Upscale Stores Do Good Business in Shanghai

Some may be shocked at the sheer number of local women who are to be seen carrying Loewe or Lagerfeld bags. These are priced at 5,000 to 10,000 yuan (US$605-US$1,210) - five to 10 times the average monthly income.

"Before I worked here, I also couldn't imagine such things, but it's true," said Xia Yi, deputy director of the promotion department at Plaza 66, a new upscale department store on Nanjing Xilu.

In the past two months of trial operations, sales of the top 27 international brands in the store including Louis Vuitton, Chanel and Christian Dior have been better than expected, according to Xia.

"Although average consumption in the city hasn't been so good in recent years, that hasn't had an adverse impact on our business," Xia said. "Our targeted customers are not common people."

According to a survey by Plaza 66, which is a member of the Hong Kong-based Hang Lung Group, there are over 100,000 rich people in the city who can afford international brands.

"Just catch 20 to 30 percent of them as customers, and we have a big market full of potential," Xia said.

His words are echoed by Zhu Lianqing, an expert at the Shanghai Academy of Social Sciences.

"Opportunities still exist in this not-so-flourishing market, and there is still room in some parts of the market, although most departments have recorded lower profits recently," said Zhu. "High-end department stores, for example."

He believes the country's entry to the World Trade Organization will lead to a rise in both local and foreign consumers at the high end of the market.

"Tourists from other provinces with strong consuming power also like to shop at Shanghai's upscale stores," Zhu said.

There are now about eight upscale department stores in Shanghai with a total of about 200,000 square meters of business area.

Maison Mode and Jinjiang Dikson Center, which opened in the mid-1990s, were part of the first batch of upscale stores in the city - mysterious places for common people.

After six years of operations, Maison Mode is no longer in the red.

In 1997, the 10-floor Westgate Mall with about 40,000 square meters of business area opened, and has quickly become a fashionable consumer center for white collar workers in the city.

In 2000, Lane Crawford in Times Square set off a new surge of attention. Big names such as Salvatore Ferragamo, Paul & Shark, Cerrutti 1881 and St John all set up shops in the store.

In the last two years, with Citic Square and Plaza 66 standing shoulder to shoulder on Nanjing Xilu, and combined with the original Westgate Mall, an upmarket commercial circle has formed on the road.

"International brands are optimistic about the local market," said Zhao Jun, promotion deputy manager of Citic Square. "Kenzo and Max Mara both expressed a willingness to enlarge their store in the square."

International brands first entered the local market in the beginning of the 1990s, among them Dunhill, Louis Vuitton and Burberry.

"But at that time, many big names were not very willing to enter because of changing retailing policies here," Zhao said.

In the late 1990s, international brands came one after the other at full speed. "Apart from tax and the rental fee, it's definitely for them to win profit," Zhao explained. "Some brands reported that they have earned about 10 million yuan (US$1.2 million) in the past year."

(China Daily HK Edition 07/13/2001)

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