Fortnum & Mason is gearing up for the launch of its first fully owned and operated shop overseas as it gets ready to land in Hong Kong. However, the luxury grocer is treading international waters with care as it looks to both preserve its heritage status and learn from the mistakes made by others in entering the market.
Zoe Colegrave, head of online and marketing for the royal supplier told The Drum how the business viewed the move – which will see it take up a 7000-square-foot space in the K11 ‘art mall’ just on the island’s waterfront – as being a “door opener into the mainland China and the wider APAC area.
As well as comprising a restaurant with views of Hong Kong’s harbour where visitors can be served afternoon tea, the store will also sell tea to take away along with biscuits, wine and gifts.
Explaining how the brand had already found its flagship London Piccadilly tea salon to be high up on the “itinerary for tourists” visiting the capital from the region, Colegrave said the decision to plant its flag in Hong Kong had also been buoyed by a “real appetite” for what the brand was already doing in the APAC market.
The 312-year-old food retailer currently has partnerships in place with physical retailers across Asia including Lane Crawford department stores in Hong Kong, South Korea’s Shinsegae and Isetan Mitsukoshi in Japan.
“We’ve seen huge growth in those countries from an e-commerce point of view,” noted Colegrave, singling out South Korea (which it only moved into 18 months ago) as having done “phenomenally well” so far in terms of driving footfall and online growth.
Despite challenging conditions in its Brexit-burdened home market last year, Fortnum & Mason achieved record sales in the year to July 2018, noting a bump of 12% to reach £126m. Similarly, profits were up 26% to £9.6m – something the esteemed retailer put down to sales of its aqua-hued tinned caddies of tea and indulgent biscuits.
In the same year, online shoppers from 125 countries ordered products, with Fortnum’s noting a 55% rise in direct orders to Hong Kong.
“So that all gave us a real indication that people want us over there,” asserted Colegrave.
Navigating cultural nuances
Investing further in the Hong Kong market will be a multi-million experiment for the brand as it looks to gain traction among a broader Chinese consumer base.
With China’s luxury goods market noting a second straight year of 20% growth in 2018 driven by women and millennials, and the Internal Monetary Fund putting its 2019 growth forecast for the country’s economy at 6.2% (against the UK’s 1.2%) the country holds an obvious appeal for an aspirational brand like Fortnum & Mason.
However, it is entering a ring which other western contenders have been knocked out of – including M&S, US department store Macy’s and even luxury outlets like Hermès and Louis Vuitton – which have been shuttering stores in the country. Predicated in some cases by a lack of understanding of Chinese culture as well as a failure to integrate effectively into its app-heavy digital economy, moving into the market can be an expensive lesson for overseas brands.
As such, Fortnum’s marketing team – which primarily use owned digital, in-store, and native social to promote the brand – are working to a careful blueprint to make sure it goes smoothly.
“It’s a big territory, it’s difficult. A lot of big retailers go in there and get it wrong, so we’re gathering lots of advice and we’re going to launch in a very considered way.”
The marketing department Colegrave oversees in London, which works to a hybrid model with creative and media agencies as well as in-house talent, will be the “mothership” from which the Fortnum’s brand enters China.
However, the brand has also hired an international marketing manager who, crucially, speaks Chinese.
“It means we have someone in the building here helping us and navigating all those cultural nuances,” said Colegrave.
In time, Fortnum will also add marketers to its team on the ground in Hong Kong.
On top of this, it’s hired a China specialist agency in the UK and has started toying with platforms like WeChat and Weibo in APAC, dipping a foot in the toe of China’s complex digital ecosystem, which is dominated by Badiu Alibaba and Tencent (BAT).
Though she admitted that a move into mainland China (if it comes) will be more challenging for the brand than opening doors in Hong Kong – which is often used as a gateway for foreign business – she hopes the new store will help garner more brand love from Chinese customers from all over the country.
“Undoubtedly opening up in Hong Kong will open us up to China mainland customers,” she said, noting that K11 was anticipating 50% of its footfall to come from China and 50% to come from the island.
“So it starts to open us up and give us a little bit of a foothold into that territory.”
She also said Fortnum’s, which is particularly strong on e-commerce, would be open to working with the likes of Alibaba.
“Never say never, there’s so much development coming along. Obviously, the shape and profile of customers over in China is developing and evolving at a great rate, and those platforms do give access on a massive scale.
“But, it’s important that we can deliver authentic brand experiences within them so it’s just working to make sure that’s maintained and that we’re on the right platforms reaching the right people. The numbers are so massive it would be foolish not to be open to it.”
Though the luxury grocer is literally about to sell tea to China, it's clear it's following the British etiquette and flair that made its own brand famous.