UK's Laura Ashley to shift focus eastward

British fashion and furniture retailer Laura Ashley will close 40 of its stores in the United Kingdom and expand its presence in China.

The company's newly appointed executive chairman, Andrew Khoo Boo Yeow, confirmed to the Press Association that the company will close one-fourth of its 160 UK stores, having already shut eight this year.

Khoo said the company is considering opening its first brick-and-mortar stores in China, where Laura Ashley products have been available to online shoppers since 2016 via Alibaba's e-commerce platform Tmall.

Often labeled as one of Britain's "heritage brands", Laura Ashley has recently contended with plunging profits amid adverse retail conditions in the UK.

"It's a challenging environment and it could become more challenging," Khoo said. "We're moving to Asia in a much bigger way. We have a regional office in Singapore. It's a dedicated office of about 10 people and it's focused purely on e-commerce into China. Once we get a significant foothold in digital retail in China, we can look at the physical stores rollout."

Khoo said he is mulling the expansion of some of the stores that will remain in the UK, enabling them to take on some of the employees from the closed properties.

"The direction I want to go is to have not so many stores, but maybe the ones we have could be larger," said Khoo, who is the son of former Laura Ashley executive chairman Khoo Kay Peng. "It's more showcasing the brand. It doesn't really matter if they buy online or offline, we just want them to get inspired."

Laura Ashley was founded in 1953 and its floral prints became hugely popular in the 1970s and 1980s. Khoo Kay Peng's Malaysia-based business group Malayan United Industries Berhad became a major shareholder in Laura Ashley in 1998.

Industry analysts have criticized the brand for failing to remain relevant as consumer trends have evolved. The company has struggled to evolve at a time when online shopping has dealt a blow to many brick-and-mortar retailers.

Laura Ashley had pinned its hopes on the recent launch of a new e-commerce platform. However, profits have plummeted 98 percent from 6.3 million pounds ($7.98 million) in 2017 to 100,000 pounds in 2018, due to a decline in sales and an impairment charge on the sale of a commercial property in Singapore.

Despite China being the world's most populous market, it doesn't offer easy entry for foreign retailers and brands if they cannot meet consumers' demand. The past two years have seen the full retreat of United States department store chain Macy's, and Britain's Marks and Spencer from China.

Alina Ma, associate director of research at consultancy Mintel, noted that with challenges such as identifying store locations, negotiating rent, and outfitting new stores, testing the waters through e-commerce has become a common approach for foreign brands looking to establish a business in China.

For the category of home furnishings and accessories, however, Ma added that a "dual-sales-channel strategy" combining both online and offline should work better.

A consumer survey Mintel conducted in August with more than 3,000 interviewees from 10 Chinese cities found that more than 70 percent of the interviewees purchase home furnishings from both supermarkets and online stores.

However, Ma added that with the popularity of minimalist style homeware in China in recent years, domestic brands are more likely to outshine foreign ones, as the design and technical barriers have lowered, and the former have advantages in production and supply chain.

"The only exception should be those foreign brands that are in the premium category, or boast an offering of special textures or materials, or have a collaboration with famous designers," said Ma.