Shanghai Tang, China’s First Luxury Brand: From Nostalgic to Chinese Contemporary Chic
Founded in the mid-90s, Shanghai Tang stores were initially set up as an unusual emporium offering memorabilia and vibrant, colourful clothing inspired by 1920s-era Shanghai fashion. Targeted towards western tourists, the original offerings were not scalable enough for sustainable growth, particularly in Mainland China. The challenge was to avoid clichés while being both locally and internationally relevant and appealing. The brand needed a Chinese aesthetic with style and self-confidence, while being positioned as an affordable and accessible luxury. But rebranding tends to be a slow process.
An unexpected catalyst came in September 2011, when rent for the flagship store on Hong Kong’s major shopping thoroughfare, Pedder Street, abruptly quadrupled following an aggressive bid from the American clothing retailer, Abercrombie & Fitch. After 17 years, Shanghai Tang’s retail space was suddenly lost on the cusp of the holiday season. Although it was a major blow to lose such a choice retail space, it did offer Shanghai Tang a chance to break from the past and pursue a target market with higher growth potential.
With the loss of the Pedder location, Le Masne and his team sprang into action to prevent a drastic drop in sales while also taking the opportunity to rebrand. Three years later, they successfully repositioned Shanghai Tang as a chic luxury brand with both Chinese and international relevance; sales were healthy and the growth outlook was strong.
Students will evaluate strategic execution, and examine the events and decisions surrounding successful brand transformation in the fashion-retail industry by applying the CLEAR Framework: communication, leadership, enablers, alignment and reinforcement. Students must consider optimisation tradeoffs between speed, performance and commitment when it comes to strategic execution. They will also gain a greater background understanding of the retail market in Hong Kong, and to a lesser extent, China. This case can be used in strategic management and marketing classes of all levels.
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