On the ground

Chinese chain store targets the low-end consumer

Shoppers who are looking for a bargain may prefer Shopin's outlet stores. Provided to China Daily

On a recent Monday morning, when the Shopin store opened at 10 am, a swarm of elderly people stepped in and began to comment and select clothes and shoes from closely packed shelves in the simply decorated store.

The 8,000-square-meter store on Laiguangying in the outskirts of Beijing is located on the fourth floor of a shopping center. It is Shopin's fifth chain store that targets a niche market of lower-end consumers who are looking for a bargain and are not in pursuit of or cannot afford big brand names.

It is the other side of the spectrum of the Chinese shopper, where the media focus has been on the affluent and jetset hunting for luxury brands.

"People don't have enough leisure time to go to outlets in the suburbs of a city. Our business model is based on the majority of consumers' city-center living mode," says Yin Song, vice-president of Beijing Shopin Retail Development Co Ltd.

There is not much in the way of decoration at the store. All you can see are white walls, gray iron frames and compact fluorescent bulbs.

To reduce operating costs and provide low price products, the investment for each square meter is limited to less than 1,000 yuan ($158, 124 euros).

Western brands account for about 35 percent of all brands with such names as Nike, adidas and North Face.

Middle class consumers who are sensitive to prices frequent the store. Non-seasonal products start from 80 percent off while new arrivals in season are at least 20 percent off.

Though some of the Shopin stores are not adjacent to the subway, they are always next to a supermarket, such as the Wukesong store that is adjacent to a Walmart or the Asian Games Village store near a Wumart. It is the company's strategy to save time for consumers and attract more floating shoppers.

The best-selling category of items in the chain store is footwear, with sales of at least 30 million yuan every month. The average price for each pair is about 200 yuan. Nine West, Ecco and Belle are among the most popular brands.

From the first store on Wangfujing Street, the company has developed eight chain stores around Beijing. Its sales revenue also surged to 1.5 billion yuan in 2011 from a few million in 2000.

Yin says in the past decade the company has been striving to do one thing: to become a chain discount store.

"Unlike usual department stores, we are not charging slotting fees from brands, our revenue depends on commission fees from brands," Yin says.

In the management database, there is more than a million stock keeping units. They keep changing the combination of products in each store according to the performance of products.

"In the retail industry, price and products are the core elements. As we are cooperating with brands committed to unified price setting system, we are highlighting the product portfolio," he says.

Usually, the company keeps at an update rate of 20 percent every week. To better cater to every consumer, it provides products based on the main buyers' groups in different areas.

"We refresh most of the products in the Wangfujing store every two weeks because most consumers are tourists," Yin says.

Faced with Chinese consumers' rising interest in online shopping, Shopin is also expanding its business to the Web.

"The price of our products sold online is completely in accordance with price tags in our (brick and mortar) stores," he says.

The company established a wholly owned technological subsidiary in 2008, and it has invested about 50 million yuan in building the online shop.

Every shopping guide in the store is equipped with a flat panel TV display. When a product is bought on the online channel or in the store, the guide receives the information and always knows where each item is stored.

Shopin also uses non-paper receipts and has introduced the use of a smart card.

At present, online sales account for 30 percent of its total revenue.

The company is planning to open three or four stores in Beijing later this year, but it is not ready for marching into other cities.

"We will continue to invest in the online operation, which can be another way to extend to more customers," Yin says.

yaojing@chinadaily.com.cn