Martha Stewart's Chinese Dream
More than 400 million Chinese had access this week to a live stream of Martha Stewart speaking about her approach to curating and maintaining a home. In all likelihood, few bothered to watch. The essential hardware of the Martha Stewart way of life -- a garden in which to grow food, an oven in which to bake it, and a large, stand-alone house -- is still inaccessible to most Chinese. As a result, America's lifestyle icon hardly registers in China.
But Stewart is taking the long view. As China's emerging middle class moves into cities, Chinese kitchens and tastes are changing, providing Stewart an unlikely opportunity to both educate and make a profit. She isn't going it alone, however. Alibaba, the e-commerce goliath, hosted Stewart's Tuesday speech and is using it to promote its first nationwide "home festival," designed to push brands like Le Creuset and Duralex to China's upwardly mobile kitchen consumers. For Stewart and her partners, it's "the first step in a long relationship" that could leave Chinese lifestyles looking a lot like American ones.
This must feel like deja vu to Martha Stewart. Back in the early 1980s, she was the bestselling author of cookbooks and entertaining guides that drew upon her experiences as a high-end caterer and hostess. But Stewart had much bigger aspirations and markets in mind. In 1987, she signed a deal to become Kmart's "consultant for entertaining and lifestyle." The deal later expanded into home goods. "Whether the people are shopping at Kmart because they don't have enough money, they are frugal or looking for value, they are the kind of people I want to reach," she told Ad Age in 1997. In 1999, the mass retailer sold more than $1 billion in Stewart-branded products.
Repeating that success in China won't be easy. Middle-class Chinese homes and kitchens are generally smaller than their American counterparts, and they lack the space for the plethora of appliances and accessories that Stewart and other retailers are keen to sell them. Meanwhile, those who can afford bigger and better are more likely to hire someone to do the cooking for them. In China's status-seeking society, being a capable do-it-yourself host lacks social cache. And even among those who value it, there's no reason to believe that anyone will take their cues from Stewart on how to host a Chinese dinner party.
But even with those challenges, there are several long-term trends working in Stewart's favor. The first is migration. Between 1982 and 2015, China's urbanization rate rose to 56 percent from 21 percent, forcing those accustomed to smoky, rural kitchens to adapt to small urban ones -- and China's housewares sector has surged as the newly urbanized accessorize those homes. When Alibaba's retail website Tmall launched in 2008, it included a home-goods channel. Stewart's Tuesday speech was, in part, designed to advertise it.
Second, Chinese incomes and tastes are moving upmarket. The 2016 edition of McKinsey's annual survey of China's consumers found that the Chinese are trading in mass-market products for premium products, with half now seeking "the best and most expensive offering." The "best" is widely viewed as a foreign product, especially in the home-goods sector, where the Chinese remain broadly skeptical of homegrown quality and brands. For example, high-end Japanese-branded rice cookers have become one of the must-have souvenirs for Chinese tourists going to Japan -- despite the fact that many of the appliances are actually made in China.
Third, crowded cities and widespread internet access have transformed China's 200 million millennials into leisure-time homebodies who would much rather chat on social media and watch streaming videos than head out to meet in real life, making them a powerful consumer force. According to one study, half of all online food orders in China come from millennials, and 60 percent of them shop online at least once a month. Yet, unlike their parents, they are far more adventurous and outward-looking. Western entertainment and ways of life are familiar and beloved -- so much so that China's top media regulator recently clamped down on television programming that promotes "Western lifestyles." That doesn't bode well for a Chinese edition of "Martha Stewart Living," but it's a potential bonanza for Stewart products and the e-commerce platforms that would sell them.
Of course, Stewart will need to localize her products. In Japan, for example, Stewart-branded bath towels are smaller than those sold in the U.S., to account for the smaller washing machines. Similar adjustments will also be necessary in China, especially if -- as Stewart indicated -- she's determined to "transform" China's small kitchens. But the good news for Stewart is that China's consumers are already embracing parts of the lifestyle she's selling. It's just a matter of time before they buy in completely.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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