Italian Concept Store 10 Corso Como Has Pulled Out of Beijing. What Went Wrong?

"China needs your time and your patience. It's very different from Hong Kong — there are countless markets here, and a kind of cultural and material diversity you won't find on a continent like Europe."

Walk into the SKP department store (formerly Shin Kong Place) in Beijing's Chaoyang District these days, step off the escalator on the third floor, and the first thing you see is a large sign: "This area is under renovation." This was the 1,100-square-meter Beijing store of 10 Corso Como, the Italian boutique that was the world's first fashion design concept store. You used to be able to see the dazzling white sculpture garden from outside — American designer Kris Ruhs made it from Jingdezhen ceramics. To catch the grandeur of the imperial capital, the store also used gold and red, colors 10 Corso Como had never used anywhere before. It was lavish, and hard to miss.

Now the space is dead quiet.

When 10 Corso Como opened in Beijing in November 2014, the whole fashion industry was watching. It did not stay long. On February 14, 10 Corso Como formally pulled out of Beijing, keeping only the café on the ground floor.

For the fashion world, and for buyers in particular, this is no small thing. Carla Sozzani — former editor-in-chief of Italian Vogue and Elle, and the older sister of Franca Sozzani, who edited Vogue Italia from 1988 until her death last December — founded 10 Corso Como in Milan in 1991. Her idea was a magazine you could walk into: one space holding a complete aesthetic of living, with exhibitions from the world's best galleries, books, clothes, shoes, designer furniture. She wanted to break the conventional idea of retail.

Her store became the model for what the sociologist Francesco Morace called the "concept store." From there, Carla pushed the philosophy of "slow shopping" into fashion — buying clothes was no longer the point of the trip. Elle once wrote that "for 20 years, Carla Sozzani's concept store has been the center of fashion, photography and art publishing," and The Wall Street Journal called it "a fashion academy, blending a gallery, a café, a bookstore and a boutique hotel perfectly..."

So you can imagine the attention this near-sacred boutique got when it came to China. Its first Chinese store was actually in Shanghai, in the autumn of 2013 — the third 10 Corso Como outside Italy, after Seoul and Tokyo. Less than a year later it opened in Beijing, the fifth concept space in the world. That is a fast pace for a boutique.

The concept 10 Corso Como sells is this: the world's most advanced gallery shows (a new one roughly every two months), books, fashion, footwear, designer home goods, fragrance and accessory labels, fine jewelry, and top Italian restaurants and bars.

At first all of that came to China too. Now it looks as if the concept simply does not work here. Most reports on the Beijing closure point at SKP being one of Beijing's luxury department stores, with rents high enough to push 10 Corso Como out. To Zemila (a pseudonym), one of the first people 10 Corso Como hired in China, that sounds like an excuse.

In fact, the industry knew the Beijing store was going as early as last September and October, during the global fashion weeks. Buyers order a season ahead, and when 10 Corso Como's China buying team set aside no budget at all for the Beijing store last autumn, everyone understood what that meant.

Zemila was not surprised when she heard, either. She had seen it coming, and it was part of why she left. 10 Corso Como's China stores were run chaotically, staff kept quitting, and the business had drifted further and further from what the Italian concept store was supposed to be. "10 Corso Como never fixed its basic problems. It was just burning time, waiting for things to blow up," Zemila told QDaily.

One buyer, who asked not to be named, said she was sorry to see it go, but added: "Better that it leaves now. If it had carried on, it would have been ruined." The "it" she meant was Trendy International Group, 10 Corso Como's main investor and partner in China. Founded in 1999 and based in Guangzhou, Trendy owns Ochirly, Five Plus and Trendiano, which are in shopping malls all over China; it had also bought the licenses to Miss Sixty, Energie and Killah from Italy's Sixty Group and taken those brands into 14 Asian countries. Because it has run several fashion labels successfully, Trendy is sometimes called China's Bestseller, after the Danish clothing group behind Only, Jack & Jones and Vero Moda.

Trendy, which turned itself from a contract manufacturer into a brand operator, is not short of experience with licensed brands. Its partnership with 10 Corso Como was described at the outset as a win for both sides.

The Beijing closure is also widely read as part of Trendy's push toward an IPO and a clearing-out of weak assets. In 2012, LVMH's L Capital bought 10% of Trendy for US$200 million, and rumors followed that the group would list by the end of 2017. Bloomberg has reported a valuation of roughly US$5 billion; if the listing succeeds, Trendy International would be the largest listed clothing group in China.

One more fact sharpens the picture: this year is 10 Corso Como's 25th anniversary, and the company is entering the United States for the first time, with a concept store in New York. 10 Corso Como, in other words, is still expanding abroad. Beijing looks less like retreat than like a transplant that failed to take.

10 Corso Como usually picks the same kind of site: a roomy building of its own. In Shanghai it sits on the busy shopping street of Nanjing West Road, in an eye-catching 2,500-square-meter glass building. From the roof you can see Jing'an Temple and the shops along Nanjing West Road.

Beijing was different from the moment the site was chosen: 1,100 square meters, smaller, and the first 10 Corso Como to be a store inside a store. "This is our first concept store with no outdoor space, and the first one inside a department store," founder Carla Sozzani said at the time. "Openness is indispensable to 10 Corso Como, so we kept asking ourselves how to create the same feeling inside the Beijing store. The windows became the visual focus there — they create a sense of space while keeping up the interaction with the world outside."

The bigger problem was that many of the brands carried inside the Beijing 10 Corso Como also had their own stores elsewhere in SKP. The selection had to be genuinely distinctive, and the team had to dig harder for other labels with character. Carla said of this: "I love a challenge."

Her confidence may have come from South Korea, where 10 Corso Como's partner is Samsung Group and where it opened both a standalone store and a store-within-a-store like Beijing's. Those two Korean stores are now considered its most successful overseas ventures. And the department stores that house Lane Crawford also carry standalone stores for brands Lane Crawford sells.

The real reason probably lies in how 10 Corso Como and Trendy divided the work. As many in the industry describe it, the split was simple: anything to do with the store's image, design and selection was Carla's call, and anything that touched money was Trendy's.

According to a former employee who asked not to be named, Trendy later inserted itself directly into buying, and — being a company good at mass-market brands — it leaned toward more popular, mainstream pieces. That is exactly the road a boutique is supposed to stay off. Boutiques build a style out of distinctive, small designer labels; the founder's taste is the whole attraction.

Ai Zhuo, who runs the Chengdu boutique Shuashan and made last year's BoF 500 list, had heard about how 10 Corso Como was being run in China. Buyers who had quit told her the main reason they left was that Trendy's boss had never run a boutique, refused to listen to professional buyers' reading of the market, and placed the orders himself. Many of the Italian labels the store started with have since been replaced by mass-market fashion brands. An employee who left recently, and who asked not to be named, put the cause of the closure in a single line: "Let's just say this is what happens when a family business built on fast fashion doesn't have the eye and meddles too much."

Because the two sides disagreed about what the store was for, buyers were not the only ones to leave. In four years in China, 10 Corso Como churned through staff constantly; senior posts such as general manager and marketing director changed hands one to two times a year on average. One detail says enough about the management: for a full year after the Shanghai store opened, 10 Corso Como had no store manager and no sales manager — usually the most important people in a boutique after the buyers. Various people then tried the store manager job, among them an internet celebrity hired from outside and someone from the company's own finance department...

When the Shanghai store opened, Trendy knew that even the most successful Korean store had taken three years to make its money back, and set Shanghai a five-year target. By that standard the group was not being aggressive. But people familiar with the matter say that only six months later, staff were told the target had changed to one year. It is hard not to connect that to the group's pursuit of an IPO.

Think about how 10 Corso Como has always worked and it is obvious this was never a business that pays back quickly. Books, galleries, designer furniture, expensive locations and interiors built at great cost are all huge outlays, and in a Chinese buyer and fashion market that is still immature, the money comes back even more slowly. Ai Zhuo, who has watched many boutiques operate, reckons that even with luck a boutique needs at least three years to break even.

In Milan, the most mature fashion market there is, it took Carla ten years to build recognition for the name. With China she has plenty of patience: "I'm not thinking about the Chinese market or local consumers. 10 Corso Como is a global concept, and some people will like the concept and some won't. Everything changes fast now, and consumers are perfectly able to work out quickly what we're doing. When we opened the first store in Milan, it took ten years before people really understood the effort."

Trendy clearly wanted it faster. Much of the ground floor of the Shanghai store that once held galleries and books is now café and restaurant, because that money comes back sooner.

But here is another question: with a different partner instead of Trendy, would it have worked? That is still a very risky bet.

Foreign boutiques have always had a hard time in China. Neiman Marcus came in through online retail in 2013 and left a year later. Plans by Saks Fifth Avenue and Barneys New York to enter China never came off, for one reason or another. Hong Kong-backed boutiques — I.T, Joyce, Lane Crawford — came into the mainland one after another and then adjusted repeatedly: Lane Crawford pulled out on a large scale in 2006, and later dropped franchising in favor of running its stores itself.

Even if 10 Corso Como came back to China with a different partner, some problems would not go away. Chinese consumers' grasp of what a boutique is, and their eye for fashion, are both still early-stage. Zhao Qike, who has just left 10 Corso Como, finds this exasperating: "A lot of people have no idea what a boutique is. They can't even understand why you would buy sneakers at 10 Corso Como," she said. Boutiques of this kind began in Europe in the 1950s and '60s, and what makes them unusual is that buyers comb the world for goods that match their own eye and style, buy them exclusively, and assemble a mix in the store that exists nowhere else — the limited editions and exclusive collaboration sneakers you find in a boutique never show up in the brand's own shops.

Wang Xiangsheng, president of the International Fashion Brand Development and Management Center, has said that buyer-led retail works in Hong Kong because consumers there are sophisticated; on the mainland, shoppers think first about how famous and familiar a brand is, and only then about whether the style suits them.

So boutiques probably have to keep teaching Chinese consumers — and in China there are more imitators than real boutiques. According to the China Boutique Store Research Report from the property research firm RET, boutiques in China boomed after 2010, but most were built around low prices. Between 2009 and 2014, goods priced at 5,000-8,000 yuan fell by 19%, while goods at 1,000-2,000 yuan rose by 11.3%. Large domestic boutiques began stocking the cheaper end, putting price first and style second, which blurred the positioning of a format meant for a high-end, niche audience.

Last year we interviewed several buyers who had attended Shanghai Fashion Week several years in a row. What they all said was that the number of buyers at fashion week keeps growing, but almost none of them have real professional buying experience. A professional buyer can call the style direction for next season, and studies consumer demand, brand positioning, weather, geopolitics and more — knowledge that can take more than ten years to accumulate.

There is, of course, a simpler way to read the Beijing closure: look at what 10 Corso Como did right in South Korea. In 2011 it worked with Big Bang on star-exclusive pieces; in 2013 it worked with SM Entertainment acts including Super Junior, Girls' Generation, Shinee and f(x); the same year, PSY shot the video for "Gentleman" in the store... All of that needed a local partner to make it happen, and Zhao Qike thinks the Korean store succeeded because Samsung Group was behind it: "They gave it a free hand, and they had the money and the connections."

Korean consumers also absorb fashion news faster. "Tech-first Korean consumers check Instagram for the latest trends at any moment, and find their communities on Pinterest, pulling huge amounts of information from these platforms," said Ryu Soon-Kyung, vice president of Cheil, a Samsung Group company.

And "China needs your time and your patience," said Andrew Keith, president of Lane Crawford. "It's very different from Hong Kong — there are countless markets here, and the kind of cultural and material diversity you find on a continent like Europe."

Unfortunately, 10 Corso Como may already have used up Trendy Group's time and patience — in Beijing, at least.

(Reporter Lan Lianchao also contributed to this article.)

Note: At the interviewees' request, Zhao Qike and Zemila are pseudonyms.

Cover image from 10 Corso Como, pinimg