American Brands Losing Popularity In China
On the latest episode of the E-Commerce Retail Briefing podcast:
America is increasingly losing the Chinese shopper. China was once viewed by American brands as a land of opportunity. Now, Chinese consumers are looking more to local brands as Chinese brands grow stronger and political controversy plagues American brand’s relationships with the country.
Popular eco-friendly, digitally native footwear brand Allbirds is expanding its retail footprint. The company announced it plans to open 20 stores in 2020 in markets like Atlanta, Dallas, and Denver. Allbirds, which launched online in 2014, opened its first physical stores in 2018. The new locations will bring its total store count to about 35.
- L Brands’ Victoria’s Secret is making big changes as they try to pull out of a sales slump. The company cut around 50 people at its Ohio headquarters last week. That represents about 15% of Victoria’s Secret’s employees at the brand’s home office. It’s the latest move for the troubled lingerie brand. The company’s sales have slowed as female consumers turned to body-positive start-ups including Adore Me, Aerie, and ThirdLove. In addition to the lay-offs at its headquarters, Victoria’s Secret has also cut its annual fashion show as viewership has fallen off and made changes to its leadership team. The company also recently started featuring its first plus-size model.
President Donald Trump says the U.S. has come to a substantial phase one deal with China. In exchange for America scrapping tariffs that were set to take effect on October 15th, China will purchase about $40 billion to $50 billion worth of agricultural products. Chinese media didn’t describe it as a deal, but as substantial progress. China reportedly wants further talks to iron out the details before signing.
American Brands Losing Interest Of The Chinese Shopper
American brands aren’t just facing challenges with political controversy in China. Brands are also up against competition like Three Squirrels. In seven years, the maker of nuts, seeds, and fruits has become one of the country’s most popular snack sellers. Its sudden popularity has made it difficult for iconic American snack brands like Oreo, to gain favor. For years, American companies looked to China as a land of opportunity, but now a new reality is settling in. Chinese consumers won’t save the day for Western brands.
One of the challenges American brands are facing is that Chinese brands are getting stronger. The other is that Chinese consumers are increasingly turning away from foreign brands because of controversy with Chinese politics. As a result, American brands that used to be cool are now falling out of fashion. As the Chinese economy shifts, McKinsey and Co predicts between $22 trillion and $37 trillion of economic value could disappear as supply chains shrink and other changes spread through the global economy.