How China Retail supports Chinese Designer Brands? Case by Joy City Chaoyang（COFCO）

Chinese designer brands, viewed as “small and beautiful” previously, no longer just exist in fashion media and street shops. They have received more and more attention from the industry and the capital market. The shopping mall featuring commercial innovation, big data technology and unique customer experience, Joy City Chaoyang in Beijing, launched an integrated pop-up space, Joy Color（悦色）, for Chinese designer brands.

Previously, Joy City Chaoyang has launched lifestyle block, “Joy World”（悦界）, and achieved success in both ambiance and revenue. Recently they have introduced the artisan slow-dining space “Shijian”（拾间）, which triggered the attention and discussion from the industry. The General Manager of Joy City Beijing Rui Li（李瑞） said that they opened Joy Color based on the demand of targeted customer groups.

We have witnessed the strong personalized needs and independent aesthetic self-expression of Chinese consumers. However, how do they view Chinese designer brands? Are they willing to purchase? Retail stores are the best testing field.

According to the business analysis from the big data system of Joy City Chaoyang, we have found the logic behind Joy Color. Among all members of Joy City Chaoyang, 7% of them prefer to purchase designer brands, but they contribute 22% of the total sales of the shopping center. The sales contribution of designer brands has exceeded that of accessible luxury brands. Their consumer groups’ purchasing power and stickiness level are far beyond the shopping mall average.

Such data are benefited from Joy City Chaoyang’s cultivation of designer brands in the past two years. They introduced designer brands (stores) D2C, ZUCZUG and ICICLE on the second floor. Later they also introduced BAN XIAOXUE, CHICTOPIA, REINEREN, MAGMODE, N-ONE and so on, as well as culture and art exhibitions. Their targeted consumer groups, in line with the market positioning of designer brands, have become loyal fans of Joy City Chaoyang.

The core customer groups of Joy City Chaoyang are emerging middle class and young families aged from 25 to 35 years old. They are also the group who have strong demand for designer brands.

For example, the designer brand BAN XIAOXUE which joined in 2015, is the first signed designer brand in Joy City Chaoyang. The brand achieved the sales per square meter figure at 220 yuan per day in 2016. Their monthly sales exceeded one million yuan in 2017.

According to Luxe.Co’s "China Fashion Consumer Survey Report 2017" which was released in June 2017, 58% of respondents (mid-to-high-end consumers) have purchased Chinese designer brands in the past year. Among them 34.3% purchased from integrated designer brand stores in shopping malls, and 34.1% purchased from independent stores of designer brands.

At the opening of Joy Color, at 2pm on November 25th (Saturday), Joy City Chaoyang was packed with people. Joy Color, the newly-opened integrated pop-up space for designer brands are located next to the northern escalator on the third floor. Customers can reach there from the escalator next to Apple store on the first floor.

The slogan of Joy Color(悦色) is "Actually, you like something different”. The space is around 500 square meters, decorated with the theme of "starry sky" and the planning concept of “smart boxes”. The moving line and space are slightly compact. The on-site staff said that it was not easy to find a big empty space in Joy City Chaoyang.

Joy Color meets the growing demand of customer groups for designed brands. As well, it the intention of Joy City Chaoyang incubating designer brands. Through Joy Color（悦色）, Joy City Chaoyang hopes to solve the concerns of designer brands opening retail stores. On the other hand, similar to artist’s residency plan, through Joy Color pop-up, Joy City Chaoyang will adjust the brand composition according to consumers' feedback every half year.

In the first phase, Joy Color selected 11 brands and integrated stores, covering apparel, jewelry, hats and so on. Among them, four brands was having their retail stores for the first time. The brands are:

Integrated stores: WANT Selected, FUSIONCO, ZUOCHANG, Tu Cheng Space;

Apparel Brands: ZIZTAR、TRACY CHU、AR&TESIA、TORRISS；

Accessory Brands: Rfactory, NOCTURNE, LITTLE BASTARD

In Joy Color, every brand is presented with a relatively independent "box". Each "box" is a shop with pre-set decoration and display props including shelves. The public area is designed with two sharing fitting islands. The smart box design facilitates the space transformation and is convenient for brand changes. Brands can settle in the ready-to-move-in space immediately and save on the renovation cost.

Usually when designer brands join shopping centers, they will face many technical problems, such as store renovation, quality inspection, contract, recruiting staff and so on. They are usually lack of experience in opening retail stores. The management of staff, products and space is the concern of designer brands. Joy City Chaoyang expressed that they will assist with exiting data, experience and even resources to facilitate the efficient operation and fast growth of designer brands.

In addition to retail function, Joy Color will combine fashion release, community exchange and social functions in the future. On the opening day of Joy Color, we have seen models wearing AR&TESIA performing fashion shows, which attracted many customers to stop by and watch.

Undoubtedly, Joy City Chaoyang has been very successful among all retailers in China, especially with their advantages attracting and analyzing young consumer groups. According to the sales data of 2016, Joy City Chaoyang has a total annual footfall of 25 million, with the average footfall of 70 thousand per day. Their total sales reached 3.5 billion yuan and the rental income exceeded 520 million yuan. Joy City Chaoyang has 42 regional sales champion stores in Beijing area. From members perspective, they have an increase of 500 thousand, in terms of number of members compared to 2015. The average sales per customer increased to 1600 yuan, with a 113% year-on-year growth.

According to the information from the Data Innovation Department of Joy City Chaoyang, the designer brand UOOYAA by Jianxia Yin located on the same floor of Joy Color, won the sales champion for the Single’s Day (November 11th) promotion this year, among all womenswear brands. The integrated designer brand store D2C had won the sales champion for the past two years for the same promotion. The shop of the designer brand AWAYLEE by Wei Li is under construction and will be opened soon.

More and more designer brands are in the fast track to commercial development. One of the key assessment factor is their retail development and store operation. In Luxe.Co's Chinese Designer Monthly Report September and October 2017 Issue, there are more than 10 Chinese designer brands opened new independent shops in China and around the world in the time period.

The General Manager of Joy City Beijing, Rui Li （李瑞）defined the future of Joy Color as a B+C community integrating both consumers and brands, in addition to its retail function.

We are looking forward to more and more such innovative business models as Joy Color, supporting Chinese designer brands and providing them platforms facing consumers directly. Brick-mortar Retail is always a compulsory lesson for young fashion designers and founders.