Big And Low Profile Facing Small Cities

Before the cards arrived, the cottage first went ahead.

Some people have divided the development of Shanzhai into two levels: one is "big money", that is, poor production.

On the side, I've heard of Starbucks, CK, Coach...

The consumers, who are strong minded, but because they live in a small city can only keep their mind on the other side. On the other hand, they are looking for the past, worrying about the gains and losses and those who are not willing to lay down their feet and go to the low tier cities.

"Fake" shop "genuine" goods

Wang Yu is dressed in black clothes, which puts the score of the big red Salvatore Ferragamo (Salvatore Ferragamo, Italy brand) on the feet as a foil to the score. "Just bought this month, it's my birthday."

She said with a slight understatement.

The place where Wang Yu works and lives is a famous "big city" - Tieling, a prefecture level city with a population of 3 million and a medium level of economic development.

As a major client manager of the local bank, Wang Yu will earn about 100 thousand yuan a year.

Wang Yu said that in Tieling, there are not many and many people like her. Because there is no life pressure in big cities, it is normal to spend four thousand or five thousand yuan on a pair of brand shoes or a famous brand bag.

"I am an office worker, and many business people have more spending power."

However, the consumption environment of small cities does not seem to satisfy this group. They often need to drive for more than an hour to go shopping in the nearby and real big city of Shenyang.

"Occasionally, I will go to some" Shanzhai store "in Tieling to buy it.

Wang Yu said.

Wang Yu's "Shanzhai store" is quite common in many small and medium-sized cities.

Because the front line brands often do not come here, but there are consumer groups of these brands.

As a result, some businesses help these brands sell products to these people.

When you see a counter selling Lancome and Estee Lauder at the same time...

Or there is no surprise that a store sells COACH and GUESS at the same time.

Of course, there are also very specific ones, such as shops selling IKEA, ZARA and Apple products.

"Although these stores are Shanzhai, most of the products they sell are genuine."

Wang Yu said.

According to the reporter's understanding, most of the purchase channels of these cottage shops are more complicated, including counters from big cities or discount stores, and also from Hongkong and abroad.

"Once we had a discount on the season, a customer from the Northeast bought 87 T-shirts and 22 pants at a time. He said he would go back to sell them in his shop."

A salesperson at Ralph Lauren store in Beijing told reporters that it was 3~5 discount and sometimes even lower because it was a discount store.

A few months ago, an American blogger uploaded the photos of a Apple Store store in Kunming.

The verisimilitude of the Shanzhai Apple store is amazing.

As a result, many netizens launched a series of Shanzhai activities: Shanzhai Watsons, Shanzhai 7-11...

For brands, the "channel Shanzhai" appearance is sad and joyful.

On the one hand, if consumers buy goods from Shanzhai channels, if they have problems in products or services, they will make consumers have a negative impression of their brands. But on the other hand, Shanzhai stores also provide free materials for these brands to study China's two or three tier city market.

The temptation of two or three lines

"The inspection of several provinces and cities in the western part of China has touched me very much."

In an interview with China Economic Weekly, Shao Qingfeng, President of Kimberly (China) Limited, said that their high-end products are very popular in western cities like Baoji. Consumers, like big cities, have strong demand for good products, such as paper diaper products, and many mothers want the best ones, not the cheaper ones.

Shao Qingfeng said Kimberly will exert its strength to China's two or three or even four or five line cities.

Starbucks also sees market opportunities in the low and middle lines.

By 2010, Starbucks had opened 400 stores, of which more than 70% were concentrated in four cities, North and Guangzhou.

But by 2015, Starbucks plans to be in China.

In the next ten years, the number of middle class and affluent consumers in China will grow from 150 million to over 400 million, of which 2/3 will live in small cities, and the middle class is rising rapidly outside the big cities of China, according to a survey by BCG, a consultancy of the business strategy consulting firm (Boston).

According to statistics, in addition to the north and the deep, China has 150 cities with a population of more than 1 million, while only 13 in the United States.

How can such a huge business opportunity not make many small and medium-sized cities as the second power source of expansion?

Big brands love small cities

A person with a keen sense of smell has been surprised.

In early 2011, L'OREAL, the world's largest cosmetics group, opened its first Lancome in the second tier city of Western China in International Trade Building or Cetra Building, Yichang.

"At the beginning, I was a bit worried. After all, Lancome is one of our best luxury cosmetics brands."

Guepaolo, President and managing director of L'OREAL (China), told China Economic Weekly. "But now, Yichang has become one of the most important Lancome counters in China."

Yichang Lancome opened its cabinet on the same day and sold it to 2 a.m. the next day to achieve sales of over 1 million yuan, and sales in the first half of the year exceeded 12 million yuan.

According to the survey, 48% of the customers are consumers in the urban area of Yichang, 30% come from the surrounding counties and cities, and 22% come from other prefecture level cities.

Later, another high-end cosmetics brand Estee Lauder also opened a brand counter in Yichang.

"We have brought the market expansion of two or three tier cities and even lower lines into the work."

He said.

The same taste of Starbucks and the most successful brand of "petty bourgeois love" were also successful in Ji'nan: the highest sales record in a single store is nearly 3000 cups of coffee, and this result can easily squeeze into the top ten of Starbucks's highest daily sales.

Although small and medium-sized cities are full of temptation and imagination for big companies, they may not be overlooked.

For example, Starbucks has tentatively entered the second tier cities in the northeast and other regions, but the reaction is mediocre.

For many brands, only a small number of stores in a city can help reduce the cost of background logistics. The recruitment and training of sales and service personnel, especially managers, will also face challenges.

"Logistics cost is also a big problem. Big cities can open a lot of stores. The more stores, the lower the average logistics cost."

A franchisee told China Economic Weekly, "the company requires standard decoration for store decoration, but the consumer group in small cities is limited. We want to make a" simplified edition ", but the company disagrees, the price can not be sold high, and the profit is too low.

He said.