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Laura Ashley upbeat on China prospects, e-tail sales there are rising fast

today Jan 17, 2019
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Fashion and interiors retailer Laura Ashley has high hopes for its expansion in China and said it’s optimistic that the country will be the “right market” for it as growth at home lags.

Laura Ashley

Owned by Malaysian family conglomerate MUI Group, of which family member Andrew Khoo is chairman and CEO, it has seen as many as three profit warnings in the last two years but Khoo said that it’s facing the same headwinds as all UK retail businesses are having to deal with at the moment.

In an interview with Singapore’s Channel NewsAsia, he said that MP’s rejection of the Brexit deal is within its expectations for a “challenging environment in the short to medium term” and his view seems to justify the firm’s decision to shutter around 40 UK Laura Ashley stores. Those closures will also see a greater push into Asia with China being a “major focus”.

Khoo said that Chinese tourists are among the biggest spenders at the firm’s UK stores and this gives him confidence for the firm’s expansion plans in their domestic market. “With higher income, the Chinese population is now more well-travelled and exposed to different cultures. They also love English brands and Laura Ashley is the most quintessential British brand,” he said.

The company entered China with a shopfront on Tmall around 15 months ago and this focus on e-tail will continue for at least the 12 months ahead, Khoo stressed. He added that physical stores will be opened when sales reach “a critical stage,” although he didn’t clarify just what that stage would be.

Analysts, such as Euromonitor’s senior research analyst Jacqueline Tan, said this is the right approach to take, but also that the Chinese business will still see challenges. “Creating brand equity will be crucial for Laura Ashley to justify its price positioning in a market where consumers may be unfamiliar with the brand,” Tan said.

But it seems that more consumers are becoming familiar with the brand as it has so far been seeing double-digit growth on a monthly basis in China, the CEO said.

Purely based on having a presence online, I think that’s very promising,” he said. “Being such a large market, there will always be opportunities for us if we enter China in the right manner.” And ‘right’ in this case means finding the correct local partner when it does decide to open physical stores, as he said going it alone would be “too risky”.

The expansion in China will be driven by the firm’s regional HQ that’s based in Singapore and that also controls the firm’s drive into other Asian markets. Elsewhere in Asia, it has appointed a new franchise partner in Thailand and wants to add more stores there, and it will also upgrade its Orchard Road, Singapore, store.

In the interview, Khoo also talked about how the brand has tweaked its website to appeal to the younger and more budget-focused consumers who hadn’t previously been big fans of Laura Ashley. That includes making more homewares products at lower prices that are suitable for smaller living spaces.

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