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Pedder Group, Kurt Geiger Tapping Asia Footwear Growth

Incumbents and new entrants alike are seizing the opportunity in Asia’s growing footwear market.
L-R: Kurt Geiger, Pedder Red | Source: Kurt Geiger, Pedder Red
By
  • Kate Abnett

LONDON, United Kingdom — According to both Peter Harris, president of China-based footwear, bags and accessories behemoth Pedder Group, and Neil Clifford, chief executive of Kurt Geiger, an American-owned label and a recent entrant to Asia, the current mood in the region's footwear market is like that of a theme park or music concert. Indeed, the two use words like "joy," "excitement" and "fun" to describe how Asian consumers respond to their stores.

Pedder Group, part of the Hong Kong-based Lane Crawford Joyce Group, is an established player in the Asian footwear market and, based on turnover, ranks amongst the top ten shoe and accessories retailers in the world. The company operates multi-brand stores (On Pedder) and its own footwear brand (Pedder Red) as well as the shoes and accessories business for Lane Crawford. Pedder Group is also the distribution partner in Asia for Christian Louboutin, Stuart Weitzman and others.

"I really see our consumers as having enormous amounts of fun," said Harris, recalling how Edgardo Osorio, the designer behind luxury footwear label Aquazzura, was overcome by the "incredibly excited and joyful" atmosphere at his trunk shows in Asia and how a trip around the region with Louboutin felt like it was "almost a Papal tour," so high was the enthusiasm from consumers. "In this part of the world, shopping is a very celebratory process."

Kurt Geiger has over 300 own-brand stores worldwide. It also operates the shoe spaces of London department stores Selfridges, Liberty and Harrods and, in 2014, generated about $360 million in revenue. But the company is a relatively new entrant to the Asian market, having launched in the region only 18 months ago. Now, Kurt Geiger, which currently has seven stores in Asia, is embarking on an aggressive regional expansion plan, kicking off with eight new stores this year.

“The energy was fantastic,” enthused Clifford, hours after touching down from a trip to China. “It felt like a real, genuine love of fashion again. We had queues of a couple of hundred people getting into our store in Shanghai yesterday — it was very exciting.”

According to Bain & Company, Asian spending is the primary driver of the global luxury market. Meanwhile, shoes are outperforming all other categories, making the Asian footwear market a particularly lucrative opportunity. “Asia-Pacific has been the real driver of the luxury market overall in the last ten years, so [in Asia's footwear market] you are crossing the fastest-growing category and market,” said Federica Levato, a consultant at Bain & Company.

“You’re not a credible brand unless you’re credible in Asia,” said Clifford. “One would have liked to been there more than ten years ago, if one’s being honest.”

Pedder Group, on the other hand, was active in the region more than a decade ago. Back in 2003, when the group launched, "the market, in terms of footwear opportunity and choice, was quite limited outside of the offer that existed at Lane Crawford,” said Harris. “I think we were very fortunate because, clearly, over the last ten years, footwear and accessories have become very desired categories.” Since its inception, Pedder has helped to launch over 250 international brands in the Asian market and currently operates more than 50 points of sale in the region.

International brands rarely go into the Asian footwear market without a local distribution partner. For Kurt Geiger, the right partner was I.T, a Hong Kong conglomerate that owns fashion labels including A Bathing Ape and is the Asia distributor for brands such as French Connection.

“We definitely wouldn’t be going alone,” said Clifford. “I mean, seeing the market I think a company like ours needs a partner like I.T because they’ve got real, credible people on the ground, in all the markets. Whether it be Hong Kong or China, they have all the relationships with the press, with the landlords.”

In contrast to, say, the US, where department stores are more common, the footwear market in Asia is dominated by monobrand stores in dedicated luxury malls. But when it comes to the product itself, little is different. Partly, this is down to the shopping habits of Asian customers, who spend not only one home turf, but in luxury capitals around the world, meaning they are well-exposed to international product.

“Actually, we haven’t tailored our product much,” revealed Clifford, who said that Kurt Geiger’s product range in Asia is 90 percent the same as in its UK stores. “The world’s a small place now. Trends are global, trends move around the world very fast. All the influencers in that market are in Milan and Paris the whole time. It’s not a different, alien place for fashion at all.”

What’s more, Asian shoppers are hungry for new styles and less ubiquitous brands. “They’re embracing real edgy fashion. It’s not about lots of black ballerinas with your logo on the front,” he continued. “There’s a genuine excitement about new product and brands. And we think that we could, if we’re lucky and we do a good job, fit into that.”

Indeed, though luxury spending is slowing in China, the country’s middle class is booming. This, along with a general shift in taste away from formal footwear towards more casual styles, all work in favour of Kurt Geiger, which sells more casual footwear, positioned between the high street and luxury price points.

Indeed, Clifford is bullish: “We think there’s four or five stores for us in Hong Kong for sure. In China, I think we can have 30 or 40 stores.” According to the company, Kurt Geiger has doubled its overall business in the last six years. “I think you could do that same business in China. In ten years' time, you really could,” added Clifford.

As for Pedder Group, the company expects growth to come from both new and existing brand partners: "The rise of the whole athleisure component of footwear has stemmed a whole new interest — we've done multiple programs with companies like Nike and collaborations with Riccardo Tisci," said Harris. "In the last 12 to 18 months, we've seen our footwear business perform extremely well. It's very interesting to see where that growth is coming from. In many cases, it's coming from newly integrated brands."

“This market is incredibly fast. You need to be constantly reinventing yourself. Reinventing your store environment, reinventing your service levels, to maintain that kind of customer link,” he added. “Our customer is not looking to repeat themselves.”

Editor's Note: This article was revised on 24 June 2015. An earlier version of this article misstated that Peter Harris is the chief executive of Pedder Group. He is not. Peter Harris is the president of Pedder Group.

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