RETAIL: Macy’s, Suning Salivate at Overseas Chinese Shoppers

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Bottom line: A growing strategy by retailers like Macy’s and Suning to target Chinese tourists traveling abroad looks smart, drawing on Chinese consumers’ growing taste for imported goods and distrust of domestically made products.

Macy’s targets Chinese shoppers in US

Traditional retailing giant Macy’s (NYSE: M) is rapidly discovering a new fondness for China, with its announcement of a series of special promotions at its main US department stores targeting Chinese traveling abroad for the Lunar New Year. Macy’s new move comes just a half year after the company announced a major new China joint venture aimed at tapping the nation’s booming markets for traditional retailing and e-commerce.

At the same time, domestic Chinese retailing powerhouse Suning (Shenzhen: 002024) is targeting similar consumers traveling over the holiday to Japan, offering its own promotions using a local Japanese electronics chain it purchased last year.

Both of these moves reflect an unusual trend that has seen Chinese tourists emerge as some of the world’s most aggressive shoppers when they travel abroad. The trend owes to a number of factors, including a Chinese fondness for luxury goods that are often far cheaper overseas than in China. At the same time, many Chinese have developed a deep distrust of products made by domestic Chinese companies, and often prefer to buy foreign brands of common household items like infant formula when traveling abroad.

I got to experience both of theses phenomena on my own recent trip to the US. First one of my Chinese friends contacted me by social media, and asked me to bring back quite ordinary goods like cashews and pistachios. Later another got in touch in a similar way, this time asking me to buy a Kate Spade designer bag due to the low prices in the US.

A growing number of big retailers are waking up to this trend, which is probably a main driver behind Macy’s new announcement of a major promotion targeting Chinese tourists traveling to the US during the Lunar New Year holiday. Most Chinese will have a holiday during the week of February 8 to welcome the Year of the Monkey, and a growing number of those are traveling abroad during that period.

Macy’s Lunar New Year promotions are spread across a range of its stores in California, New York City and Washington, which are some of the most popular destinations for Chinese tourists. (company announcement) The promotions, which cover such Chinese favorites as perfumes and cosmetics, looks quite savvy, as they combine shopping with touristy experiences such as in-store performances and product demonstrations.

Fondness for Japanese Electronics

Accordingly, any unsuspecting local American visiting the stores during those days could discover the stores are crammed with festive, big-spending Chinese shoppers. This particular move comes just a half year after Macy’s announced a major move into China retailing through a joint venture with a local partner, and also the opening of a flagship Chinese store front on the hugely popular Tmall online marketplace operated by local e-commerce titan Alibaba (NYSE: BABA). (previous post)

Next there’s the Suning news, which is targeted more at buyers of gadgets and home electronics that are staples at its own stores and also those of Laox, the Japanese chain it acquired last year in one of its first major global purchases. (previous post) Chinese media are reporting that Laox is making special efforts to cater to Chinese tourists during the upcoming holiday, including opening a glitzy new flagship store earlier this week in the city of Osaka. (Chinese article)

The new store is among 17 duty-free Laox stores that Suning has rushed to open in the 8 months since it purchased the Japanese chain. The strategy of choosing Japan and the duty-free store format looks quite shrewd, since Japanese electronics enjoy a hugely popular reputation in China for better quality than their cheaper domestically-produced cousins. What’s more, Japan has also recently emerged as one of China’s top tourist destinations, following the relaxation of tensions that flared 2 years ago due to a territorial dispute.

Some new numbers coming out nicely sum up the potential for retailers from these overseas Chinese shoppers, including one that says a record 6 million Chinese tourists are expected to travel abroad during the weeklong Lunar New Year holiday. (English article) Many of those are happy to plunk down hundreds or even thousands of dollars for cosmetics, electronics and luxury goods, and I expect we’ll see a growing number of retailers joining Macy’s and Suning in the years ahead to tap this lucrative segment.

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