HONG KONG, China — Rupert Sanderson launched his eponymous shoe brand in 2001, immediately winning over influential fans like Jessica Alba, Katy Perry and Solange Knowles with a cool combination of British style and ‘Made in Italy’ craftsmanship.
In 2010, the brand took its first steps into the growing China market, opening a boutique in Hong Kong’s trendy On Lan Street in partnership with Hong Kong-based entrepreneur Bertrand Mak. And following the launch of a second boutique in the city, last year, the brand has just opened its first store in mainland China, situated in Shanghai’s prestigious IFC Mall. (The China business is 100 percent owned by Mak, while Sanderson serves as a “partner,” providing designs and other expertise.)
While the Rupert Sanderson brand is currently stocked at over 200 retailers worldwide and operates five direct-to-consumer stores (including a webstore and an outlet at Bicester Village outside London) the business remains relatively small (the company is set to generate about $18 million in global retail sales this year, acccording to estimates provided by the company) making the expansion into mainland China an important and challenging move.
BoF sat down with both Sanderson and Mak to talk about the challenges of launching a niche label in the world's largest luxury market.
BoF: You first launched in Hong Kong four years ago, but it’s taken a while to open a store in mainland China. Why have you entered the market so late in the game?
Rupert Sanderson: The truth of it is that we’ve had a big learning curve in setting up a business in this region. Big brands don’t encounter the same problems as us because they have two advantages — huge resources and a history. We did two things at once which was learning how to run a retail business in Hong Kong and then building up a knowledge base.
Bertrand Mak: When we started in Hong Kong the brand was considered a new player in the market. For me, coming from a business perspective, it was important to build a solid foundation. Opening a store is not difficult, but ensuring it’s profitable and sustainable is an entirely different story.
I’ve always felt that China is overrated. Of course, China is such a massive country, with a mind-blowing population, so while there are opportunities there are also dangers and risks. I may be Chinese, but it’s still very different to do business in Hong Kong. The process to set up in China has been an uphill battle with logistics, taxes, and procedures. We cannot deny the fact that things in China are not black and white. For a new player, it’s really important that these procedures need to be clean transparent and clear cut.
RS: We all know that there have been numerous examples where people have rushed into China only having to close soon after. From the trademark trolling to the infinite layers of bureaucracy you have to go through, the cost is so much higher, which is a threat against opportunity.
BoF: The Chinese are now looking to buy products that are more about integrity and quality versus big brand names. What qualities of Rupert Sanderson appeal most to the mainland customer? How are you differentiating yourself?
RS: The appetite and sophistication of Chinese luxury consumers is well documented. They have a great eye, so now they are looking for the real deal. The truth is we are standing on shoulders of enormous giants. There is a history of Italian shoemaking and British design and it is instinctively respected and desired in China. It’s a magical thing and you can’t create this domestically. We represent the sort of modern expression of that.
We are small but that’s good — we are not a stodgy old European or Italian luxury house that’s doing things the same way. It’s the history we come from. We bring the generic qualities of 'Designed in London' and 'Made in Italy', and then we have to trade off the strengths and appeal of the design of shoes. We’re the shot in the arm, breath of fresh air people are looking for — the new generation don’t want to wear what their mothers wore.
BM: It’s true the mainland customer is becoming more sophisticated, so for us, we need to innovate all the time. Rupert is incredibly open-minded and we have done special styles and collections available in Hong Kong and China. The gold leaf collection, which we developed specifically for Asia, is incredibly successful. The fact that we can adapt easily because we are small is a massive advantage when it comes to building a business. We are also working on customer fits and special lasts that cater to the local market.
BoF: Most brands tend to steer clear of localising product for the China market, but your Gold collection has worked surprisingly well…
RS: Bertrand is my eyes in that market and so we developed a story that is unique, which is the gold leaf covered heel. We’ve worked hard on identifying a specific signifier that marries a number of things the brand stands for and that Chinese women want. The charm of the collection plus this bit of branding marks us out in the Chinese market. We have built a successful business on this one signifier.
BoF: China’s retail landscape is dominated by large-scale businesses. Where does a niche brand like Rupert Sanderson fit in? What have been the biggest challenges launching in China as a smaller, niche brand?
BM: We’ve been very lucky to open at IFC in Pudong and work with Sun Hung Kai Properties, which has tremendous resources, respect and recognition in Hong Kong and China. Location is everything — people may not have heard of Rupert Sanderson, but our adjacencies within the mall speak volumes about us as a brand.
You have the usual challenges from human resources to importing products into the country. This resonates with big or small brands, but for them they have resources to leverage.
RS: It’s a brave thing to build a business from scratch in China — we don’t have cash, a history to spread around or marketing resources to tell the story repeatedly. We are not an advertiser so we need to build a reputation through the product, which in a market of this size and speed has its challenges. We need to build desire. It’s the old fashioned way of building a business back in the 1940s and 50s.
BoF: You have launched in China with a partnership model. How does this work? What have been the challenges and benefits? Do you think this model is best for emerging labels wanting to launch in China?
RS: The best way of describing our relationship is organic as we are both learning how it works from scratch. We are two very instinctive people. We are following a franchise model in the loosest sense, but it’s more of a partnership. I come up with ideas for shoes and we depend on Bertrand to grow the business model and tell us what we need.
BM: With a typical franchise model, what’s mandatory is that the brand has to have sufficient recognition to succeed. Here the brand is literally unknown, so we are building from the ground up. It’s an exceptional relationship and unusual in the market as it’s built on trust and confidence. Rupert Sanderson subsidises and supports us with product through adaptation and suitability. I’m on the ground, I am his eyes in this market but ultimately he has to trust me in what I propose. Without this willingness to listen and flexibility to execute, it wouldn’t have worked. Works for us, may not work for other brands.
RS: My job is also to ensure that there isn’t a difference between what you can buy in Asia versus anywhere else. It needs to have the same DNA, same hand. Bertrand is a business man who has a clear idea of the opportunities available for the product I design in that specific market. Small brands don’t have resources so you have to be more flexible and adaptive without diluting or dissolving the core signature of the brand.
BoF: How has business been so far? What categories are performing the best? What surprises have you seen?
BM: We’ve been open for a month, so it’s too early to say if there are any patterns or profiles. There are surprises for sure — in terms of sales, it’s been within my expectations. Despite our Hong Kong store and all our Chinese celebrity endorsement, I am surprised that 99 percent of customers that walk into the store have not heard of the brand. In terms of categories, 80 percent of what we sell in Shanghai has gold leaf components.
BoF: What are the long term goals for the brand in China? What do you think you need to be cautious of looking ahead?
RS: I am spending some time in China this month to see what we built so far and how to grow it. The past four years have been very organic so we are learning where the exciting parts of the business are. We have settled on bits that don’t work, and how we amplify that. There is no set map. We are also developing wholesale business in China. Retail is ideal but it’s complicated, so we have to be cautious.
BM: There’s a danger to jump far ahead — it's easy to open stores, but danger of expanding too quickly. Ensuring consistent delivery of quality products is important. Great product is crucial to building business in China.
BoF: Does China play a dominant role in your worldwide strategy? For many luxury brands it’s considered the holy grail.
BM: I still maintain that China is not the holy grail. It’s this herd mentality in the industry and pressure for everyone to be there. Staying relevant and having that presence in the market is important but we are looking at it as a strategy for Greater China as a region. I’m interested to see if the Shanghai store has a knock-on effect to Chinese consumers that travel to Hong Kong. We are trying to meet them at both ends. The Shanghai store is a driver to Hong Kong as much as a business in itself.
Editor’s Note: This article was revised on 12 June, 2014. An earlier version of this article misstated that Rupert Sanderson has a stake in Bertrand Mak’s business in Greater China. He does not.