While many shoe and apparel retailers choose to enter the China market by franchising, Walker Group Holdings (1386) is trying to go it alone for the most part in what will soon be the largest consuming nation in the world.Walker Shop outlets in the mainland sell a diversified range of fashionable sneakers under a one-stop-shop concept, said chairman Chan Mei Sheung who believes China still holds a huge untapped potential for the company.
The group's Walker Shop chain stores in Hong Kong and mainland carry foreign brands like Britain's acupuncture, as well as its own brands such as Couber G. and Artermis.
On March 28, the company opened its first mainland flagship shop under the name Walker One in Xidan district, Beijing.
Opening a new outlet in a top-tier mainland city requires about 1.50 million yuan (HK$1.71 million), Chan estimated.
The opening of the Beijing branch was timed to coincide with the Olympics and so far, sales in the new store have been encouraging, she said.
Judging from current sales, the venture is expected to break even in two to three years. More plans are under way to open Walker One chain stores in other major mainland cities with Shanghai slated to be the next destination.
As of the end of March, only 37 of the 577 Walker Group branches in the mainland were franchised.
When the group entered the China market, its main strategy was to open outlets within established departmental stores.
For high-end goods, mainland consumers s
till shop at department stores. So being at such locations assures exposure, which the company hopes, will translate into healthy sales. Apart from opening flagship stores, the group is also promoting Acupuncture shoes, originally a London brand. Since Walker Group started distributing the brand in 2006, acupuncture has gained a respectable fan base both in Hong Kong and the mainland, Chan said.
With 12 specialist shops in Hong Kong, the brand is popular among those aged between 25-30.
The company is eager to focus on such casual footwear - apart from sports shoes - a growing segment in the mainland.
Such footwear also offers hefty profit margins, which on the Acupuncture brand for example averages at about 70 percent - at least 10 percent higher than other product lines, Chan said.
"Now, acupuncture is considered a luxury product in the mainland, ranking alongside Gucci, Calvin Klein and various international brands," she claimed. But in order to establish a distinct image to draw the customers, the company must be willing to invest in independent outlets, said Chan.
Presently, apart from having its own section within Walker Shop outlets at department stores, acupuncture also has its stand-alone branches at shopping malls.
In Beijing, Walker One covers Beijing more than 8,000 square feet, offering eight brands, including Acupuncture and OX-X-OX.
Walker One serves not only as a retail outlet but also as a showroom for mainland show retailers who may want to sell the company's products at their own shops in third- and fourth-tier cities, said Chan.
In the largest of China's urban centers, the company plans to expand the Walker footprint on its own.
