By Cho Suzumura, Principal, MulvannyG2 Architecture
Here’s a quick testament to China’s growth: Its retail sales grew by 16.6 percent in the first five months of 2011, up from 14.8 percent for all of 2010. (United States-based retail sales for 2010 were 6.7 percent.)
But China’s continuing economic flurry also masks certain challenges its retail sector faces: the sophistication of Chinese consumers has markedly increased while the size and complexity of retail operations have grown unwieldy. The repercussions of each hold opportunity for architects and designers who recognize this gap between what exists and what could be—and can quickly offer value to this burgeoning market.
Let’s rethink architecture
As spending has escalated, Chinese consumers’ expectations have also increased, and there’s mounting pressure for China’s somewhat homogenous retail landscape to diversify. The challenge for local retailers, largely those in second- and third-tier cities, will be to ascertain how best to shape the design and development of more cosmopolitan marketplaces—one that focuses on satisfying not only what consumers want but what they desire, all while delivering memorable retail experiences.
But what does a marketplace that offers greater differentiation look like? And in terms of a business structure, how can we, as designers, efficiently and effectively approach the two-headed business model—merchandising plus real estate development—to create one healthy retail entity?
Here’s a tangible example: Department store chains have focused on expanding their business throughout China to meet consumer demand and to position themselves as branded retailers against increasing foreign competition. For instance, a large, Beijing-based department store chain is expanding into six or seven different regions every year. The chain has reached a critical mass and now realizes there are limits to the area of the sales floor. As a solution, they’re turning to the shopping center concept to promote balanced, financially healthy shopping environments. But this is a paradigm shift that requires the navigation of new architectural talent, leasing, and operational territory.
As China’s retailers consider their operational strategies and changing marketplace, an important thing to keep in mind is that the key to successful differentiation is to implement a lifestyle merchandising strategy as opposed to a strategy driven by the sale of commodities. The design should define a targeted demographic, based on research and the understanding of what appeals to members of that group, and offer places, experiences, and things that appeal to its identity. This is how the most successful Western retailers stay not only afloat but ahead.
Cho Suzumura’s (Cho.Suzumura@MulvannyG2.com) more than 30 years of experience includes designing specialty stores, department stores, and shopping centers worldwide. Cho’s insight helps clients interpret and adopt retail system paradigms internationally. As a former director at Millennium Development Co. in Japan—owners of SOGO and Seibu department stores—Cho’s specialty is designing to appeal to lifestyle drivers.