Smith Barney's path of development this year has not been an easy one, especially in the context of the global financial crisis. Over the past eight months, Smith Barney apparel buyers have been actively expanding their presence across the country, purchasing or renting 39 commercial properties in 19 provinces and cities. While most businesses were struggling during the economic downturn, Smith Barney saw an opportunity to grow. For the brand, the financial crisis did not derail its original strategy—it actually accelerated its store expansion plans.
So, was the crisis a catalyst or a motivation? According to CBN reports, in the first eight months of this year alone, Smith Barney acquired six commercial properties totaling 28,997.66 square meters in six provinces, including Zhejiang, Fujian, and Jiangxi, with a total investment of 785 million yuan. In addition, the company also rented 33 stores across 16 provinces and cities, covering a total area of 63,336 square meters, with a rental cost of 147 million yuan. According to the company’s expansion plan, these purchases and rentals accounted for more than half of the target of 68 new stores planned for this year.
According to the development goals set by Smith Barney, the company aimed to buy or lease 68 new stores in cities with a population over one million, including 31 direct-operated outlets and 37 franchise locations. By the end of the first eight months, Smith Barney had already secured 39 commercial real estate properties, surpassing half of the target.
Zhou Chengjian, chairman of Smith Barney, explained to CBN: "The international financial crisis brings both opportunities and challenges. The opportunities come from the relatively low prices of commercial real estate, making it a good time to purchase or rent. However, the challenge lies in the overall economic environment, which has affected many businesses. Although Smith Barney has faced some pressure due to the downturn, we believe that the opportunities still outweigh the challenges."
According to available data, the average price per square meter of the six commercial properties Smith Barney purchased this year was 27,073 yuan, while the average rent for the 33 rented stores was 2,317 yuan per square meter. Even without the financial crisis, the company would have likely pursued such large-scale real estate acquisitions, given the strong potential of the domestic casual clothing market.
In 2006, the total retail sales of China’s casual clothing market reached approximately 357.1 billion yuan, accounting for 58.97% of the entire domestic apparel market. From 2001 to 2006, the market grew at a compound annual growth rate (CAGR) of 15.31%. Analysts predict that the CAGR will remain around 14.10% in the coming years, with the market expected to reach 605.3 billion yuan by 2010. This indicates a bright future for the casual wear industry in China, and Smith Barney is clearly positioning itself to take full advantage of the growing demand.
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