Lane Crawford expands through China with eye-catching displays

HONG Kong’s premier department store Lane Crawford inspires customers with beautiful visual displays.

Womenswear at Lane Crawford Canton Road store, Hong Kong

LANE Crawford is China’s premier luxury department store.

It was founded in Hong Kong in 1850 by Scots Thomas Ash Lane and Ninian Crawford and today has more than 54,000sqm of retail space spread across Hong Kong, Shanghai, Beijing and Chengdu, which says nothing of its digital reach across Asia and the rest of the world. Lane Crawford’s online store, launched in 2011, ships globally and has been purpose-built for the Chinese market with shopping available in English, Cantonese and Mandarin.

Last year the company, which is part of the Lane Crawford Joyce Group and wholly owned by its honorary chairman Peter Woo Kwong-Ching, opened its largest store to date, more than 14,000sqm, in Shanghai.

It’s also one of the world’s most successful department stores. At a time when pundits are declaring the department store model dead, or at the very least dying, Lane Crawford is thriving. Sales in 2012 were $US700 million (up 23 per cent from the previous year) and are expected to have exceeded $US1 billion last year.

Under the direction of its president Andrew Keith, who joined Lane Crawford in 2000 as vice-president in charge of merchandising and has been president since 2011, Lane Crawford has not only expanded into mainland China but also undergone a major repositioning in Hong Kong as the store with the largest multi-brand designer portfolio in Asia. Lane Crawford is known for its unique edit of more than 800 international women’s, men’s, homeware and beauty brands and for its uncanny knack of knowing what the next big thing in fashion will be.

Its success, however, has also been largely driven by an old-fashioned department store stock-in-trade: visual merchandising. Put simply, Lane Crawford’s physical stores are also some of Asia’s most beautiful. In Hong Kong, where space is at a premium, its four stores are in shopping mall environments and devote significant space to displays and innovative merchandising concepts that fuse fashion, design, art and music. It’s like walking into the pages of a fashion magazine, where everything is for sale.

WISH: Is the emphasis on visual merchandising a way to make the department store shopping experience an exciting one?
ANDREW KEITH: We took a very deliberate decision a number of years ago to make the heart of our stores all about storytelling. So when we built the IFC store [in Hong Kong], which was the first expression of Lane Crawford in this new generation of the store, we took what is the central space, which is prime retail space and where most department stores would put cosmetics, and we said our customers want to be inspired so let’s create a space to inspire them. We are a retailer but we’re also a very creative retailer and we really wanted to engage with customers in a way where they felt they were experiencing something new and that every time they came into Lane Crawford they were seeing something that was going to inspire them and that was going to take them on a journey. All of our stores have been designed with a significant space in the heart of the store that is given over to visual merchandising and storytelling. We use them for everything from showcasing young talent to being able to do pop-up installations with designers like Marc Newson or Tom Dixon to being able to showcase a new brand that we’re bringing into the market.

Every luxury brand on the planet seems to have a stand-alone store in Hong Kong. How does a department store selling luxury brands compete with the brand’s own temples to luxury?
We don’t necessarily see that we’re competing with those stores. I think that what we’re doing is creating a different experience and customers are coming to Lane Crawford because that experience is significantly different both from the products and visual merchandising and a service point of view. They are coming to us for the total experience.

Department stores in Asia seem to be all about shop-in-shops, except for Lane Crawford, that is. What was the strategy behind not doing shop-in-shops?
We feel that the Lane Crawford experience needs to be controlled by us, so we don’t want to be doing shop-in-shops — we don’t want to be renting out our space to a brand. Part of the magic that’s Lane Crawford is the fact that we have 85 people travelling the world selecting the best product from all of the brands, and that’s what makes both our take and our edit unique but also the physical environment unique in that we control it. I think that the brands really respect what we do and they can see that in a market like China we are really a global benchmark in terms of luxury retailing. We’re talking to a significant audience, we’ve got a big market share and the brands see that what we do is something very different to what they do in their own stores so they are actually mutually compatible. We’re showcasing their products in a beautiful environment and I think that that works for them and they see great value in that.

What do you think when you hear people say the department store is dead?
I think that it’s difficult to talk about department stores en masse, but at Lane Crawford we’re seeing significant growth at the moment. Business is up 23 per cent versus last year and for the luxury market in general in China growth is more like 2 per cent so we’re significantly outperforming what’s happening from a luxury retail perspective. And I put that down to a number of things. I put it down to the fact that we have to a certain extent the first-mover advantage. We’ve been in the market for 160 years, we’ve got heritage but we’re also known for driving innovation; and over that period of time we’ve grown a significant customer base who are engaged with Lane Crawford and that customer base is growing. And we encourage our buyers to take risks, to create great stories and to drive the excitement through the stores. And I think that also what we’re doing from a connected commerce strategy, which is an internal term that we use for how we’re expanding from physical to digital, and seeing both of those channels as being very synergistic because you can create the very special environment within stores, you can also create a very special environment online. We don’t feel that they’re mutually exclusive; we feel that there’s real synergy to have between both of those.

Do department stores still have to have exclusive brands to stand out or is that model no longer so important in an online world?
I think increasingly what online is doing is breaking down the barriers and there’s transparency around the product. I think that there’s always opportunity to create exclusive product where it’s meaningful and where it’s really bringing something different, but the online world means that you can see what’s available globally. What we’re encouraging, the way that we’re building the business, is to be able to have full transparency for our customers in all the product that we buy, so whether that product be physically in a store in Hong Kong or Chengdu or Shanghai or Beijing, you in Australia will be able to see all of it and you will be able to make a selection from all of that product.

Is online growing at the same pace as the store business?
It’s difficult to say. I mean, if I take online in its isolation, it’s triple-digit growth so it’s growing very, very rapidly. We currently have a million visitors to our site a month — we are growing our online business significantly. We started off just with shoes and accessories and women’s ready-to-wear; we now have all of our business units online and we are committed to extending our product assortment online.

Where are your online customers coming from?
Seventy per cent of our online business has been generated by Greater China and then the rest is obviously the rest of the world and Australia is one of the key markets in the rest of the world. Australia has got significant market share for us and is growing very rapidly as well.

Would you ever consider opening a bricks-and-mortar store outside of Asia?
I think it’s fair to say that the physical store focus for us is in China at the moment because with the opening of Shanghai and Chengdu we’re seeing the importance of having physical anchor flagship positions in those key parts. I think that the opportunity for the rest of the world is definitely through digital at this point. Mind you, having said that, we’re constantly being asked by Australia if we’d open there. But I think that the immediate opportunity for us in that market is through our online store.

What have been the challenges with establishing the Lane Crawford brand in mainland China?
Other than the normal logistic challenges of just getting products there and dealing with on-the-ground red tape, the main challenge is actually around the level of execution of our brand. If you take Shanghai, for example: it’s 150,000 square feet [14,000sq m] and we’ve employed 400 people in Shanghai to be able to service that store. Those 400 people had eight weeks of training before they actually went into the store. Because you’re building talent and you’re building the retail experience from the grassroots up, your investment into China isn’t just the physical presence, it’s not just about the merchandise, it’s not just about the brand marketing — it’s also the people investment. We’ve always had a pretty measured approach to China and we see it as being part of our DNA and the first store that we opened in Shanghai was in 1872. And so I think that we’ve always had this very long- term vision. We move when we’re ready; we move when we feel that we can execute it right. We’re still learning and we’re still fine-tuning that execution but we don’t see China as a short-term gold rush. It’s really about building that consistency.

How big can China get for Lane Crawford?
Well, to be honest, in the past 18 months we will have extended our footprint in China by 66 per cent, which is a significant growth. China will continue to be a focus for us and it will continue to be a growth, but the reality is that 150,000 square feet spaces in China are not easy to find, particularly with the street frontage and the positioning that we need and in the kind of neighbourhood that we need. So it takes time to build that presence. But in the meantime we’re also building our digital presence in China and really building reach that way.

Do you spend much time in stores checking things out?
A lot. I think that this industry is so much about being connected to product. It about being in stores and seeing customers’ response and how they’re reacting and how they’re navigating around, how they’re finding items. I think that you need to be very nuanced and to be nuanced you’ve got to be very hands-on. I look at absolutely everything from the lightbulbs through to a brand adjacency through to the towels that we’re using in the platinum suite, through to whether or not the makeup counters have got the full assortment of samples on the counter. I look at pretty much everything.