Why Neiman Marcus might fail in China – Shaun Rein

The US-based luxury fashion group Neiman Marcus has decided to enter the China market through e-commerce, rather than building brick-and-mortar stores. Business analyst Shaun Rein explains in the Financial Times why that might not be a smart idea.

The Financial Times:

The problem for retailers looking to get into China may be two-fold. Listing costs are high – but brand recognition may not travel online. The Neiman Marcus news was greeted with scepticism by local retail analysts. Shaun Rein of China Market Research in Shanghai said: “nobody knows who Neiman Marcus is in China.”

Rumours have been swirling for years about Neiman trying to get retail space on the Shanghai Bund for a large new store. Most analysts see it as essential for foreign brands – especially luxury brands – to have bricks and mortar shops to bolster their credibility in a country where seeing is still believing.

“Customers really need to be able to see and touch the product and feel the brand heritage in a physical environment,” said Rein. “Luxury sales are booming online but people still tend to equate e-commerce with cheap,” he said, adding “I don’t think it’s possible for a foreign brand to come in and sell at high prices just online”.

More in the Financial Times.

Shaun Rein is the author of The End of Cheap China: Economic and Cultural Trends that will Disrupt the World. He is also a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.