The First-Store Economy Catches On

Japanese lifestyle megastore niko and ... opened a flagship shop on the bustling Huaihai Road in Shanghai on December 21， 2019， becoming one of the latest foreign brands to set foot in the commercial zone known for its numerous fl agship stores.

The 3，500-square-meter store， the fi rst in China and the largest in the world， sells nearly 4，000 types of customized products with local features. It said it plans to cooperate with local chefs to present more gourmet food in the future.

Niko and ... has more than 140 stores worldwide， of which 110 are in Japan. It signed a strategic cooperation agreement with investment firm Shanghai Huaihai Commercial （Group） Co. in mid-2019 and entered the Chinese market.

“The Chinese market is full of opportunities and very important for us，” said Yoshiaki Kitamura， General Manager of Sales at Adastria， the multi-brand apparel company niko and … is affi liated to. “Shanghai is a modern city and young people here embrace new things quickly. So we decided to open our fi rst store here and are looking forward to further development and integration into the Chinese market.”

For businesses tapping into a new market， the first step is critical. The location where they debut is not only determined by cash fl ow， but a combination of brand image， exposure and plans for the future.

China， with its huge proven consumption potential， has become the top choice for many overseas brands.

Christophe Caillaud， President of Liaigre， the French luxury furniture and interior designer， said it took his brand three years to prepare for the fi rst showroom in China as it was a “brand setter” and would act as a channel to form lasting relationships with customers. “Chinas consumption upgrade is good news for us. We find the business environment here very friendly，” Caillaud said.

Canadian fast food restaurant chain Tim Hortons made its debut in China in downtown Shanghai in February 2019. Ten months on， it had opened 32 branches and now plans to push the number of stores in China to 1，500 in the next decade.

“Compared with the per-capita annual coffee consumption in European and U.S. markets， the coffee market in China has huge potential，” CEO of Tim Hortons China Lu Yongchen said. “The coffee market in Shanghai is comparatively mature in China. If we can succeed in Shanghai， our market prospects in China will be promising.”

The number of first stores opened in Shanghai reached 498 in the first half of 2019. The fi rst-store economy will help the city boost tourist spending and improve the business environment， according to Liu Min， Deputy Director of the Shanghai Municipal Commission of Commerce.

Opening the fi rst store in Chinas megacities such as Beijing and Shanghai used to be a common practice but now， large and medium-sized cities have become new investment hotspots.

Chengdu in Sichuan Province， southwest China， for example， welcomed 435 fi rst stores in the fi rst 11 months of 2019， more than double the number from 2018. Among them are New York-based contemporary clothing brand Blancore and French fashion brand Dior. Dior set up a pop-up store in the heart of a traditional temple in Chengdu to launch its pre-fall 2019 mens collection by Kim Jones.

To woo more brands to set up their fi rst stores， many Chinese cities have rolled out preferential measures.

Beijing opened a “green channel” to facilitate first stores by providing financial support to cover rent and renovations.

Chengdu published a guideline in April 2019， targeting 200 new first stores every year by 2021. In September 2019， Nanjing in Jiangsu Province， east China， rolled out multiple measures to provide rental support and preferential policies for companies opening their fi rst stores in the city.

In July 2019， Danish toy company LEGO Group opened its 100th retail brand store in Xian in Shaanxi Province， its fi rst certifi ed store in northwest China， in a move to expand its footprint inland. Paul Huang， General Manager of LEGO China， said the next step is to further tap the Chinese market. “Were confident of the development of our business in China，” he said.

More brands have joined the wave of launching first stores in China. In 2019， Shanghai ushered in the first flagship theme shop in China of the Belgian comic series The Adventures of Tintin and the first YG PLACE of YG Entertainment from the Republic of Korea. On December 18， 2019， Dream City， the fi rst Smurfs-themed park in the Asia-Pacific region， opened in Shanghai. The Smurfs are comic characters from a Belgian comic franchise globally popularized by a series of animated Hollywood fi lms.

“As consumptions share in Chinas GDP continues to grow， the first-store economy will play a more prominent role in boosting local consumption，” Yang Chang， an analyst with Zhongtai Securities， said. “It will enhance vitality and contribute to high-quality development.”