(Yicai Global) Dec. 22 -- House of Fraser Ltd., a major UK-based department store group, has opened its first outlet in China just weeks after compatriot retailer Marks and Spencer Group Plc announced it will exit the market.
The store in the Xinjiekou business district of Nanjing, the capital of China's eastern Jiangsu province, opened yesterday to much fanfare including the chimes of 'Big Ben.' M&S announced the forthcoming closure of all 10 of its China stores on Nov. 8.
Nanjing Xinjiekou Department Store Co. [SHA:600682], a subsidiary of Sanpower Group Co., took an 89 percent stake in the 168-year-old House of Fraser in 2014. A retail veteran told Yicai Global that the company's business model still needs testing by Chinese consumers.
House of Fraser plans to expand to first- and second-tier Chinese cities with development potential in the future, China CEO Kong Jun said in an exclusive interview with Yicai Global yesterday. To differentiate, the company will use the model of 'self-owned brands plus professional buyers.'
"The professional buyers' model would bring higher costs with growing inventory risks," said retail insider Shen Jun. "On the other hand, though some independent designers' products are unique enough, their higher prices may be less attractive to the public." The 'self-owned brands plus professional buyers' is a success overseas, but may not work well in China, he added.
"Whether consumers are willing to pay for self-owned brands and niche goods of professional buyers still needs to be verified by the market," Shen said.