Europe to promote the campaign such as “Here in the UK” (UK) and “Bravo Cinese” (Italy).

Rippingale said that it’s important to target channels that reach an increasingly sophisticated Chinese consumer base. “One of the things McArthurGlen does around the world is really try to show our fashion credentials and relevance to consumers,” he said. “It’s about getting into the right channels in front of the right consumer and the right messaging. Haibao is such a huge influence in terms of street style and that target audience for us.”

This is key as Chinese fashion consumers become more discerning, especially in first-tier cities. “We approach it in terms of independent travelers and group travelers and by nature of sophistication,” said Rippingale. He said that while Chinese visitors from lower-tier cities are generally still coming through package tours, visitors from cities such as Shanghai are frequent travelers increasingly looking for cultural experiences and niche brands.

The company believes that it will still see growth from Chinese shoppers this year despite a combination of challenges to European retailers that include recent terrorist attacks and increases in personal tariffs on items brought into China from abroad. Although Global Blue recently reported a steep drop in Chinese tourist spending in Europe, Calabrese says McArthurGlen’s total sales were up 7 percent for international visitors in the first quarter.

Regarding the issue of the recent tariff increases, “I don’t think anybody knows for sure and I think it’s going to take a little bit of time before we actually know what the impact has been,” said Calabrese. “But we think that our customer is in fact a global traveler. They do in fact come to us to buy the luxury goods. And we think that they will continue to do so.”

As for future plans, the company intends to focus on technological development to keep up with the changing preferences of Chinese consumers. “We know WeChat Wallet is going to be enormous,” said Rippingale. It’s also on the search for local Chinese designers to sponsor and feature at its stores in Europe. Searching for young Chinese labels was a “main reason that we’re actually here,” said Calabrese of the visit to Beijing.

While opening a China location is off the table for now, Calabrese also noted that things might change in the future. “If in fact the right partner, if in fact the right site were presented to us, you never know.”


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Sources:

Article: Jing Daily / Image: Phalinn Ooi

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About

Stefan

Stefan (from Austria, Europe) has been living, studying and working in China since 2010. Stefan has worked on several research, publication and consulting projects focusing on the China Travel Market. He holds three Masters degrees and is an expert on China Outbound Tourism, Marketing and Social Media in China. Stefan works with BMG on the Global Ready China Seminars as well as the Global Ready China News and related projects. He also has teaching engagements in the areas of eMarketing and Tourism Strategy.

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