While some companies are tightening their expansions during the current economic climate, others feel that this is the time to give a boost to their growth. Anta Group, a Chinese footwear company, plans to open 1,900 new retail stores this year, taking advantage of cheaper rents.
It also plans reduce the amount of production work it does itself to 40 percent, and outsourcing the rest to footwear manufacturing plants that have newly available capacity as orders drop for the foreign companies that use them.
Anta plans to have all of its shoes carried in 1,000 of the new stores. Six hundred will sell higher-end fashion footwear, and the other 300 will carry children’s shoes.
While many other Chinese retailers stuck with high inventories of Adidas shoes and other sports brands are reducing investments in new sporting goods stores after the euphoria of the 2008 Beijing Olympics (more on this in Sporting Goods Intelligence Europe), another Chinese company, Belle International, is going to spend $75 million to expand its store network, currently about 6,000 stores in mainland China. It says it would still grow by 10-15 percent this year.
This kind of reactive strategies is not confined to the big promising Chinese market. An American company, Genesco, also sees the bright side of the economic cloud. Its chief executive, Bob Dennis, told attendees at a conference that ambitious players can renegotiate leases, negotiate lower ones for new stores and capitalize on cheaper construction costs right now.
He also noted that as other companies go out of business, the ones that remain gain market share. He pointed specifically to the recent demise of Mervyns and to the decision by Pacific Sunwear to stop selling shoes. Those customers had to go somewhere, so why not his Journeys stores, he said? Dennis also lauded the power of youth spending, saying that teenagers don’t have retirement plans or mortgages that are currently in danger, so they are less affected by the economic downturn.