The Retail NaviGator - our communication to you about our research on retailing issues and the activities of the David F. Miller Center. This ongoing media change creates a direct connection to the retailing community in a way that keeps information current, direct and GREEN!
October: Issue 2, 2014
In this issue:
- Retail Consulting: MAR 4232/MAR 6905
- 2014 China Retail Study Tour
- JCPenney in Hong Kong
- Ocean Park in Hong Kong
- DFS GROUP LIMITED in Hong Kong
- Dick's Sporting Goods in Hong Kong
- Umbra in Shenzhen
- Brown Shoe Company in Dongguan
- US Commercial Service
- Chimelong Resort Park and Hotel in Guangzhou
- Starwood Hotels Customer Contact Center
- Y & R in Guangzhou
- CityShop in Shanghai
- Baosteel in Shanghai
- Online Design Ltd in Shanghai
- Jack Wolfskin in Shanghai
- UCCAL Fashion Group in Shanghai
- Outback Steakhouse in Shanghai
- Hyundai in Beijing
- Right at Home in Beijing
- 51ants.com in Beijing
- Olympic Management Center in Beijing
- Science Park in Beijing
- JD.com in Shanghai
- Perry Ellis International and Laundry by Shelli Segal in Beijing
Retail Consulting: MAR 4232/MAR 6905
The David F. Miller Center for Retailing Education and Research at the University of Florida offers a Retail Consulting class through team-based projects. This course is designed to provide students with an opportunity to practice strategic decision-making based on market research through hands-on experience in approaching real retail problems. Talented students work in teams to solve pressing retail business challenges provided by sponsoring companies and present evidence-based recommendations under the guidance and supervision of Dr. Hyunjoo Oh. By working closely with retail clients, students gain practical insight into real retail business operations while identifying problems, exploring opportunities, collecting data and developing strategies.
The Retail Consulting class was a chance for students to break out of the traditional classroom setting, which many of them enjoyed doing. Not only did it challenge them to think outside of the box and work with a diverse group of teammates, but it also meant coming up with real solutions to current problems in the Retail sector that they were able to present to their companies' executives. For some students, they found this to be the most rewarding part of the class. Others enjoyed the fact that the directions and objectives gave them flexibility in their strategy. In addition to the project, students enjoyed the lectures from Professor Oh and company speakers. Finally, the class taught students lessons they will carry with them past graduation and into the professional world. Below are projects conducted in 2014 and testimonials of student experiences.
2014 China Retail Study Tour
The David F. Miller Retail Center at the University of Florida offers students a Global Retail Leadership Development opportunity through the China Retail Study program. Visiting companies in Hong Kong, Shenzhen, Guangzhou, Dongguan, Shanghai and Beijing, students gain first-hand experiences about China business practices ranging from product development, manufacturing, supply chain, advertising, e-commerce, real estate, customer services, retail operations, government relations to global strategies. During the three-week study tour, following the in-class course, students visit six cities, which are representative of their own regions in terms of economic development and customer behaviors in different regions. They meet executives of U.S. companies in China and exemplary domestic Chinese companies, government and trade association officials, and visit stores. Students have opportunities to compare and contrast company operations and business environments in these cities, learn how different functions are related together, understand unique challenges, and observe regional differences and how such differences can affect business decisions. Such opportunities are priceless for opening up mindsets of young business leaders to prepare them for their future careers. Students greatly valued the experiences that they had in China visiting companies and meeting with executives to learn insights into Chinese markets.
Many thanks to individuals in law and consulting practices and executives in companies who have provided extraordinary learning and networking opportunities for students: JCPenney|Ocean Park|Dick's Sporting Goods|DFS|Wal-Mart Headquarter with Sam's Club |Umbra|Brown Shoe Company|Chimelong Hotel|Starwood|Young & Rubicam Advertising|Coach|Gap|Costa Coffee|Toys-R-Us|Outback Steakhouse|Mark Fairwhale|C&A|Online Design, Ltd.|Lenovo|JD.com|Hyundai|Perry Ellis|Laundry by Zhongguancun Science Park|IBM Innovation Center|Olympic Xin Ao Group|City Shop|Right at Home|US Commercial Service|US Embassy|BaoSteel|China Chain Store and Franchise Association (CCFA)|Shanghai AMCHAM.
Special thanks to JCPenney for awarding a scholarship to this program!
Please support the 2015 program by providing scholarships to future global leaders. Please hear what students learned from the program below. Click here for the scholarship information.
Carolina Cuello, Accounting Major
Austin English, Marketing Major
Daniel Milstein, Economics and Political Science Major
The learning experiences in the 2014 program are summarized below. The past study tour programs and student experiences can be found at http://site.warrington.ufl.edu/china-retail-study-tour .
JCPenney in Hong Kong
By Ben Stein
The first stop on the China Retail Study Tour was JCPenney's sourcing office in Hong Kong. The students were excited for their first company visit, and JCPenney did not disappoint. This office handles product quality, logistics, and transporting products to the United States, as there are currently no JCPenney stores located in China. During this stop, students met a variety of different personnel, including Operations Manager Conrad Chan, Senior Merchandise Manager Ringo Lam, and International Technical Design Manager Clara Lam. The students toured the office and learned about JCPenney's operations in Hong Kong, including the challenges of labor cost and sourcing, the product development process, technical design and more. Many students were impressed with the display on the product development process, which was a timeline of how a pair of shorts is produced from start to finish. In addition, many noticed how important it is to take into account how body shapes vary across various cultures, which will impact how clothes must be produced. After the tour, the group immersed itself in the culture of Hong Kong with a Dim Sum lunch, during which students were able to talk with the various speakers in a less formal setting.
Ocean Park in Hong Kong
By Christine Lee
The visit to Ocean Park, a non-profit educational theme park in Hong Kong, was an amazing experience for our group. During the visit, Mr. Paul Pei, Executive Director of Hotel & Hospitality, talked about Ocean Park's past endeavors regarding marketing, its financial picture over the years and the implementation of the park's current plans. Mr. Pei emphasized throughout his presentation the importance for the park to "present a need" to the target audience. As support, he discussed a case study of the park with us to explain how the park has faced its difficulties over the years. First, he mentioned that people like to visit in groups, and so the park has to target groups, not individuals. People saw Ocean Park as being "old," and, therefore, stopped going altogether. Ocean Park reacted by launching a birthday promotion, in which customers get free admission on their birthday. Visitors are more likely to bring their friends/family along to celebrate their birthday if they already have free admission. After the success of this promotion, the company began other promotions such as Hong Kong ID promotions, photo promotions, and wedding promotions.
Ocean Park also produced creative ads targeting viewers' curiosity to counteract declining park attendance and fragile customer loyalty. For attractions such as the Halloween haunted houses, advertisements employed Chinese phrases and scenarios regarding ghosts to try and establish a "need" to visit the park. Even people who don't understand the words in the commercial can easily guess at the storylines, making it ideal for targeting both locals and tourists. Ocean Park has done fairly well over the years, with peak revenue achieved in 1997 (when Hong Kong returned to China), and record-breaking attendance in recent years. The park has recently been using promotional flash mobs and is working on the construction of a hotel to give visitors more comfort and choice. Mr. Pei summed up the success of Ocean Park's operations and doing business in general as creating "need" and "being hungry." Without either of these, accessibility would be a hard goal to reach.
DFS GROUP LIMITED in Hong Kong
By Aspilcueta Saavedra (Cindy), Lourdes
DFS, a luxury travel retailer, does an excellent job of offering collections for the convenience of its customers at different destinations worldwide in four key categories: Fashion & Accessories, Beauty & Fragrances, Watches & Jewelry and Wines & Spirits. DFS carries a large assortment encompassing 700 world-leading brands to meet the preferences of the traveling customers. It operates through airports and T-Gallerias department stores. It currently has more than 420 locations worldwide, in 11 countries and across three continents.
During our stay in Hong Kong, we had the opportunity to meet DFS representatives at one of the T- Gallerias located on the island. We got the chance to meet Mrs. Gena Rubia, vice president of the human resource department, who delivered an interesting presentation on the company and its future plans.
During the presentation, Rubia explained that DFS was highly interested in leveraging the greatest value of the growing appetite for travel. China, which is ranked as the world's top spender on tourism, is an ideal market to further penetrate DFS's plans. We discussed expansion in Brazil as well. Although the company already has an office in Brazil, they have not decided to run any operations in that location yet. The office serves as an entity that evaluates and scans the environment and reports it to the headquarters. Due to Brazil's impressive economic potential as a tourist destination and its increasing GDP, DFS has hopes to eventually open an airport duty-free retail store and a T-Galleria there. However, Rubia emphasized that location is key for their business; therefore the company would take time to make sure the location is a good strategic choice. Overall, DFS wants to go wherever the customer goes in order to best serve them and meet their demands.
After the presentation, we were guided through the T-Galleria store to see the importance of store layout and product assortment in attracting the customer and how it influences their decision to explore the store.
Dick's Sporting Goods in Hong Kong
By Austin Levenson
On our second day of visits we toured Dick's Sporting Goods. I was very interested in learning how they conduct business in China, since they are so successful in the United States. While they do not have a single store in China, their office is used for sourcing the products that can be found in their United States stores.
The office was in a beautiful building in the Kowloon Bay area of Hong Kong. We were led into a boardroom with an incredible view of the city. Multiple representatives from the company gave us their point of views about the sourcing process. Dick's Sporting Goods offers many brands in their stores, and many are their own private label brands. They also have exclusive partnerships with companies like Reebok to make special products just for their stores. The private brands, along with these exclusive products, are all sourced through their Hong Kong office. This office receives the designs and turns them into the final products seen on store shelves. This office finds the best way to produce and ship the pieces of clothing to the United States, as well as materials at the best quality and price. They also determine the most efficient location to produce the clothing and the best way to ship it to the United States, which can be the bulk of the cost. It was extremely interesting to learn about the creation of products that I have bought in Dick's stores before. The company was very welcoming to us, and we all learned a great deal about the sourcing process.
Umbra in Shenzhen
By Emily Lowman
Umbra is a housewares company that sells to retailers such as Target and Bed Bath and Beyond, On May 14, 2014,and we visited its factory in Shenzhen. We met with Henry Huang, a product design developer, to learn more about how an idea for a product becomes a reality. Umbra lives by the words "innovative, modern, casual and affordable." The company ensures that all products fit into those categories or they are not produced. Some of Umbra's original designs are the swinging garbage can lid, multi-picture frame, and cut out chair. Huang also went into detail about some of Umbra's most successful designs – the Polaroid picture frame, paper towel stick man, and auto soap pump.
Umbra has only one physical store, located in Toronto, Canada. The company uses this store to test out its products and receive customer feedback. If a customer sees a product in the Toronto store and would prefer it in a different color, Umbra will consider this before providing the products at different retailers.
After the company visit, we toured the Umbra factory. The 120,000 square foot factory was established in 2003, and currently has more than 500 employees. Going to the factory gave us a better idea of how Umbra's products are made and stored. We were able to see many different curtain rods produced, as well as how they are assembled. It was interesting to see both the machines and the employees working together to create one product. Our group also examined a 3D printer. The company uses it to make prototypes to get a better idea of how the finished product will look and to see if the measurements are correct.
Overall, this company visit was especially interesting because we were able to learn about the product development process and actually witness it firsthand.
Brown Shoe Company in Dongguan
By Maria Rodriguez
On May 15, our first visit of the day was with Brown Shoe Company, where we met Mr. Harlan Chang and his team. Mr. Chang was one of the best speakers of the trip as he not only talked to us about the company, but also about the government, education, food safety, and even marriage in China. He had interesting thoughts about the second wife problem for businessmen in China, counterfeit products, government control in education and the way people live in general.
I learned that China now has the world's largest highway system, which is good for sourcing. Also the high-speed railway is taking over flights, which will make transportation much faster and efficient for shipping goods and materials across China. Moreover, most shoes are made in coastal China, a strategic location because the shoes are ready for shipping. I also learned that most shoes now say "Made by Gucci" or a specific brand, instead of saying "Made in China". One of the challenges the company is facing is rising labor wages in China as well as low productivity. The company is starting to think about other possible destinations where labor cost is cheap and the culture is similar to the Chinese. They already have factories in low labor wage countries such as Ethiopia and Vietnam, but will keep looking for other alternatives. Mr. Chang also said that the company is not as tech-savvy as they hope to be, but their production is as efficient as it can be.
I think this was one of the most well-rounded visits since we were able to see the designs and the production after the presentation. It was amazing to see all the boots, sandals and designer shoes, and I was even able to try on one of the most beautiful designs they had. We concluded the visit by eating lunch at a delicious Thai restaurant where we interacted more with Mr. Chang and learned about internship opportunities in the company.
US Commercial Service
By Christine Lee and Jasmine Baxter
Having the privilege to be on the China Retail Study Tour we were able to see many global companies trying to be competitive within the Chinese market. Given this fact, there is no doubt that China is an important place for foreign direct investment. Companies hoping to enter the Chinese market strive to enter both quickly and efficiently. However, there are many unknown parameters such as cultural and language barriers. This is where most companies need assistance and the United States Commercial Service Office comes in to help.
Our class paid a visit to the U.S. Commercial Service Office in Guangzhou on May 16. There we met Mr. Jay Biggs, a Commercial Officer; Ms. Veronica Liang, a Commercial Specialist; and Ms. Jenesy Wang, a Commercial Clerk. The Guangzhou embassy mainly serves the southern portion of China, conducting its affairs in the major business cities such as Guangdong, Shenzhen, and even neighboring Hong Kong. This fact makes this office extremely important because, as we learned from Mr. Biggs, Forbes projected the two best cities to do business in China were Shenzhen and Guangzhou. The office works to analyze the functionality and activities taking place in the Pearl River Delta region, including matters of manufacturing, supply chains, and ports governed by major cities like Hong Kong, Guangzhou, Shenzhen, Dongguan, Zhuhai and Macau. The Commercial Service Office's duties include helping their U.S. clients register patents or trademarks, find trustworthy agents or distributors, learn about doing business in China, promote their business, and giving advice on how to enter the Chinese market, among many other services that the office provides. One of the first critical steps for a U.S. business to take before coming to China is to work with the Commercial Service Office first in the U.S. through their Golden Key Program. Many of the duties of the Commercial Service Office detailed previously are critical components of the Golden Key Program.
The service is a branch under the U.S. Department of Commerce, working to encourage U.S. businesses to either come to cities like Guangzhou over the typical Shanghai or Beijing or to increase their exports. During our visit, we learned that the Guangzhou Consulate Office holds the award for being number 1 in the world for generating exports. This made our meeting with them a true honor. The three executives, mentioned previously, spoke to us about their responsibilities, including attending trade shows to see if Chinese companies were legitimate, as well as helping U.S. universities appeal to Chinese students wanting to study abroad in the U.S. They also shared with us trends that they have observed over the past years. Some examples were that Chinese people have been investing in the U.S. to build better teams before coming back to start business at home, many prominent Chinese businessmen are investing heavily in U.S. golf courses, and low-end U.S. brands that are very prominent in China. We discussed the emphasis put on working in the business of e-commerce and the Chinese government's desire for the region to be a high-tech hub in the future. Lastly, we touched on internships that are available for those students interested in working for the U.S. government abroad. It seemed like an excellent opportunity for those students wanting to explore a new culture while still being able to interact with fellow Americans. The visit was a pleasant surprise for most of the students on our study tour because many of us were not aware a U.S. government service like this existed and operated in China. It was a rare and unique look into the steps and strategies that come into play before, during and after a U.S. business comes to the Chinese market.
Chimelong Resort Park and Hotel in Guangzhou
By Noah Zimmerman
On May 17, we visited Chimelong Resort Park, a privately-owned company started by Su Zhigang. The person presenting the company to us was Tony Sze, who is the General Manager and second-in-command. It was interesting to hear about the history of Chimelong and the direction they are heading in. You truly cannot appreciate a company as expansive as this one until you visit them yourself.
Zhigang was a pig farmer who sold his pigs to restaurants. Through his interaction with restaurants, he learned about the business behind it and decided to make his own. The success from his restaurant allowed him to start creating other businesses, which started with a safari park in 1997. Zhigang is best described as a man who sets out and accomplishes his goals. Through his wise decision-making, he now owns amusement parks, a water park, a circus and a luxury resort. He is currently building a mega island resort that will include 10 different theme parks.
A huge reason Zhigang is able to accomplish his goals is by solely owning the company. Since he is in charge, he makes all the decisions and does not need to wait for approval to accomplish his tasks. He relies on bank loans instead of investors meaning Zhigang takes on all of the risk. I asked Sze if they had any plans in the future of becoming a publicly traded company, and he said they have not given it any thought. Chimelong Resort Park is a thriving private business in a world of mostly public companies, and I hope they enjoy success for many years to come.
Starwood Hotels Customer Contact Center
By Alex McDuffie
Starwood Hotels is the owner of many well-known hotel chains such as Sheraton, Westin, W and Four Points. On May 19, our group visited the Starwood Hotel Call Center in Guangzhou. We were given a presentation on the Starwood company history, as well as the success of the Guangzhou Call Center. The call center in Guangzhou is the primary facility for Starwood China guests to call with questions or comments. The Guangzhou location opened in 2009, and is continuing to expand with the growing number of hotels opening in Asia. Starwood currently operates 258 hotels in China.
The Starwood Call Center in Guangzhou handles thousands of calls from Starwood guests every day. It receives around 1.6 million calls a year, while total worldwide calls to Starwood amount to approximately 17.5 million a year. The average customer satisfaction rating for the Guangzhou center is 96%, while the overall satisfaction for Starwood call centers is 92%.
The typical time spent on a call for Starwood China employees is roughly three minutes, while the average in Japan is about six minutes. This is because the Chinese prefer short, quick answers, while the Japanese typically desire an understanding employee who is willing to take the necessary time to respond with care. I found this interesting because it displays how a company must adapt to satisfy cultural differences in various international locales.
After our presentation at the call center, we were allowed to shadow various Starwood employees. We watched one employee respond to an upset guest's phone call to see how complaints are properly managed. We also spoke with another employee who demonstrated how she responds to customer WeChats and e-mails. Observing these Starwood associates allowed us to truly understand the importance of good customer service and how to react in difficult situations.
Y & R in Guangzhou
By Jasmine Baxter
On May 19, we visited the office of Y&R. Y&R stands for Young and Rubicam, the last names of the two founders of this multinational advertising agency. With offices in more than 100 cities and numerous countries, Y&R certainly earned a spot to do business in China. We visited the Y&R office in Guangzhou and we learned about the many trends that this office has been tracking over the years for various clients. We first discussed the "Golden Generation" which can be classified as males and females ages 18 to 35. Kaco Zhang, a Senior Planner, described characteristics of this Golden Generation as people with the highest income in China, who have direct influence power, they are open to the world and they think they will be rich one day. This collective group is called the Golden Generation because of the one child policy which encouraged people of this generation to be very conscientious of themselves, believing that the possibilities for them are unlimited, which is in direct contrast to their parents' generation. The opposition between the two generations was also discussed identifying that the Golden Generation wanted internal validation while the Old Generation needed external validation. Using this data, Y&R knew which markets to appeal to with certain products. For example, products that appear to enrich one's life and give more happiness appeal to the Golden Generation. However, products that you would show off because they evoke a certain image and lifestyle such as Lexus or Rolex appeal to the Old Generation. This same desire for the Golden Generation is carried over into their family life because this new generation seeks to get meaning out of their jobs; they do not want to work just to work.
Another interesting topic we touched on was the role of the Chinese woman now compared to that in previous decades and centuries. Today, Y&R has found that the typical Chinese woman wants to keep a balance between her home and family with her career and work life. Zhang mentioned that it was considered "cool to be a housewife" and that today, they have the right to choose work or home. The woman of today was contrasted with a Chinese woman during the Qing Dynasty who was expected to stay home, be a staple of the household and look after the children. Then, during Mao's time, a woman was expected to work and be a productive member of society, and they wanted to establish themselves in this area. Today, it is a balancing act, which is not so far from a modern Western woman who also tries to be a good housewife and a successful woman in her career.
Overall, our visit to the Y&R offices was successful and we learned a lot about the Chinese market and how an advertising agency like Y&R discovers and appeals to the different markets within China. It was a very interesting and unique insight that all the students enjoyed.
CityShop in Shanghai
By Kevin Ren
CityShop is a specialty supermarket chain that provides fresh produce, imported goods and exceptional service to its customers. It provides a special facility where the floors separate and differentiate products. For example, the first floor is produce and vegetables, the second floor contains wines and spirits and the third floor has home improvement products. Many different trending products are imported from overseas to provide a variety of products. One-tenth of its sales are through the traditional shop format.
CityShop's target market is the local high income Chinese, though their customers are in a 30/70 ratio as expats and locals. To attract customers, CityShop offers a wide variety of products, with a 50% different product range from regular supermarkets. Also, the company offers exceptional service. Five percent of their sales are home deliveries, and any delivery over 200 RMB is free. Their membership cards also differentiate them from competition. Fifty percent of their sales are from 4 p.m. to 7 p.m., when locals are coming from work and children get out of school. With the addition of restaurants into stores, CityShop looks to tailor-make food to individual customers and encourage family concepts.
CityShop created CityFarm, its personal farm that supplies vegetables, pork, chicken, lamb, duck and eggs to its stores and hotel business partners. The farms are self-sustaining and help provide easier sourcing and a full range of vegetables to customers since the company is able to grow its own products. This also lowers the cost of offering organic foods since the volume that CityShop produces is small. Since the food is organically grown, the company can offer the safer foods that customers desire, though the price is 10-15% higher than regular food.
CityShop sees a future of mobile ordering and shopping where customers can pick up their order from the shop after ordering online. This way, CityShop doesn't have to make home deliveries and can save logistic fees. There are no plans to expand outside of China at the moment.
Baosteel in Shanghai
By Christine Lee
With the world looking towards further globalization and national development to fuel the economy, production of basics that can support a variety of industries is ideal. Many industries have a dependence on metal use nowadays to help build or sustain their business operations. Therefore, the importance of factories that produce steel and iron are really apparent.
Our class visited the Baosteel factory on the outskirts of Shanghai on May 21. We toured its factory, which produces steel and iron, as well as the surrounding area. We received an introduction of the company by the Baosteel production manager. The executive explained how the company is doing in terms of the global economy, and how it ranks in production in the world and how they supply to other industries. He discussed how Baosteel provides its products to assist operations with automobile production, development of industrial machinery, design of household appliances and other goods, and energy work. The executive also briefly covered the company's focus on production of other products and its engineering services, as well as his thoughts on social responsibility.
The students visited the factory and realized just how extreme the working conditions are for the employees. Inside the factory, the students saw the whole production process for steel. Additionally, the students learned of the few employees that work there. Those who do work there mainly handle the machines, and are allowed to go to the air-conditioned areas every so often. Overall, the factory visit gave the students a full glimpse of just how business works from the bottom up, summing all the business visits and industries the class had learned about into one.
Online Design Ltd in Shanghai
By Christine Lee
Online Design is a fashion design company that helps its clients be successful in fashion retail. The company currently has offices in Shanghai and Hong Kong. The company is mainly focused on two operations: Design and production management. Fashion pieces such as coats and dresses are designed in-house, while production of the clothes is sent to their factories in Anhui, Zhejiang, and Jiangsu.
On May 21 , the class visited the Shanghai office and met Mr. Theo Wit (General Manager), and Mrs. Maureen Wit (Owner and Fashion Designer). The executives talked to the group about how they research trends and design pieces for all seasons, how they manage and expand their clientele, how they are working on online commerce, how they showcase their designs and advertise, how they are hoping to enter into other markets including the U.S. market, and how they are entering into the retail business in late 2014. The group then got a tour of the office to see the different departments that work within the company, the company's creative workplace, and style boards and pieces that the company has completed already.
Jack Wolfskin in Shanghai
By Shannen Sigman
Jack Wolfskin is an outdoor clothing and equipment company that was founded in Germany in 1981. The company is led by Michael Rupp with a mission to make people feel at home outdoors. During our company visit, we met with Josh Pearl. He informed us about the Chinese economy and how it has evolved over his time in the country. He mentioned some very interesting points throughout his presentation, such as where China comes from dictates where it is today. This can be seen by Chinese consumption in investment of consumer services such as retail, travel, e-commerce and similar services currently being 40% of their economy. Now with more economic freedom, the Chinese are able to indulge in activities and make purchases that they were previously unable to do because of urbanization, wage growth, and the savings rate driving consumption. The current trend in China shows that more people are moving to urban areas where there are higher wages to be earned; thus leading to more disposable income. The savings rate is also at 30-35%, which demonstrates the lack of confidence in their futures. Now the younger generation must support more of their elders as people live longer, which is driving them to move to urban cities in order to have more income to fulfill their familial responsibilities. In addition, Pearl also introduced the term "megalopolis," which is a city with a population of 50 million, to inform us that China will be developing around 20 of these cities in the future to support its growing population.
Due to limited time, information presented regarding the company was very brief. The main point discussed was the future of using digital technology more in store locations in order to gather information such as if the window displays get people into the store, and the length of time people spend in store. This would all be done through the use of someone's smartphone to the technology in the store.
UCCAL Fashion Group in Shanghai
By Bill Zhou
Throughout this study tour, we have visited many different kinds of companies. Companies range from sourcing office to a wholly-owned tourism company. I have learned so much from the company executives and their employees about the operations process and their marketing strategies, as well as the companies themselves and the Chinese market as a whole. Although I have traveled to China many times before, this tour gave me different perspectives of how businesses operate here.
The company I researched before this trip was UCCAL Fashion Group in Shanghai, which is owned by the Fung Retailing Company under the Li & Fung Limited umbrella. The host of this company visit, Edward Moura, is the creative director of UCCAL. During his presentation, he shared the latest research and results about Chinese consumers, which indicated that customers are having increasingly high demand for luxury products. This created a large and profitable market for UCCAL Fashion Group, resulting in successful sales. One of the most interesting topics Moura went over in his presentation was the company's marketing strategies. These include inviting influential Chinese bloggers and magazine reporters to special events, utilizing online and offline strategies to maximize brand exposure, and using personalized marketing to reach Chinese consumers. With over 1 billion active Weibo and Wechat users in China, social media marketing is more cost effective than traditional advertising. It is also the most effective way to reach the majority of luxury product consumers who are younger and tech-savy.
Outback Steakhouse in Shanghai
By Shannen Sigman
Outback Steakhouse was founded in 1988, and is part of the Bloomin' Brands Group. We visited the restaurant at Global Harbor, a large shopping mall in Shanghai and the most profitable location in the Shanghai area. We met with Alex Zhou (General Manager), Karen Zhang (Store Manager), Jessie Zhong (Marketing), and Jinming (Kitchen Manager).
Immediately when entering the restaurant, we could see that Outback Steakhouse is still marked with an Australian theme, but the décor is more luxurious than in the United States. We learned a lot about the company's strategy in China as well as more specific information about the particular location we were visiting. Beginning in August, the company is altering the menu to incorporate more Chinese food items.
Currently, the main differences between Chinese and American locations are portion sizes, menu items, and food taste. All Outback locations in China are also in a mall of commercial area.
Regarding specific store information, the average employee is age 22-26 and single, and the target customer age is 25-40. It is difficult to retain employees because many are seeking more permanent positions with higher levels of income. The peak season is between April and June, and the busiest time of the week is the weekend, with average sales of 80,000 RMB. Even during the busiest times, employees and management strive to treat each customer with VIP service. The average wait time is 10-15 minutes and table turnover is anywhere from an hour to an hour and 15 minutes.
Finally, we were able to have a group lunch at the location. Some food characteristics were the same as in the U.S., such as the famous Bloomin Onion, but differences included fancier plate presentation and smaller portions.
Hyundai in Beijing
By Christine Lee
With the amount of cars on the roads in China increasing significantly in the past decade or so and with more people willing to make the transition into owning a car to get around more efficiently, it is of no doubt a market that automobile manufacturers should look into. Companies like Hyundai have already taken initiative and opened up a manufacturing facility for the production of Hyundai vehicles.
On May 26, our class took a visit to Beijing Hyundai and got a tour of the factory. We learned about the production process and got to see the different teams of workers assembling cars together. In the end, the cars were tested and driven off. It was interesting to learn about some of the factory's operational statistics, including the facts that 1,300 cars are produced per day with one car driven off every 54 seconds, and that there are 15,000 workers in the facility. We were also made aware that the name Hyundai in Chinese (北京现代)derives from the Korean name, translating to "Modern Beijing."
Right at Home in Beijing
By Maria Rodriguez
On May 26, , we visited Right at Home in Beijing. This location, which opened in 2012, was the first to make profit and currently has 430 caregivers. The company is looking to expand to other cities in China such as Guangzhou and Shenzhen. They talked to us about their business and introduced us to some of the challenges that they are facing to position themselves as a caregiver company in the Chinese market. Between 2007 and 2011, they have been focusing on conducting market research to address their customer needs and to look for new opportunities.
They spoke to us about how challenging it has been for the company to position themselves in the Chinese market, since Chinese people do not really understand the difference between caregivers and a regular maid. They have also had trouble persuading elders to get service because the Chinese elderly do not want their children to spend so much money on them. Consequently, they have adopted the marketing technique of talking to the children instead of the elders to get the service. Children can check online with the company system or via Facetime to make sure everything is alright. Right at Home has also partnered with the government to provide for disabled people. This was a very interesting meeting since they are a new concept starting in China and have a lot of opportunities to keep growing and to expand their market.
We also learned about the training that employees must have before they are ready to provide services with Right at Home. They have to train for three months, and then practice with real families. I really enjoyed this presentation because it helped me realize the importance of conducting market research to determine who you are marketing to and the most effective way to reach them.
51ants.com in Beijing
By Supharat Sribunpheng
We learned that 51ants.com is a collection of e-commerce, chain logistics and regional distribution. Its vision is to "build the city last mile service provider channel," and its mission is to "make life more convenient." The company is headquartered in Beijing and has about 200 employees. The name in Chinese is translated as "worry-free" ants. The company has nine distribution centers in seven districts of Beijing: Changping, Haidian, Chaoyang, Daxing, Fengtai, Tongzhou and Shijingshan. 51ants.com provides an array of more than 10,000 items. Customers can place orders by phone, online, through a mobile app or WeChat. About 80 percent of orders are from mobile devices. Once an order is verified, it is shipped within 24 hours. 51ants.com's business model is B-to-B-to-C. The company is focusing on expanding its network of convenience stores. Of the 5 million convenience stores in China, there are about 100,000 in Beijing. Initially, 51ants.com was able to capture a network of 18,000 of these stores. According to Mr. Ningbao Song (CEO), the company currently distributes to only about 3,000 convenience stores due to some drawbacks. However, he hopes to create strong links between convenience stores and giant manufacturers such as Coca-Cola and P&G. He strongly advocates e-commerce solutions, seeing online platforms playing a big role in the future. Offline will become a place just for warehouses.
Olympic Management Center in Beijing
By Christine Lee
After the 2008 Beijing Summer Olympics, the area has become a tourist destination site. Certain facilities used in the Olympics have been open to the public for taking pictures and for enjoyment, but the foot traffic in the area is still limited. The company in charge of taking care of the area after the Olympics, the Olympic Management Center, talked to the group about managing the different athletic facilities there and advertising the area to both locals and tourists. The Center has built an underwater mall with a variety of brand name shops after the Olympics and is currently working on its promoting and branding. Due to the mall's location being so hidden, consumers and companies don't exactly realize it being there. Therefore, the Center is cooperating with some real estate companies to place advertisements in more high-traffic locations where their ads can be visible. The executives also talked to the group about the difficulty the Center had in attracting businesses to sign contracts with them to open a store at the mall.
The group got the chance to tour the Olympic Park area (Interview room, Bird's Nest, Water Cube, etc.) and also the underwater mall.
Science Park in Beijing
By Noah Zimmerman
The visit to the Zhongguancun Science Park was our final business visit of the trip. Chairman Dr. Xia presented to us, explaining what the science park was and how it played a crucial role in technological advances. The science park is actually a cluster of 10 zones spread throughout the city of Beijing. The purpose of these zones is to create a concentrated area of people in the technological field. Z-Park, as it is most commonly referred to, contains almost forty educational institutions as well as almost 200 companies.
What Z-Park arguably does best is attract venture capitalists. Dr. Xia explained that companies struggling to get off the ground usually find an abundance of money and resources from wealthy individuals willing to invest in companies. Companies in the park actually receive around one-third of all capital investment in China, which is amazing considering how relatively small the park is. However, there is more to the park than money. The technological advancements that have come out of this park have proven to be of great importance to both the Chinese government and the world. The park is also symbolic to the Chinese people as it represents a shifting view of the Chinese government. The government is realizing the importance of technology and innovation and creating a pro-capitalistic environment. Dr. Xia explained that the importance of this park is to establish a place where the Chinese entrepreneur wants to go, in order to combat brain drain. We concluded our visit by watching Dr. Xia play a traditional Chinese drum, which was used in the 2008 Summer Olympics opening ceremony in Beijing.
JD.com in Shanghai
By Kevin Ren
JD.com is an e-commerce marketplace and one of the largest B2C companies in China. They utilize GIS systems to track real-time orders and deliverymen. Their strengths lie in the technology and logistics they have invested much of their profits into. They have seven fulfillment centers for their delivery system, 209 self-pickup stations and 1,453 delivery stations, making JD convenient for customers no matter where they are. They have also developed a superior logistics distribution network, offering a 211 program in which the customer can order by 11 a.m. and get a package the same day or order by 11 p.m. and get the package the next day. They also provide targeted brand promotion and varying product marketing platforms for its partners.
JD is building its brand image by adapting to changing consumer demands, creating customized products and special software, enhancing the user experience through customer interaction, offering a proper price and personalizing deliveries. Along with offering convenience with its superior logistics distribution, JD is in a prime position to dominate the expanding B2C market. In the future, JD hopes to expand into other countries once they have done more research on third party models or more self-developed models.
Perry Ellis International and Laundry by Shelli Segal in Beijing
By Supharat Sribunpheng
One of the most interesting company visits was Perry Ellis International. Ms. Chen Deying, Chief Representative of China, generously shared her time and insights with us about Perry Ellis International (PEI)'s sourcing operations and its challenges in price competitive markets. She also shared new initiatives of e-commerce launched through major B-to-C platforms and strategies for a joint venture of Laundry by Shelli Segal, one of PEI's brands.
Unlike other company visits, where the topics of discussions mainly involved doing business in China, we had the opportunity to learn about the power of meditation in midst of busy business and personal lifestyles. Not to mention, we actually meditated. Deying walked us through a few minutes of total relaxation. The main takeaway from this was the fact that, oftentimes, we neglect to remind ourselves of all the good work the relaxation effect can do on the mind and body.
We also learned that, for Laundry by Shelli Segal brand in China, PEI has a licensee called Parmax. Currently, Parmax has two Laundry by Shelli Segal locations in Beijing (Seasons Place and Shin Kong Place) and plans to open three more locations in 2014. The first location was opened about one year ago. Parmax has positioned the Laundry by Shelli Segal brand at a higher price point than in the U.S. The styles carried in China are typically the same styles carried in the U.S. Deying brought us to the store at the Seasons Place Mall. Ms. Tequila, PR Director of Parmax, explained communication and retail strategies for target markets in Beijing. It was evident with the contemporary store layout, tones, atmosphere, and vibrant displays that the Laundry by Shelli Segal brand is to embody "the spirit of the quintessential 'LA Girl'."
This electronic newsletter from The David F. Miller Center for Retailing Education and Research is issued throughout the year to provide updates on what is happening in retailing at the University of Florida. Information regarding student outreach, jobs, internships, research and retailing connections throughout the country will be included. We hope you enjoy seeing what Gators are doing in the retail industry!