Last week, kate spade New York announced it was partnering with the E.Land Group to form kate spade China — a new joint venture in China’s mainland. We spoke with Craig Leavitt, CEO of kate spade New York, about what this deal means for the brand, and how he intends to execute the expansion.
The High Low: China is emerging as one of the world’s largest luxury-goods consumers. How will this partnership with E.Land help expand the brand’s Chinese presence?
Craig Leavitt: Importantly, E.Land has significant experience in the retail marketplace, and they have a rather unique structure — they operate their businesses directly across all tiers of the Chinese marketplace through regional offices. This structure gives them a significant advantage in terms of understanding the needs of the sub-markets in the Chinese market. Which gives us the opportunity to expand not only in larger cities, but also in regional capitals in a unique way.
THL: With brands like Coach and Tory Burch also aggressively expanding in China, how will kate spade differentiate itself from the pack?
CL: In a couple ways. First, our product itself is a major differentiation — we think the brand DNA of kate spade is going to really resonate with the Chinese consumer. The fact that we have a unique use of color, the playfulness of our brand, the wit of our brand – those things will separate us from the competition.
Second, we think that we are now positioned to have a significant presence throughout all of China, and not limit ourselves to the Beijings and Shanghais. Rather, we’re in a position to move beyond just [the large cities] and become a brand that plays nationally throughout the country.
THL: Kate spade has already entered the Asian market through Globalluxe, and is continuing to expand throughout Southeast Asia. E.Land is based in Korea and not known for working with luxury brands. What made you choose them for the partnership?
CL: It’s true that their parent company is a Korean company, but E.Land China, our new partner, is a very significant operator in the Chinese market, operating well in excess of 1,000 stores in around 17 different brands. As such, it has tremendous operational expertise in the market. They are also very strong operators and merchants, and they work hard to understand the nuances of the market and execute flawlessly from an operational perspective. The marriage of that local expertise and operational expertise with our global brand imaging and product will be the “magic sauce” of a successful operation in China. Their ability to marry a brand concept with flawless execution is the perfect match for our needs in the marketplace.
THL: Reports indicate that kate spade expects to grow to nearly 300 points of distribution by 2020, from the current two freestanding stores and three shop-in-shops. What’s the strategy for accomplishing this goal?
CL: We intend to grow in channels both as it relates to shop-in-shops in department stores, freestanding shops in malls, and street stores. This will accomplish a few things: it will multiply points of distribution and engage with customers more fluidly, and it will communicate the brand to multiple channels by exposing customers to the brand in multiple ways –- essentially building our flagship and freestanding mall locations where we can more clearly communicate the brand’s lifestyle image. It’s extremely important to communicate that this is a very lifestyle brand, and with shop-in-shops you’re often very limited in this regard. Balancing shop-in-shops with a freestanding strategy will have a halo effect on our ability to perform well within the department store environment, and outside of it. It’s a multi-tiered approach to expansion. And what we hope is that we will be learning the nuances of the market and responding to them as we grow. This is not a desire to open 300 points of distribution in the first couple years — this is a plan that calls for steady growth that responds to market needs, in a market that’s growing very quickly
THL: What will kate spade’s Chinese ad campaigns look like?
CL: The ad campaigns will look basically the same as they do around the world. We have a consistent global brand image that we work hard to communicate, so we anticipate the same campaign will be used in China. We continue to strive to have a diverse modeling cast that will resonate with consumers around the world, so that strategy will be part of our effort as we become more of a global brand. But we do anticipate that our China campaigns will continue to be consistent globally, as they are in the U.S. and Japan and South America.
THL: Will the product itself – or look of the stores – change? Will new or special products be made available?
CL: The look of the stores will be consistent with what we are doing globally, certainly initially. As we look at the product, we want to communicate a global brand image, but one of the things we think is important about our partnership with E.Land is to help understand the nuances of consumer needs in the specific region or market – so we will take feedback from local operators and respond to that as it relates to our line architecture. So this will be a continued learning about the marketplace and we’ll be open to the needs of that market while communicating a consistent brand image
As it relates to stores, we want the environments to feel relevant to our stores around the world. But as we learn more about that business, even if there’s a shift in product categories, we don’t anticipate any change in overall environment or feel.
THL: What about kate’s branding strategy – will that change at all to meet the needs of the mainland Chinese market? Will there be a different digital strategy?
CL: Our branding strategy is always to communicate our brand promise – that kate spade New York helps you to lead a more interesting life. That is the brand promise we try to communicate around the world, and it will remain consistent in China. And the market strategy will make sure the brand continues to be relevant, by making people talk about the brand – and when you enter a new market, this is a critical aspect to success.
From a digital perspective in particular, using the Internet is a great way to not only bring awareness but also tell the brand story – that’s very hard to do on a static ad page or in a shop-in-shop environment. So the digital strategy is really important in a new market, to be able to tell that story more fully. In such a vast market as China, it will be particularly important. We will be learning what will be effective in that market – overall its about engaging the consumer and building brand awareness.
Disclosure: Kate Spade is owned by Liz Claiborne Inc., the sponsor of this site.