France's top-tier department store chain Lafayette will close the Beijing store it opened in China's capital after 13 years. Observers said it will remain a prime example of a foreign traditional retailer that failed to adapt to China's rapidly changing consumption patterns and shifts in the retail market.
Summing up reports from major outlets including the Global Times and FashionNetwork on the 25th, Lafayette's Beijing Xidan store will end operations on the 27th. Opened in Oct. 2013 as a joint venture with Hong Kong's I.T Group, the store boasts more than 47,000 square meters. At one time, it was regarded as a landmark symbolizing Beijing's high-end retail market. After news of the closure spread, crowds flocked to the store seeking farewell discounts, and posts expressing regret continued on local social media.
This is Lafayette's second withdrawal from Beijing. Before 2013, Lafayette opened China's first store in 1997 on Wangfujing, a famous commercial street in Beijing, but closed it after a year due to mounting losses. Regarding the latest decision, Lafayette drew a line, calling it a "strategic retreat," not an exit from the Chinese market. However, following the closure of the Chongqing store a year and a half after opening last year and now the winding down of the large Beijing store, only two relatively smaller locations remain on the Chinese mainland: Shanghai and Shenzhen.
Experts pointed to localization failures as the main cause. Liu Dingding, a Chinese industry analyst, told the Global Times that "localization is not a compromise but a core competitive edge." The explanation was that a conservative strategy insisting on overseas operating methods and a slow decision-making structure are no match for the spread of the digital ecosystem and the so-called patriotic consumption trend. Lafayette, too, is seen as having failed to fully blend into the local market in areas such as product assortment and building online sales channels.
Opportunities in China's market for foreign capital have not disappeared. corporations that have flexibly adapted their operations to local consumer preferences, like Tesla or Sam's Club, are still on a growth trajectory. Lafayette is expected to seek a turnaround by testing new retail approaches centered on its remaining smaller stores.