macys-bags-books-tmallMacy’s first entry in the to the Chinese market – a Tmall store – went live this week. In a short Q&A, L2’s Head of APAC Danielle Bailey discusses Macy’s expansion plans and probability of success.

Macy’s is the first U.S. department store to open a store on Tmall, but several brands like Burberry and ASOS have opened stores on the e-tailer. What can Macy’s bring to the platform that brands themselves will not?

Similar to their Amazon strategy in the U.S., premium brands like Burberry are present on Tmall to clean up the gray market rather than to generate sales. Macy’s, at least initially, is likely looking to build brand awareness in the market to plant the seeds for offline presence while becoming top of mind for the traveling Chinese consumer.

As of now, Macy’s isn’t exporting. With the exception of a handful of SKUs from a few brands like Anne Klein and Dooney & Bourke, Macy’s Tmall store is primarily a platform for its own private label brands. Depending on the concept’s success, Macy’s may offer a wider selection in the future, replicating the store within a store concept for which they are known. It would be very attractive to Chinese consumers as a one-stop shop with access to premium brands.

Macy’s is using Tmall as a way to test the China waters for a potential offline expansion – it’s much easier to shut down an online storefront than brick and mortar stores if things don’t work. Selling through Macy’s on Tmall can also be a good way for manufacturer brands to test their own temperature in China, doing market and product research while Macy’s assumes all the inventory and risk.

 

There have been parallels drawn to Neiman Marcus’s unsuccessful foray into China. (They opened up a China-specific online shop but have since minimized their logistics operations in the country.) Do you anticipate Macy’s move being similar or different?

Neiman Marcus was attempting to launch e-commerce directly via its brand site. However, unlike in the West, Chinese consumers primarily shop online via marketplaces like Tmall, which controls nearly 60% of China’s B2C e-commerce market. Macy’s is smart to partner and to go where shoppers are already buying. However they can’t rely on an “if we build it they will come” strategy to be successful. Tmall is a highly promotion driven environment, and Macy’s Tmall shop has not yet offered any loyalty aspects to encourage repeat purchases. Macy’s has not yet used its established presence on Sina Weibo (where the brand has more than 141,000 followers) or WeChat to tout the launch or promote the upcoming Singles’ Day. Macy’s also has the benefit of learnings from previous China efforts including selling online through it’s relationship with BorderFree.

For more on the international expansion strategies of global department store brands, download a copy of L2’s 2015 Digital IQ Index: Department Stores.

 

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