Bottom line: brands chase China's high-end lingerie market

Embry Holdings

24/07/2016 03:00

* China's women's underwear market set to double U.S. next 
yr 
    * International brands expanding; competition increasing 
    * Local firms looking to go upmarket, improve quality, style 
 
    By Farah Master 
    HONG KONG, July 24 (Reuters) - High-end lingerie sales are 
outpacing China's generally downbeat luxury market, and heating 
up competition between international brands and local rivals 
looking to go upmarket. 
    U.S. brand Victoria's Secret will open its first store, and 
companies including Italy's ultra-luxury La Perla and Germany's 
Triumph are adding stores and moving beyond China's mega-cities 
to tap a lingerie market that has more than doubled in five 
years to $18 billion, according to Mintel Group. 
    Chinese consumer tastes are maturing, women are more 
confident about buying for themselves and President Xi Jinping's 
drive against conspicuous consumption is likely diverting 
spending from flashy branded bags and accessories to sports and 
ath-leisure wear and the more discreet lingerie. 
    "Luxury is ... not about buying to show off, it's about 
buying items that make you feel good," says Chiara Scaglia, La 
Perla's Asia chief. 
    China's women's underwear market is expected to have a 
retail value of $25 billion by next year - double that of the 
United States - and will grow to $33 billion by 2020, according 
to Euromonitor. 
    Chinese firms such as Beijing Aimer, Maniform and Ordifen 
are also chasing that money, targeting higher-end customers and 
raising their quality. 
    "That means foreign brands will have to out-compete local 
brands not just on quality, but also innovation," said Matthew 
Crabbe, director at Mintel. 
    For now, the market is highly fragmented, with none of the 
leading firms having more than around a 3 percent share. 
International brands see China as a priority to help bolster 
overall sales given a fairly bleak global outlook. 
    La Perla, which sells bras priced around 2,000 yuan ($300), 
has eight stores in China and plans additional outlets in 
Chengdu and Chongqing within the year. It also aims to open a 
men's store in Beijing. 
    "The perception of the lingerie sector has changed," Scaglia 
told Reuters. "At the beginning many people we spoke to were 
confused as to why anybody should spend over $1,000 on panties 
for something nobody sees." 
             
    EXPANDING FOOTPRINT 
    Victoria's Secret will open a 20,000 square foot (1,860 
square meter) flagship store in Shanghai this year, taking over 
a prime downtown location that used to house a Louis Vuitton 
store. "I think it will announce our arrival in China in a very 
significant way, and should be the beginning of an enormous 
business for us," said Martin Waters, L Brands International 
President. 
    Triumph, which already has 1,000 China stores, plans to open 
in five new cities this year and up to 11 cities next year. 
    Cosmo Lady  2298.HK , a Chinese firm that has focused on the 
mass market, selling bras from 50 yuan ($7.50), last year bought 
Ordifen to increase its presence in the luxury market. 
    "We would like to gradually step into the high-end market," 
said Peter Lam, Cosmo Lady's assistant chief financial officer. 
    Gao Qiannan, a 22-year-old Shandong student who says she 
spends upwards of 1,500 yuan a year on lingerie, doesn't think 
there's a big difference between Chinese and foreign brands. 
    "If I can buy a domestic brand, I will, but if I 
particularly like the international brand's style, I'll get 
that," she said. 
    The international brands say they don't offer products 
specifically for the Chinese market, though La Perla notes that 
some colours - red and baby pink - sell far better in Asia than 
in Europe or the United States. The Italian brand has also used 
Chinese supermodel Liu Wen in its campaigns. 
    Japanese and South Korean brands are also growing in 
popularity in China. 
    Yin Huijuan, 23, who spends 800 yuan ($120) on lingerie 
every three months, said she prefers Japanese brands such as 
Wacoal and Narue. "I feel foreign brands' style is more detailed 
and diversified, these are areas where domestic brands fall 
short," she said. 
     
    CONSUMER CAUTION, ONLINE COMPETITION 
    Even in the lingerie market, though, there are bumps. 
    Cosmo Lady, which has 8,600 outlets including Ordifen's 550 
China stores, saw robust growth in its mass market sales last 
year, but has warned about its profits for the first half of 
this year, citing China's slowing economic growth, consumer 
caution and competing online sales.  urn:newsml:reuters.com:*:nWNBS02PDA 
    Hong Kong-listed Embry Holdings  1388.HK , which owns the 
Embry Form lingerie brand, said its group retail sales slipped 
by nearly a fifth in April-June on tougher competition and the 
economy.  urn:newsml:reuters.com:*:nWNBS02Q1O 
    Despite those bumps, the lingerie sector retains a strong 
appeal, said Eugene Mak, an analyst at China Merchant Securities 
in Hong Kong, and firms like Cosmo Lady are still outperforming 
other apparel retailers.  
    He predicts the market will hit a consolidation phase at 
some time. "It's a very young market, but in the near-term it's 
going to be messy," he said. 
    ($1 = 6.6730 Chinese yuan renminbi) 
 
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China's women's underwear market    http://tmsnrt.rs/2a4jhOi 
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 (Reporting by Farah Master, with additional reporting by Giulia 
Segreti in Milan, Shanghai newsroom, and Sharon Shi and Joyce 
Zhou in Hong Kong; Editing by Ian Geoghegan) 
 ((farah.master@thomsonreuters.com; +852 28431631 , +852 9631 
8262; Reuters Messaging: 
farah.master.thomsonreuters@thomsonreuters.net)) 
 
Keywords: CHINA LINGERIE