Novomania Shanghai expands despite stagnant growth

The economic slump in Europe and reduced growth in China were felt at the Novomania trade fair in July in Shanghai. Under the headline 'China economic slowdown', it filled the local papers. In addition, the Chinese economy has ‘only’ grown

by 7.5 percent in the second quarter and consumer spending is rising less rapidly.

Director and co-founder of Novomania, Guilherme Faria tells it as it is: "It’s a tough year,” he says, “former exhibitors from Italy, Portugal, Japan and Spain aren’t here this year.” Due to the new owner’s considerable network of agents - global media company UBM bought a controlling interest of 60 percent in Novomania in March - the trade fair floor was reasonably full with 115 exhibitors. Yet in a period where fashion companies in both Europe and Asia are consolidating more than expanding, the fashion trade fairs must also fight for every customer.

More multi-brand retail in China

The organisers at Novomania are not leaving it at that. Although many big labels stayed away and the aisles left an empty impression especially on the second day, the fair will expand in 2014. After three years with one edition, Novomania is going to be organised twice from next year. The fair is returning to a time slot in March instead of July and there will be an autumn edition in September. The main reason is the strong emergence of multi-brand retail. In a month’s time for example, the Italian multi brand store 10 Corso Como will open its first Chinese store in Shanghai.

Multi-brand retail is growing, primarily due to the rapid increase of web stores, like famous forerunners Tmall.com and 360Buy.com. In 2013, online spending in the country is estimated at about 100 billion euros. Novomania’s trade fair concept has been adjusted to this. In 2010, Novomania started as a fair where Chinese real-estate magnates could find mature retail concepts to fill their new shopping malls and developed itself into a location where European brands could find partners for their first steps into China. The fair is now developing into a location where brands can find project developers as well as retailers and can fill orders. The change means that at the fair in Shanghai on 17, 18 and 19 July, there were a number of exhibitors with different expectations.

Jerome Tordjmann, export manager of the French label Eleven Paris, participated for the first time and found a number of potential retail customers. "We have a few sales points in China and Hong Kong, but we are still looking to see how we can grow further and what multi-brand retail in China looks like exactly."

The Korean designer brand Lie by Lie Sang Bong, the second label by Lie Sang Bong that previously stood at the Who's Next in Paris and Coterie in New York, is precisely looking for retail customers but at Novomania, they mainly encountered real estate people. “Numerous interested parties who would like to open stores for us, but I am not sure if we are quite ready for that,” says representative June Kim, as "the second label has only been on the market for three seasons."

Fair director Guilherme Faria understands the hesitation and confusion of non-Chinese labels: “I live in the French Concession district and see new stores and boutiques opening weekly. During the previous fair edition in March 2012, the arrival of multi-brand retail was already imminent, but still a pie in the sky. Now you see it everywhere. That’s how things develop in China.” That’s why for Faria, it doesn’t stop after the three days of the fair. "We want to help our exhibitors as much as possible with developing further and ensuring that their participation at the fair is a success. We will do everything we can to make everyone happy and we have the contacts to make that a reality."

The new multi-brand stores - on- and offline – in China actually have little in common with their European colleagues. A thriving retail concept in China, and that also applies to multi-brand retail concepts, becomes very interesting to investors very quickly. This results in rapid expansions whereby multi-brand chains emerge with substantial ranges and often with corresponding requirements.

An agent of a large French brand who'd rather not be named in this piece says that he has had discussions with various retailers at the fair who would like to have his collections but would only sell them on consignment. Not purchasing in advance and thus pre-financing the production while only paying for the items after they have been sold is not what he had in mind. “We don’t work like that, but I do want to continue discussions,” says the agent. Even though that business model is not feasible for most (European) labels, it does mean they would instantly have a foot in the door in China.