US luxury handbag retailer expects sales in China to jump 75% in 20118 |% d! ]! e- C1 R/ T
SHANGHAI - The growing self-indulgence of China's middle class has proved a boon to Coach Inc, the largest maker of luxury leather handbags in the United States, leading it to expect 75 percent year-on-year sales growth in its 2011 fiscal year in China.9 O# q; I I4 v
The New York-based retailer is planning to open stores at 25 locations in China in the fiscal year 2011, which ends in July, making a total of 65 Chinese stores, Lew Frankfort, chairman and chief executive officer of Coach, told China Daily on Monday.
: q; D* o4 e( Q E9 S In fiscal 2010, Coach saw robust growth in China, with comparable store sales rising at a "double-digit" rate, according to its annual financial report. That compared with a 6.3 percent sales increase in the US.
. j* @3 ?6 _4 v* l5 \' u4 k Given its late entry in the Chinese market, however, the US handbag retailer captured only about 5 percent of China's luxury market, in which total spending reached 156 billion yuan ($23.27 billion) in 2009, according to the research firm Bain & Company.; }8 O6 |: P3 N7 r/ i( @0 u2 ~
"In China, our brand awareness is still very low, around 8 percent. We're playing catch-up," Frankfort said.: `* H' n4 \- s1 @* X9 v) i
China is expected to eclipse Japan within five years as Coach's second-largest market after the US, he said.
7 c" X, E9 P& `; U( h Japan accounted for $700 million of its sales in fiscal 2010, compared with $175 million in China. "I hope China will soon outdo Japan," Frankfort said.
# d0 }) I( @; P! M g3 v m In October, Coach said that the next phase of its international-growth strategy will focus on Asia, after its high-profile entry to the European market, including the United Kingdom, Spain, Ireland and Portugal.
5 B6 w0 ~5 f- p/ O$ t0 U) _ In keeping with its Asia-focused strategy, the self-deemed "accessible luxury brand" appointed Jonathan Seliger - for five years the managing director of Alfred Dunhill China under the Richemont Group - president and chief executive officer of Coach China, based in Shanghai, in a bid to enhance the firm's competitive edge.
$ \2 Z/ r6 R" i* m5 Q( X Many of the leading luxury brands have bet on China, a nation experiencing an exponential increase in the middle class, as their main business growth engine. Luxury brands - including Louis Vuitton, Ermenegildo Zegna and Coach - opened flagship stores in Shanghai this year, making the city a fierce retail battleground.. q7 `0 H) z* t8 I' p
"The performance of our Shanghai flagship store (opened in April) exceeded our expectations," Frankfort said.7 ]1 k" k5 t& o N9 ^
China's middle class is estimated to reach 700 million by 2020, making up 48 percent of the nation's population, according to Euromonitor International, a market research firm. Meanwhile, its annual income may climb to an average of $17,700 in the next 10 years.
/ m$ e6 w( `0 i/ u/ l) |/ y& d, H% K% h "As the middle class grows rapidly, consumer spending will increase. China will become the world's largest luxury market, but it's still at an early stage today," Frankfort said.
9 H8 n3 P) v1 v' v He also said that Coach plans to launch its e-commerce website in China in mid-2011 as a marketing vehicle. |