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Marks & Spencer, the British retail store, announced just five years ago it was withdrawing from the global market, but now it has recently opened a new store in Shanghai and has plans to open 49 more across China.
M&S is the latest western *retailer to *invest in China, following in the footsteps of food giants, Tesco (UK), Carrefour (France), and Walmart (US), as well as clothing firms H&M (Sweden) and C&A (France) which are all already established in Shanghai and beyond. The scramble for market position in China is not only because China has 1.3 billion people, but also because more and more of those people are moving into the middle class band and so have more money to spend. Figures suggest that China’s middle class is growing by 20% each year, meaning there is always a ready supply of cash-rich, yet *time-starved *consumers. It is believed that the Chinese retail market grows *annually by 17%.
The new M&S store on the Nanjing West Road is the company’s biggest store outside the UK, with 370 square metres over four floors and employing over 100 people. Its immediate appeal will be to the *expat community, especially as the food hall stocks over 1,000 M&S branded products. Julie Harper, a British economist living in Shanghai was *thrilled when the store opened. ‘It’s like a dream come true,’ said Julie, ‘look, there are tea bags, ketchup, and tinned soup – just like at home.’ But the company is not basing its sales on expats alone.
‘The real *target is the Chinese,’ states Brigitte Wilson, a market analyst. ‘The company’s aim is to get people liking and trusting the M&S brand across China. There are eighteen million people in Shanghai – that’s a lot of underwear sales.’ In order to make sure the new store is a success they have taken advice from their colleagues in Hong Kong, where there are already ten Marks & Spencer stores. The food hall has very similar *stock to those found in the UK, but the clothing range had to be tailored to fit a different body shape and includes slightly different styles.
So will the new M&S store be a success? Looking at what happened on the opening day when the store was nearly overwhelmed by customers then yes, but there is a cautionary tale. The stores that M&S opened in Taiwan failed after only 18 months, so shareholders will be hoping that the necessary lessons have been learnt.