Ushering in good news for Disney fans across China, The Walt Disney Company (DIS - Analyst Report) announced its plans to open the largest Disney store in the world in Shanghai. Scheduled to open in early 2015, this 53,000 square feet store will be located in Lujiazui district – the financial center of Shanghai.
Walt Disney, China signed an agreement with Mr. Li Jinzhao, General Manager Shanghai Lujiazui Finance and Trade Zone Development Co., Ltd to bring its first flagship store on the Chinese Mainland. The store will integrate the retail concept with fun and novelty to create the ultimate entertainment destination.
Disney unveiled its first Disney Store in Glendale Calif in 1987 and now boasts 340 locations worldwide. Disney’s latest store will possess state-of-the art store retail space (nearly 10,800 square feet) and an outdoor plaza area. The store will feature an assorted range of Disney products both by domestic as well as international designers.
The outdoor plaza area will have a Disney themed landscape along with the capacity to host outdoor events. The location of the store has been strategically chosen as it is a well-known shopping/ tourist destination in Shanghai and Disney is expected to benefit from such an ambience.
Apart from Disney, leading retailer, Wal-Mart Stores, Inc. (WMT - Analyst Report), is geared to expand into the promising market of China. It plans to open more than 100 facilities in the country between 2014 and 2016, which will create approximately 19,000 retail jobs. Earlier this year, as part of its global expansion plans, apparel retailer The Gap, Inc. (GPS - Analyst Report) announced its intention to expand in the Chinese market.
Gap has also decided to open company-operated Old Navy and Banana Republic stores in China as it currently operates stores under its namesake brands only. During fiscal 2012, the company opened 33 stores in China and intends to add approximately 35 new stores in fiscal 2013. With this addition, it will have nearly 85 stores in China at fiscal 2013 end.
Thus, the question arises, why are retailers flocking to China? China, the world’s largest economy after the United States, grew 7.7% (on track with the Chinese government’s target of 7.5% for 2013) for the first nine months of 2013. Though this is a comparatively dismal performance, given its double digit growth in the recent past, however it shows improvement compared to other giant economies viz U.S (GDP rate for first and second quarter 2013 is 1.1% and 2.5%, and we are awaiting third quarter figures).
Further, with the Chinese government looking to stabilize and streamline its economy to focus more on consumption, it seems retailers will reap bounty. Moreover, with a tepid domestic retail backdrop, the Chinese economy provides a lucrative opportunity for American retailers to drive the top line.
Currently, Disney carries a Zacks Rank #3 (Hold). Liberty Media Corporation (LMCA - Analyst Report), another stock in media conglomerate sector can be recommended for investment as it carries a Zacks Rank #1(Strong Buy).