As NBA Drama Plays Out In China, Retailers Push Forward

The last few days has brought new retail news from China, as the NBA tries to keep hold of its commerce presence in that country after controversy involving the protest in Hong Kong. But that’s not all that’s going on with retail in China, where foreign commerce operators are upping their own games.

Levi Strauss and Co., which this week reported its third quarter earnings, offers a good recent example of the larger retail situation in China. The apparel brand is trying to drum up more sales to China, and a big part of that is not only digital and mobile channels, but social media and online experiences as well. “On the heels of our recent rollout of Levi’s customization services on WeChat,” CEO Charles Bergh said on the post-earnings conference call, referring to the massively popular China-based messaging app, “we have joined forces with the hugely popular music and dance game QQ Dance to create a 3D-rendered wardrobe for its game characters, so consumers will be able to dress like their game avatars.”

Bergh told the analysts on that earnings call he has big expectations for those efforts. “Not only do partnerships such as these provide consumers with a fun, interactive shopping experience, allowing them to define and design their own cool,” he said, “but they also support our endeavor to position the Levi’s brand at the center of culture.”

IKEA Push

IKEA, too, has big plans for China.

Following a slowdown in sales growth in the country, IKEA is making its largest annual investment in China.

The furniture retailer is putting over $1.4 billion into an expansion drive in the next year, with the intention to open multiple new locations prior to the close of 2019 and to refresh stores already in existence, the Financial Times reported.

The plan would help “accelerate expansion offline and online,” Anna Pawlak-Kuliga, the company’s top executive in the country, told the outlet. While the company came into China two decades ago and has brought 27 stores to the country, its sales growth has slowed as it grapples with increasing competition from brick-and-mortar stores and eCommerce.

China is part of the company’s top five markets, offering revenue of Rmb15.5 billion in 2018, a 6 percent increase from the year prior. However, that was lower than the 19 percent growth in 2016, per information the company reportedly offered local media. According to FT, the company’s big-store formats have become less attractive to many shoppers who are used to the convenience of eCommerce.

IKEA is now moving into smaller cities in China, in hopes that newly wealthy shoppers will select its items. The company is also creating a new, small-format store in the nation. As the report noted, thousands of shoppers came out for the opening of IKEA in Zhengzhou (the capital of the Henan province) last month, and the brand reportedly plans to bring more stores into two other provincial capitals.

Even as the NBA retail controversy plays out, companies are eyeing bigger things for China.