You're watching...
John Morris, BMO Capital Markets managing director & SR Retail research analyst, on the dangers retailers face in Asian markets.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- of Asia John Morris -- senior retail analysts would BMO capital markets and John.
Thank you for being here to stay whether went bad analogy the siren would tend to.
You know ships onto the rocks.
Why should US retailers be so wary as they look to Asia and China in particular.
Well it's a very good question first of all it is a call it's an incredible opportunity it's a 140 billion dollar apparel retail market.
But there's a lot of hazards the -- so to speak in these retailers have to and other consumer it's a completely different consumer and Asia.
Different cultural.
-- if everything else totally different well first of all come -- and the consumer there.
What needs to rely more on a loyal brand they need to know that there's a strong brand behind it.
What works in the west doesn't necessarily translate to the east different set cultural differences it -- Iraq.
An addition to that you've got competition that's very different.
In the US it's a pretty you know controlled landscape of a lot of you US competitors.
When he go to Europe.
Sure it's pretty interest thing there are but again it's a lot of European -- Asia it's a global its global competition it's a hyper market you have.
You have companies like ITH and M -- outcome edited zero assemblies -- competed with before exactly.
Arm so.
It's.
Doing business in China we know is famously difficult how difficult is it for US retailer to go in and set up shop and should they go in small and expand or just saturate the market -- interesting because you have.
Several different approaches that these companies are -- beginning to take.
On the one hand some companies like Abercrombie & Fitch and the gap -- own and control their brand they want to open up their own stores and expand from a -- there.
Other companies want to do franchising.
Another way is necessarily proven to be correct at this point.
But we do know is these companies need to spend a lot of money up front.
As much as a half a billion dollars in marketing just to establish their brand before they grow well.
Ultimately we think one of the most successful ways is gonna have to do with whether or not.
It's a strong brand new life for example we think one of the leaders is going to be the limit its Victoria's Secret division already has -- name global global name out there.
In addition the competitive environment not nearly so developed.
Very fractured there's no one leaving intimate apparel retailer.
So in that case you've got a company that's going to be able to don't -- Couple years from now not right away probably not gonna happen immediately -- but they're gonna go in and they're gonna begin to open up and we think that they could be one of the most successful out there and Asia overall -- Interest things stuff -- -- -- could speak a lot longer than we have time for now but thank you so much for being here thanks initiate it.
That companies really have to do the research before -- getting anxious spend money on marketing as John was saying and then just in the long term the --
