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HK New World Department Store Announces Yantai Store

Hong Kong New World Department Store recently announced an agreement with Xianglong Wanxiang Plaza in Yantai's Laishan District to open a 55,000 sqm department store and manage an additional 46,000 sqm of shopping mall. The 101,000 sqm project is expected to open in 2014, making it one of New World's largest to date. Total investment is estimated at $250 million. The entire Xianglong Wanxiang Plaza complex will be approximately 1.63 million sqm in size, with a retail area of 350,000 sqm, and a total investment of $1.28 billion.

+CW Analysis:

NWDS is really on a roll. Last year's revenues increased 46.8%. They now have 37 stores under the "New World" and "Ba Li Chun Tian" brands across 17 cities in China, a total GFA of 1.27 million sqm, zero debt, and $540 million in cash. If any mall owners out there are listening - department stores are killing it.

NWDS is smart and serious. They've quickly expanded from 1st and 2nd tier cities to where the action is - lower tier cities. They see what's happening in the LTCs and are making a move to increase market share by adding another 25 self-owned stores by 2016.

A quick revenue analysis shows some interesting things. NWDS tenant's gross sales are up 66.2%, and rental income is up 77.6%. So while the brands are really selling, NWDS is still making another 11% on top of that bump. This is most likely due to their deliberate rebranding and renovation activities. They've brought in newer brands, improved their F&B and entertainment offerings, and focused more attention on female services, all of which keep people in their stores longer. In store traffic is up 8% as a result.

On top of all this, what we find most impressive is what NWDS has done with their loyalty programs. VIP club members have grown 118%. NWDS now has 2.16 million VIP members. These members contributed to an astounding 46% of their sales.

So maybe NWDS is onto something, that the customer is king.

Five-Star Public Toilets For Karamay

The sanitation bureau of Karamay, Xinjiang recently announced that twelve 5-star mobile public toilets are being installed around the city, including Black Oil Hill, and in crowded downtown areas. The 5-star toilets come equipped with a mirror, coat hook, paper towels, ashtray, diaper changing area, exhaust fan, emergency button, and stainless steel sink and countertop. Soothing music will be played while the door is closed, and all lighting, exhaust, and flushing are automated.

According to Karamay sanitation bureau director Ms. Zhang Huixia, "People's happiness is not measured only by food, clothing, and shelter, but also convenience and a sense of dignity."

+CW Analysis:

First, we had to actually look this place up on the map. Sorry, but we haven't done any retail analysis here yet. From what we know, there are around 300k people, and a hill that oozes oil.

Second, we have to marvel at how the fiscal stimulus money from a few years ago has now trickled down to even the sanitation bureau of Karamay. The fact that there's any money left is remarkable let alone that it's being spent on toilets. As any informed corporate or socialist bureaucrat knows, you need to use it or lose it when it comes to your annual budget.

Third, "crowded downtown areas?"

Dongguan Gets Italian Luxury Mattresses

Italian mattress brand Dorelan recently entered the China market, selecting Dongguan for their first store. CEO Cristian Bergamaschi indicated the importance of the China market at a press conference held in the first floor lobby of Xinghe Furniture City.

+CW Analysis:

We had to giggle when we heard this because selling mattresses in a city with the highest concentration of brothels in China is kind of funny. Selling luxury mattresses is even funnier because we have to assume there is also a huge ernai population in Dongguan requiring that suitors provide the best mattresses money can buy for their mistresses.

Entering China is a complicated affair. A brand needs to decide on the right city, the right partners, and fully understand the local market in order to be successful. Many foreign brand entry stories begin in Shanghai or Beijing and result in an unhappy ending. In this particular China entry case, we think Dorelan has chosen the perfect market - a city that appreciates a good mattress, with the high probability of a happy ending.

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