While aggressive expansion is becoming commonplace, one brand in particular highlights the need for a degree of caution.
Fifteen years ago, Hong Kong casualwear chain Bossini generated significant interest by becoming one of the first of its kind to successfully expand its reach into the mainland.
Spurred on by praise from market observers, the brand proceeded to grow into a network which last year included 552 stores in the mainland, over two thirds of which are directly managed, while the rest are licensed as franchises.
Such ambitious brand expansion over a relatively short period has not done Bossini any great favours, and while the brand may have heightened its visibility, profits have failed to increase accordingly.
Indeed, alarm bells started ringing about two years ago and the company has been losing money steadily since - almost HK$20 million (US$2.5 million) by March last year and HK$7 million by December 2007.
Despite initial success, Bossini’s revenue growth was simply unable to keep up with the rate at which new outlets were being opened, each one at considerable cost.
Poor management was cited by observers as another damaging factor. And while the share price of Hong Kong rival Giordano has also dipped in recent years, the drop is minimal compared to that experienced by Bossini.
Giordano, with a total of 820 mainland stores, saw its operating profit surge by 82 per cent last year and has been applauded by pundits for having continued to raise its brand image and offer increased value since its entry into the mainland back in 1992.
In the face of increasing competition from low-cost local brands and global players, such as H&M and Zara, Bossini is in serious need of new structure and strategy to keep its head above water.
Matt Donovan, director of strategy, Euro RSCG Asia-Pacific
Family fashion reminds me of an awkward period when I was about 15 and my father would borrow my Lacoste polos and jeans. We now know this as a global prosumer trend called ‘cross-ageing’. Then, I just thought “kill me now”.
Bossini’s early success flailed in a fast-changing China, but its 2007/08 brand revamp shows signs of life in southern Asia. Will it work in the mainland?
A late injection of style to the clothes, and retail upgrades to keep up with expectations of the mainland shopper are steps in the right direction, but its core product is still more fashion backward than forward when viewed against H&M, Meters Bonwe, Semir & Giordano. When we helped Uniqlo launch in the US we focused on translating its Japanese core proposition into one that could compete in the US.
I’d want it to translate its family focus to a modern mainland family. What type of family is the ‘Bossini family’?
‘Fashion sensible, value seekers’ is fine in developed markets, but hardly the badge for today’s mainland prosumer families.
Do you really think everyone in the mainland wants to dress the same anymore?
Toby Leung, managing director, Auditoire China
Expansion into the mainland market by increasing the number of shops without a strategy to clearly position the brand and to enhance brand values, could not guarantee growth in market share and profitability.
This is exemplified in the case of Bossini’s rapid ‘retail-driven’ expansion into China.
Clothing and fashion trends in this country are undergoing fundamental changes, from a merchandise-based ‘quantity’ to an image-led ‘quality’ approach, indicative of the ever-growing pursuit for premium and well-known global brands.
Consumers are now presented with more choices. Local brands (from Hong Kong) like Bossini and Giordano have to upgrade their brand status to withstand keen competition posted by their mainland counterparts.
It would certainly be a tall order for Bossini to become a Gucci or a Chanel, but at least they should establish a unique brand positioning before expanding their distribution network.
A basic reinvention of what the Bossini brand stands for should be the logical first step of its reinvigoration. It is difficult to see how the brand could grow simply by focusing on a retail strategy.
