Tier-two and tier-three cities are the mothers of invention in China – forget the white-collar treadmill of Shanghai, where daring to go it alone is seen as too risky these days for the mortgaged-up middle classes. I met an enterprising store manager of a ladies clothing chain out in central China the other week who has developed a novel strategy. He manages a chain that’s one of the dozen or so looking to be China’s answer to Zara (Inditex; ITX.BMAD). His "upsell" technique is to offer clients free dry cleaning (a minimal cost to him). When customers return to collect their clothes, his lurking and pre-primed sales team pounce and try to ensure the customer never leaves the store without making a new purchase – apparently it’s almost a 100% conversion rate.
Talking of clothing, I’ve suddenly found myself in a lot of conversations about menswear. This has traditionally taken a backseat to womenswear in terms of importance in China, but changes are afoot – brands such as Nautica (VF Corp; VFC.NYSE) are managing to raise sales and prices simultaneously, while a host of smarter local menswear brands have emerged, such as the Bosideng (3998.HK) Man chain. Men, it would seem, are finally demanding a little more from their retailers. Or perhaps – given the power of Chinese women in a society where outward appearances count for everything – well-dressed girls are demanding a little more of their men.
Generational shifts is one theory for the menswear surge, and the smart money is on Hugo Boss (BOS3.FWB) to emerge as a very strong brand in China over the next few years. The basic theory is that as a new generation of entrepreneurs emerges, the absolute last brand they will patronize is the one popular among the first wave of get-rich-quickers – and that’s Dunhill (Richemont; CFR.SIX, CFR.JSE). The last 20 years have been good to Dunhill in China, but many younger men don’t want to be identified with the man-bag-clutching, chain-smoking, thin white-socked brigade and their love of Dunhill belts.
Incidentally, I was invited to a wedding recently where the groom wore Hugo Boss. This was a disappointment, as he’d told me it was to be a "naked wedding," which are apparently quite common at the moment among young professionals. Of course I turned up early – put "naked" on an invite to anything and I’m there early! It turned out that a "naked wedding" is one where the fluff and extravagance of all those saccharine photos of the bridge and groom, the lavish banquet, the tacky MC, the free fags, the bottles of Scotch on every table and the bride’s meringue wedding dress are all dispensed with. (Cue shocked gasps of horror from the money-grubbing ranks of the Chinese wedding industry.) Instead, this was a nice gathering of friends and family to toast a couple obviously in love – not always a common thing at Chinese middle class weddings, you have to admit – before they departed for a honeymoon to South Korea.
Not that the bride didn’t get a nice diamond ring, though. And diamonds are certainly a Chinese girl’s best friend, it would seem. During Expo the Belgians quickly sold out of all the diamonds they brought over and were left trying to hawk only the one carats and less that nobody in their right nouveau riche mind would be caught dead wearing. I assume they’ve taken those back to Antwerp to offload on recession-strapped Europeans.