It was the sale of the century and the talk of the town when House of Fraser was sold to the Chinese, and a local Nanjing company at that. Now, however, the honeymoon is well and truly over.
Brick and mortar retail therapy has, in the UK’s recent past, seen its once powerful department stores literally locking up shop, and for good. Online shopping has taken over in a massive way with mega stores such as Amazon snaking their way through the western world, shutting down hundred-year old department stores as they slither.
Observing the importance of the online trend, small business owners have recently begun pushing their online shopping further in the UK, America and Australia, with some not even opening a physical presence at all. So when it comes to looking at Chinese purchasing psychology, it is easy to assume the same pattern would emerge.
Although large retail companies desperately wanted to set up shop in China, the spectacular success of online retailer Alibaba (Taobao) and others, such as Tmall and JD, investors were wise to wait. Their break came when scandal after scandal regarding the authenticity of Taobao products scared Chinese consumers back to the shops.
Nanjing company Sanpower, which had already been successfully running Nanjing’s Xinjiekou Xinbai department store for some time, decided a few years back that bringing a trustworthy British department store brand to Nanjing would be good for the industry. The idea of House of Fraser was born.
House of Fraser finally opened its doors in 2017, after a debacle of final payments delayed its opening by many months. Not a good start, especially in China where such a thing would be considered superstitiously bad luck.
So it came as no surprise when UK newspaper Independent yesterday reported that, “[The] Nanjing Xinjiekou Department Store will sell its 51 per cent holding to a tourism development company named Wuji Wenhua, according to a Chinese stock exchange filing Tuesday”.
The article went on to mention Xinbai, “Sanpower said after the acquisition that it planned to open 50 House of Frasers in China under the name Oriental Fraser. But as Chinese consumers started staying home to shop online, retailers have seen sales plunge. With its own department-store business under pressure, Sanpower has opened only one House of Fraser in China”.
The sale is more than a little embarrassing for Sanpower founder Yuan Yafei, who, when completing the purchase of House of Fraser in 2014, proclaimed a new era for the department store chain, one in which he would steer it to global success.
So why are Nanjing consumers not taken with such an iconic UK brand? Deji Plaza still seems the hottest place in town. Could it be that Chinese consumers simply are not aware of British brands?
Any regular Taobao user will know that Mr. Ma has been upping his game, by making huge strides towards transparency, authenticity and stellar customer service. Given these and greatly improved courier services, could it be that Nanjingers are feeling it safe to return to affordable and convenient online shopping?
