New global consumption metropolis rises

By WANG YING in Shanghai | China Daily
Updated: Oct 20, 2021
The double open park at Taikoo Li Qiantan, a retail complex in Shanghai. [PHOTO BY CHEN YUYU/FOR CHINA DAILY]

'First stores' increase rapidly, help introduce fresh brands, drive retail market growth in East China's Shanghai

Accelerated opening of "first stores" and the attendant emergence of new brands are helping Shanghai to build itself into a global consumption metropolis.

The first-store economy, which has been growing for a few years now, is now becoming a key driver of the retail market, experts said.

First store refers to the first of many stores set up by a brand in a geography, which could be a city, province, country, region, continent or the entire world. Typically, a first store marks the first physical appearance of a brand in a specific market.

The category includes launch of a new format of old stores showcasing an innovative business model or a trending retail philosophy-concept stores, experience stores or flagship stores. Retail and catering take the lion's share of Shanghai's first stores.

In Shui On Land's newly opened Hall of the Sun, about 30 percent of brands made their debut in Shanghai, 40 percent appeared in north Shanghai for the first time, and 70 percent were first stores across Hongkou district.

With 180,000 square meters of commercial space, the shopping mall located near the North Bund in Hongkou district became a landmark in north Shanghai along with Shui On Land's existing commercial projects including Hall of the Moon and Hall of the Stars.

"By introducing China's first stores, regional debut stores as well as flagship shops of prime brands, we are providing consumers a destination that should not be missed and is worthy of sharing with each other," said Chen Chun, director of commercial business with Hub & Ruihong Xincheng, both under Shui On Land's wholly owned subsidiary China Xintiandi.

According to Chen, in addition to all the existing firsts, the mall would welcome Muji meal solution supermarket's debut in China in November.

Also in Shanghai, across the city's iconic Huangpu River, Taikoo Li Qiantan, a joint-venture retail complex, celebrated the debut of the Taikoo Li project, known for its open-plan and lane-driven architectural design.

The project features a double-open park concept, a wide expanse of open green space and lanes across the ground level and rooftop, connected by an 80-meter-long scenic bridge overlooking the Huangpu River.

Situated at the heart of Shanghai's Pudong New Area, the 120,000 sq m floor area project is home to about 250 shops. These include three global first stores, 21 first China stores, 18 making their debut in Shanghai, and 53 brands launching their first stores in Pudong, said Tim Blackburn, chief executive of Swire Properties.

"With the opening of Taikoo Li Qiantan, our retail portfolio in the Chinese mainland now represents 66 percent of our overall completed retail GFA (gross floor area). We are very excited to further our ambitions and continue expanding our presence here with way of more unique popular retail destinations."

The debut stores have given consumers an opportunity to explore firsthand experiences, adding to their appeal as retail destinations, which is very important amid the growing homogenized trend of shopping malls, department stores and other retail destinations, industry experts said, explaining the economic drive behind the boom of opening first stores in major Chinese cities.

Taikoo Li Qiantan officially opened to the public on Sept 30 at Pudong New Area in Shanghai. [Photo provided to China Daily]

The first store boom comes in various forms and sizes, and has become part of many Chinese cities' efforts to become international consumption hubs.

In the first half, 513 first stores were launched across Shanghai, including six global or Asian debuts, 69 first stores in the Chinese mainland, seven making the first entrance in East China and 431 first shows in Shanghai, according to big data service platform Dataquest China.

Beijing and Chengdu, Sichuan province, were also hot destinations for brands opening their first stores. The two cities attracted 434 brands and 296 brands, respectively, in the first half.

In Shanghai, about 15 percent of the debut brands are international, and they come from Japan, the United States, France, South Korea, the United Kingdom and Italy, according to Dataquest's figures.

"From the perspective of investors and operators of shopping malls, the hashtag of first store plays an important role in helping one shopping mall to differentiate from others," said Xie Chen, head of research with CBRE China.

Many sophisticated shopping centers would usually make sure at least 30 percent of their brands in the mall were first stores of a specific region. Such approaches could become very positive for the shopping centers' early stage marketing and operations, and attract considerable numbers of consumers, Xie said.

First stores are drawing consumers, and so are new debuts in existing shopping centers. Data from commercial real estate services provider CBRE showed that between 8 million sq m and 10 million sq m of new shopping mall space is launched in major Chinese cities annually. In order to retain a shopping center's competitiveness, a convention has developed wherein a shopping mall's brands are adjusted according to the trends of the consumer market.

The continued upgrade of Sun Hung Kai Properties' IGC mall in Guangzhou's Tianhui Plaza for new national or regional-level first stores in the past five years has enabled the shopping center to become a new landmark for affordable luxury in the region. The mall has also become one of the few commercial properties in South China to buck the COVID-19-related downtrend and see its revenue grow.

Several new debut stores of fashion, sweets, accessories and toys were launched at Shanghai's IAPM mall this year, which further consolidated the shopping center's positioning as a one-stop shopping landmark for luxury brands, food and restaurants, entertainment and experience, as well as lifestyle and fashion, according to Maureen Fung, executive director of Sun Hung Kai Real Estate Agency.

The shopping mall has also become the first choice for international luxury brands to launch pop-up stores, said Fung.

Experts said the glamor of first stores is fundamentally backed by China's strong consumption potential. According to the CBRE report, bulk and other transactions of retail and retail-related commercial complexes in the Chinese mainland soared nearly 150 percent year-on-year to 80 billion yuan ($12.44 billion) in the first nine months, with shopping malls taking the lion's share of the trade.

The rapid recovery of the consumer market after the outbreak of the COVID-19 pandemic has beefed up investor confidence, while the 10 to 15 percent price gap from pre-COVID-19 levels makes the situation more appealing.

Internet-based new consumer brand Bananain is looking to operate 30 brick-and-mortar stores across the nation by 2023 with a majority of them being first stores in major Chinese cities.

"To us, first store means the debut of our brand in a specific city, and it connects us to consumers physically," said Zhang Li, head of Bananain's offline business.

So far, the brand has launched its city-level debut stores in Shenzhen in Guangdong province, Shanghai, Hangzhou in Zhejiang province, and Xi'an in Shaanxi province. And Bananain looks to operate five offline stores by the end of this month, with more in the pipeline in the coming years in big Chinese cities.

At the same time, China's leading artificial intelligence and speech technology company iFlytek Co Ltd is advancing its plan to open the first flagship store in 2022.

"In a bid to have our products to reach more people in Chinese cities, iFlytek looks to operate 200 outlet stores by next year with the first flagship store to be unveiled by 2022," said Zhao Xiang, executive vice-president of consumer business with iFlytek.

"While seeking debuts stores, retail operators are equally enthusiastic to collaborate with experienced brands on new concepts to bring fresh and high-quality experiences to consumers, maybe even more," said Paige Chuang, head of retail agency at JLL Shanghai.

The key to attracting consumers on a long-term basis is the business itself, and the good facilities, premium services, and proper positioning in accordance with target consumers, Chuang said.