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December 27, 2016

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Home » City specials » Hangzhou

Market dons ‘new suit’ to attract customers

By Wu Huixin | December 27, 2016, Tuesday | Print Edition

THE annual year-end clearance sale at the Hangzhou Evergreen Garment Wholesale Market begins this week. The event offers all merchandise at discount prices, attracting big crowds of bargain-hunters.

The market, one of China’s largest wholesale venues, houses between 12,000 and 15,000 shops, offering everything from buttons to fine linen and cashmere clothing.

But this is not the end of an ordinary year for the market. Trading volumes have dropped 30 percent from 2015 because of the overall economic downturn, the first decline in the venue’s 27-year history. In addition, Evergreen Market is also facing competition from online vendors and a space squeeze from expanding residential construction in the area.

The market opened in 1989 with only 45 outlets. Evergreen Garment Group Vice President Ni Shuiquan said no one anticipated at the time that the venue would grow to its present size.

It has weathered the changing fortunes of the rag trade, including the shift to global e-commerce and slower economic growth in China.

“The prosperity of e-commerce has been a big blow to this traditional market,” Ni said. “Many factories have opened online stores to go with the trend. They attract wholesalers but tend to skip brick-and-mortar markets like us.”

Indeed, customers can now easily compare prices at the market with merchandise offered online.

In order to rejuvenate the market, Evergreen has invited factories to open outlets in the market, narrowing the gap between online and offline prices. 

It’s a tough proposition to transfer the price advantage of business-to-business wholesale transactions to business-to-consumer retail selling.

“The business-to-consumer model requires attention to online customers, which isn’t the case so much in the wholesale business,” said Yu Yuqing, who runs a women’s apparel shop in Evergreen. “We had to shut our online shop after four months because of the operational demands.”

Some shops have hired university students versant with Internet use to handle online orders. Other shops simply supply products to e-retailers on the Alibaba online platform Taobao.

“Now, online platforms link with factory-gate products through our market,” Ni told Shanghai Daily. “In addition to brick-and-mortar shops, online stores add a new channel for product distribution.”

Modern logistics is an indispensable part of the e-commerce business. Merchandise ordered online needs to be delivered fast and efficiently. Evergreen is building logistics hubs in over 10 cities, with sites in Xi’an, Qingdao, Yinchuan and Tianjin already up and running.

“We are helping spread our products across the nation and, at the same time, strengthening our competitiveness in the local market,” Ni said. “We are establishing logistics hubs using local facilities and online-to-offline platforms.”

Not long ago, the Hangzhou government implemented a policy that encourages traditional markets to upgrade themselves and take advantage of the Internet Plus campaign and big data technologies.

Next March, the Evergreen Group will begin offering a cell phone application that links thousands of wholesale markets across China to online trading.

“This platform will be the ‘Didi-Kuaidi’ of the apparel industry,” Ni said, referring to the popular cab-hailing platform. “Didi doesn’t have any taxis itself, but it has become very successful. We will collect big data, like Didi does, and sell it to factories to help them adjust production and plot marketing strategy.”

Too many factories today still make products without regard to demand. That can lead to piles of unsold stock, adding to cost and burdening the wholesale market.

“The data gathered can help track fashion trends and highlight merchandise that is most popular with customers,” Ni said. “The reduced cost and smoother sales will make the market more sustainable. At the same time, we can also sell the data to banks and logistics companies.”

Evergreen hasn’t stopped there. It has also established a design academy this year to recruit top-flight clothing designers from around China.

In the past, consumers tended to flock to “hot” mass-marketed merchandise, but they are becoming more discerning and now often prefer original designs to cheap copies.

The academy will provide those new designs for the Evergreen Market. Stores may then purchase the designs and have factories produce them under their own brand names.

“The only way to survive is to boost our competitiveness,” said Ni, “and original designs are part of that strategy.”

In addition to the challenges of e-commerce and slower sales, Evergreen also faces space problems and nearby traffic congestion. The market complex sits among construction of residential buildings, creating noise and traffic jams.

“When the market opened, this area was on the outskirts of the city, but now it finds itself in a downtown area,” said Ni. “It causes us management and development problems.”

A few years ago, the group built a complex in the suburb of Jiubao Town, where it eventually plans to move.

“We still worry that relocation might harm the market’s vitality,” he said.

“But the need to move is undeniable. We have to make room for city expansion.”

Hangzhou


 

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