WESTERN RETAILERS DIRECT ACCESS TO CHINA

Chinese presence of western retailers in fashion luxury is changing.

Over the years we have seen retailers shift from just shipping to China as an option, with logistics still rooted either in the West or in a more accessible Asian country like Singapore, to establishing a dedicated mainland China logistic.

YNAP exposure to china

Pressures by Brands

One of the most recent retailers to do so was Net-A-Porter: By creating a separate website, with a dedicated product selection and dedicated logistics, it surprised analysts with short selection of brands and products. 

There is indeed a pressure from brands to limit global reach of multibrand retailers. Larger brands (Gucci, Prada, etc) will prioritize their own direct distribution (i.e. Gucci.com, Prada.com website) over multibarnd retailers in strategic market, especially if in those markets it is very difficult/expensive to operate.

We will expect more larger brands to reduce their exposure in China on multibrand retailers.

YNAP exposure to china

YNAP CASE

Let's take a closer look to the YNAP. The Richemont owned (CFR:SW) group (now rumored to be on sale) includes following retailers: Net-a-Porter, Mr Porter, The Outnet and Yoox.
Net-a_porter recently reorganized its international logistics, creating a dedicated hub for China (and a separate distribution for Europe as well, detaching it from the UK). Mr Porter did not do yes so, keeping its offering more or less aligned with Europe (probably just filtering off some of the brands that are not allowed/not convenient to sell in China like Dolce&Gabbana).
The Outnet is not selling in China at allo (from its country menu China is still visible but redirects to the US website) and Yoox ceased its Chinese activities as well.
 
YNAP exposure to China

 

Selling directly to China has its challenges. Let aside the economic cost of organizing the operations on the ground, regulation and fiscal implications (not irrelvant) retailers enter in fact a market where the competition with local giants is ferocious. 

We are experiencing several collaborations that create a nested offering: multibrands selling on chinese marketplaces, or even western marketplaces (M1) selling on Chinese marketplaces (M2) where the merchant of M1 is a multibrand retailer as well.