Supreme Geographical Expansion in China

Supreme Geographical Expansion in China

Sup.

01 LXFM 749 - Luxury and Fashion Management M.A Final Project Supreme Geographical Expansion in Shanghai Professor - Carin Wightman Spring 2019

Table of Content

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5 7

I. Introductions II.

Company Overview

2.01 Supreme Milestones 2.02 Financial Highlights 2.04 Supreme Video 2.05 Supreme Current Market Strategy 2.06 Supreme Customers 2.07 SWOT Analysis 2.08 Supreme Competitors III.

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Supreme in China

3.01 PEST Analysis of China 3.02 Cultural Insights -

China Hip Pop Culture

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China Skateboard Culture 44

3.03 Market Overview -

The Global Streetwear Industry

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China Fashion & Apparel Industry

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China Menswear Market

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China Street Fashion Industry

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Street Fashion Market in First and Second-Tier Cities

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China GDP Information

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China High End Street Fashion Consumption

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Supreme Italy/Spain, Legal Fake in Shanghai

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Future Outlook

3.04 Competitors’ Analysis

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- Direct Competitors (Domestic Street Brands/ Foreign Brands That Have Entered the Market) -

Direct Competitor Analysis

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Indirect Competitors (Sports Brands, Luxury Brands

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Indirect Competitors Analysis

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Supreme Geographical Expansion in China

2.03 Supreme Boutiques

IV.

Target Consumer Identifications

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4.01Target Consumer Analysis 4.02 Demographic 4.03 Behavior 4.05 Target Consumer Profile V.

Primary Research

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5.01 Research Objectives 5.02 Research Design and methods 5.03 Research Analysis VI.

Research Key Findings

6.01 Research Key Findings 6.02 Analysis & Key Findings of Primary and Secondary Research VII.

Supreme Boutique Overview

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7.01 Business Partnership (entry mode, Related Chinese laws) VIII. Marketing Strategy

96

8.01 Strategy Objectives

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8.02 Price Strategy 8.02 Place Strategy 8.03 Product Strategy (Assortment Plan) 8.04 Media & Promotion Strategy IX.

Marketing Budget

131

9.01 Marketing Cost Allocation 9.02 Annual Sales of Supreme boutique in Shanghai X. Conclusion

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XI. References

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XII. Appendix

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Supreme Geographical Expansion in China

4.04 Psychologic

Introduction

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I. Introductions

A c c o r d i n g t o B a i n & C o m p a n y, high-end street fashion is driving growth in global sales of luxury personal goods, with a commercial value of euro263bn.

The rise of high-end street fashion has shown how fashion from the underground can become mass market.

Supreme is a street fashion brand catering to millennials by providing apparel, skateboards and accessories inspired by the skateboarding culture.

Supreme is gradually expanding to multiple locations across the globe in response to high praise by young people in the global street culture wave and the increasing speed of cultural transmission. There has been a growth in popularity of

street fashion in China due to higher disposable income as well as popularity of fashion trends. Along with this growth, Supreme has been expanding t o n e w l o c a t i o n s , a n d C h i n a’s growing GDP and rise in popularity of streetwear among millennials and late Gen Z make it a potential market for new development.

The aim of this project is to propose an expansion for Supreme to open a boutique i n C h i n a . It w i l l fo c u s on identifying the location for the boutique, the timing of the launch and will propose a distribution strateg y along with a marketing campaign for the launch of the store.

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What is Supreme.

Company Overview

2.01 Supreme Milestones 2.02 Financial Highlights 2.03 Supreme Boutiques 2.04 Supreme Video 2.05 Supreme Current Market Strategy 2.06 Supreme Customers 2.07 SWOT Analysis 2.08 Supreme Competitors

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Supreme Milestones

Supreme is an American skateboarding shop and clothing brand founded by James Jebbia in April 1994 in New York City. Jebbia continues to run the SoHo-based company which not only continues to make clothing and skateboards but also continues to inspire the desire in consumers to absolutely want their products. Over 24 years, Supreme has developed from the original New York City store into a global community with 11 boutique stores and has worked with generations of artists, photographers, designers, musicians, filmmakers, and writers who defied conventions and contributed to its unique identity and attitude. By catering to the street culture of skateboarding, hip hop, and rock, the skateboarding and apparel brand Supreme has carved out a very successful niche for its shoes, clothing, and accessories, which are sold extensively in the secondary market (“A Look at the Supreme Logo and How They Got Started”).

In January 2017, Supreme cooperated with luxury fashion company Louis Vuitton to launch a limited-edition collection: “Pop-up stores featuring the collaboration were opened on June 30, 2017, in Sydney, Seoul, Tokyo, Paris, London, Miami, Los Angeles and Beijing”.(Pearson, Highsnobiety) In this cooperation, a total of 71 styles, including clothes, shoes, accessories and leather goods, were sold, although every country’s pop-up store limited each consumer to two or three products.

This new line of Supreme products is renowned for selling out in record-setting times. Two days after opening, the pop-up stores in Beijing announced that they were sold out and were temporarily closed. Collaborations such as those of Louis Vuitton and Supreme help increase the exposure of the brand and produce mutual profit in China, and this will influence the opening of the Supreme boutique in China, Shanghai in 2020 (Kelly, “Evolife”).

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On October 5, 2017

Supreme opened their 11th store—the second one in New York City—in the Williamsburg neighborhood of Brooklyn. On October 6, 2017, Supreme became a billion-dollar brand. James Jebbia confirmed that the label had sold a significant stake in the company of roughly 50% (around $500 million) to private equity firm The Carlyle Group (Kansara). “Since then, the popularity and cult following of the Supreme brand has continued to grow” (“A Look at the Supreme Logo and How They Got Started”).

In 2018, Supreme was awarded the Council of Fashion Designers of America’s Menswear Designer of the Year Award. This award signals that street fashion, particularly Supreme menswear, controls the trend cycles. The consumer is totally in charge when it comes to fashion.

Brands no longer control the fashion conversation. This fashion award for a streetwear brand is a manifestation of the shift (Verry, “Footwearnews”).

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Financial Highlights 10

Financial Highlights

On October 6, 2017, The Carlyle Group LP acquired a 50% minority stake in Chapter 4 Corp, trading as Supreme New York, a portfolio company of Goode Partners LLC, for US$500 million. The acquisition expands the brand growth in the United States.

Chapter 4 Corp, doing business as Supreme, controls 50% of shares. Remaining stock of Supreme is held by the Carlyle Group, which had a profitable year in 2018. According to the data report from D&B Duns Market Identifiers Plus (US), Supreme’s revenue is estimated at $9.76 million in the 2018 merger management.

According to the financial report of the Carlyle Group, the Carlyle Group’s assets under management are “over $80 billion, . . . giving investors an average annual return of 35%.” From these two points, it can be seen that this profit margin is extremely high. For this $500 million investment in the Supreme brand, the Carlyle Group will determine the fastest, most stable and most concentrated recycling fund market. China’s market has a significant factor for a higher return on their investments. Not only is China’s influence rising, but also the world’s brands are turning their attention to China’s highly promising market. China’s market is a good place for every investor, and its rich resources are matched with strong purchasing power. Every brand is exploring the Chinese market. However, Supreme has not yet opened a store in China, which would be a huge opportunity for Supreme and Carlyle Group to get the most effective revenue with the fastest efficiency.

Supreme Boutique

Supreme Boutique

Supreme Boutiques

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2.03 Supreme Boutique

Over twenty-four years, Supreme has developed from the original New York City store into a global community with eleven boutique stores.

The first Supreme store opened in an old office space on Lafayette Street in downtown Manhattan in April 1994. It was designed with skaters in mind with a unique design for the store layout: by arranging the clothes around the perimeter of the store, a large central space permitted skaters with backpacks to skate into the store and still feel comfortable. This store had its core group of skaters who served as its team in 1994 (Couch). “As for the products that Jebbia made available in these stores, the Supreme brand stocked its own line of clothing and skating supplies as well as clothing from a number of other brands such as Nike, Van, Spitfire, Thrasher, SB, and many others” (“Logomyway”).

For ten years, the Supreme brand consisted of this one single store, but in 2004, Jebbia opened up a second Supreme store on North Fairfax Avenue in Los Angeles. The Los Angeles store was almost double the size of the New York store and even featured an indoor skate bowl. Little by little, Jebbia began to open up other Supreme stores all over the world, including stores in multiple Japanese cities (Daikanyama, Osaka and Fukuoka in 1998, Harajuku in 2006, Nagoya in 2009 and Shibuya in 2013), a store in London (September 2011), and one store in Paris (March 2016). All of these stores were built with the same skater-friendly layout of the first Supreme store. Stores feature rotating art displays and use videos and music to attract attention.

This topic will be explored further in the section titled Supreme video (Smith, “Vice”).

When news came out that Supreme had sold a 50 percent stake to investment firm The Carlyle Group for $500 million, this much was clear: changes were coming. The logical assumption following the $1 billion valuation that accompanied the sale was that Supreme would have to scale up quickly to meet investor expectations—faster, presumably, then the famously patient skate wear brand ever had. Expansion is at least part of Supreme’s new strategy as it is set to open a new shop on the West Coast (San Francisco) in early 2019. (Wolf, “GQ”)

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Additionally, as an untapped potential market, a new boutique in Shanghai means more Supreme stock— which would presumably hurt the resale value of Supreme everywhere. There’s no doubt the demand for the brand remains sky-high, but the closer Supreme gets to fulfilling those desires, the higher the risk of losing the hype that’s driven the brand for over two decades.

The Shanghai boutique will help Supreme sell more merchandise and do more to meet its billion-dollar valuation. Opening only one store in China isn’t going to completely change Supreme’s position in the fashion landscape.

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Boutique

Perhaps more interesting than the expansion is the speed at which it’s happening. The brand opened only its third U.S. retail location, in Brooklyn, last year.

While two years between new stores might not feel like a particularly quick turnaround, the gap between the Brooklyn store and the one that preceded it, Los Angeles, spanned thirteen years. This time frame is fast for a brand that has developed by maintaining a slow but steady progress. (Wolf, “GQ”)

Supreme Video

Supreme’s website maintains a page for off icial videos created by the brand. Skate videos made by shops, as opposed to hardgoods companies, are generally thought of as second tier.

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Supreme Video Supreme's website maintains a page for official videos created by the brand.

Skate videos made by shops, as opposed to hardgoods companies, are generally thought of as second tier. When the “cherry” video came out in 2014 by William Strobeck, it immediately put to rest whatever doubts about Supreme that might have lingered in some corners of the skate sphere. With “cherry”, Strobeck and crew delivered a shop video full of raw power that could hold its own next to anything else out there. In “cherry,” as in “BLESSED” (full-length skate video by William Strobeck, 2018), the overwhelming vibe is of a tribe of dudes who are having a really good time. The skateboard world noticed, and “cherry” catapulted Tyshawn and the other kids in the crew like Ben Kadow, Sean Pablo, Aiden Mackey, Sage Elsesser, and Nakel Smith onto the radar of the broader skate scene.

The group of kids and the video had such an impact on skating that after its release, skate shops around the country reported a spike in their Converse sales, the shoe of choice for some of the kids in “cherry,” according to a Jenkem article. It can be seen that if skate films are played in Supreme boutique stores in Shanghai, China, it not only can promote consumers' understanding of skateboarding culture but also consumption of Supreme products.

(Smith, “Vice”)

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Supreme Current Market Strategy Company Overview

Product strategy Promotion strategy Price strategy Placement strategy Scarcity model

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Product Supreme has an exclusive range of products in every collection, all available in different colors. This is where Supreme stands out from other brands because they are not limited to one color product design; they offer a variety of options. Supreme continues to work with world-renowned brands such as Nike, Vans, Timberland, and North Face. They use their different colors to make their exclusive products. Supreme also offers a range of personalized accessories, from skateboard accessories to blankets and flasks, all of which portray Supreme’s iconic box logo. Supreme also sells Vans, Thrasher, and Nike brands in the store to show their support, not competition.

Although Supreme is a skateboarding brand, they have built themselves into a brand known for “quality, style and authenticity,” which is reflected in their products. Their products are of high quality using high-quality fabrics with a unique design (Day 11).

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Promotion Strategy Supreme advertises their brand in a very unique way. Rather than having TV commercials or double page spreads in famous fashion magazines, Supreme uses guerrilla marketing to advertise the brand. Every year, Supreme uses a famous photographer (such as Terry Richardson) to take a series of photographs of a famous celebrity wearing the signature Supreme box logo t-shirt. This celebrity can be anyone from Kate Moss to Mike Tyson, or Kermit the Frog to Lady Gaga. This shows the wide range of support Supreme gets from celebrities and also shows that the brand can be worn by anyone. Once these photos are taken, they are printed out and plastered all over New York City, London and Japan. This kind of advertising (guerrilla marketing) is inexpensive and creative and shows the kind of brand Supreme is, as they think outside of the box and refuse to “sell out� with TV ads and department stores. Stickers are another way Supreme promotes their brand, giving them out free with online purchases so their consumers will plaster them all over their rooms, skateboards or cars. (Day,16)

Odigendios ma dolorum

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Price Strategy.

- Price (except the cooperation products) T-shirts/Shirts($60-$120) Top/sweaters ($100-$200) Jumpers and hoodies ($120-150) Outerwear/leather jacket ($220-$700) Trousers and jeans ($80-$150 Hats ($48-$90) Skateboard decks ($50) Accessories ($30-$220) Stickers (free with purchase)

(price from the website “supremecommunity�)

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Placement Strategy Supreme's boutiques combine a clean, minimalist style (which is more common in high-end fashion stores), skateboarding and urban art such as work by Mark Gonzales. The addresses of Supreme stores are often difficult to find, which further demonstrates their exclusivity, as they seem to be hidden and invisible to passers-by. There are no window displays, no mannequins, and stocks are very limited, as most of their collections are produced in small quantities.

Supreme's products are only sold in physical stores or online, and they maintain the size of the boutique in order to maintain brand value. Supreme's simple and minimalist style continues on its website. They use a very simple and monochrome house style with a red accent to highlight the highest box logo. Supreme's website is their primary source of marketing as they promote their upcoming series and collaboration. Since Supreme's products have no release date, consumers must register on the mailing list. This is another clever way to the Supreme market itself; by letting consumers do this, they can always provide them with the latest news and send them directly to their mailbox. Whether in the store or online, Supreme's target consumers are very obvious, because they often play hip-hop and rock music, play skateboarding videos, and interview famous skateboarders. Supreme's products are aimed at a specific class of people: people interested in fashion, skateboarding and music. But despite this, Supreme's customers range from teenage boys to female fashion bloggers. Supreme has no limitation for age or gender (Day,11)

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Scarcity Model

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Scarcity Model Supreme may technically be a skate brand, but it operates much more like a luxury fashion label. Supreme's strategic plan is and has been to establish itself as a brand known for its quality, style, and authenticity. But the brand’s success lies in its scarcity model. Supreme’s initial price range is actually an affordable quality of the products they are producing.

What pushes up the price is the resell market for skateboarding supplies. It is well known that Supreme does not carry out mass production. As a result, the limited number of each product drives the price increase, slowly but surely reaching the current crazy high. Jame Jebbia has said that “if I know Supreme can sell 600 pieces, I will make 400.”

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Supreme's strategy is to create a limited supply relative to demand. Unlike other skateboarding brands, even Nike and Adidas, Supreme has never had a stable supply of goods, and customers can buy it at any time. In addition, Supreme is known for making “drops,” which is to release a limited number of new collections and designs at specific times. After the drop, the goods are sold out, and these goods are no longer in stock, so they will never be restocked. Essentially, each series they make is turned into a limited edition.

In the Hypebeast/Sneaker community, there is no more magical word than the “limited edition”. Limited edition items are gold in the resale market because they have unique qualities that collectors can't resist.

Sup. Customers Sup. Customers Sup. Customers Sup. Customers Sup. Customers Sup. Customers Sup. Customers Sup. Customers 24

In the beginning, Supreme attracted a specific niche market for skateboarders in downtown Manhattan. It quickly grew into a broader subculture, and in the past few years, Supreme has become an ideal choice for no-skating enthusiasts, becoming a street wearer. Supreme's consumers range in age from 13 to 35, usually male. However, in recent years, Supreme has worked with female models such as Lady Gaga and Keke Palmer to open the door to selective female groups, and Supreme products are mainly for fashionable men who pursue cool, high-quality clothes. Target customers tend to live in busy modern cities, they like freedom, such as no constraints in the city skateboard park; they like to skateboard with friends and listen to the latest hip-hop songs. They also enjoy keeping up with the trends of streetwear and reading the fashion blogs and using social media to show their fashion style.

Supreme's stores were established in the United States and then expanded to Europe and Japan.

It's always about the always-chosen New York customers. However, with the development of brand, more and more customers are Asians because they quickly accepted Supreme aesthetics, which is why Supreme has to supply the Asian market. In 2015 Supreme opened three stores in Japan. In general, Supreme adapted to translate itself to the world to attract the sharp-edged hip-hop urban skateboarding teenagers.

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SWOT Analysis

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Supreme Competitors KITH

Market

BAPA

Lin

OFF-WHITE

STUSSY

Only for US

Europe, Asia, US,

Europe, Asia, US,

Europe, Asia, US,

(7 stores)

Russia,

(42 physical retail

Canada and Australia.

(34 stores)

store)

oldest and original

Landscape

streetwear brands

Customers

4-35 years old

4-35 years old for

18-35 years old for

15-35 years old for

kids, women,

kid and men

women and men

women and men

Footwear,

Footwear, apparel

Footwear, apparel

Footwear, apparel and

apparel and

and accessories

and accessories

accessories

Have different

High-end

$35-350

product lines

($200-$7500)

men

Product Range

accessories $30- $1200 Price

($30-$1300)

Collaboration

PUMA, ASICS,

PEPSI, G-shock,

Nike, Converse,

BAPE, Nike,

New Balance,

Kaws, Pepsi,

Levi’s, Rimowa,

Champion, FPAR, Hello

Versace.

Supreme, adidas,

Braun,

Kitty, Patta, Marvel,

collacoration

Disney,

Heron Preston,

HUF

with underrated

Miracle,

Jimmy Choo, Raf

brands

Scarface, DC etc.

Simons, etc

&unexpected

More

companies

collaborations than Supreme

Online Store

yes

yes

yes

yes

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III. Supreme in China

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Supreme in China 3.01 PEST Analysis of China 3.02 Cultural Insights -

China Hip Pop Culture

-

China Skateboard Culture

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PEST Analysis of China Political •China strictly protects intellectual property rights in accordance with law In the past, China has seen frequent trademark theft, or the proliferation of fake luxury goods and high imitation products, which have shaken the confidence of overseas and domestic brand companies in investing in the Chinese market. However, in 2018, the Chinese government proposed reforms to the system to further strengthen the construction of the legal system and at the same time improve the public’s awareness intellectual property. From the perspective of cultural construction, their goal is to improve the public’s awareness and ability to protect intellectual property. China’s current trademark law and patent law stipulate that the maximum amount of compensation for trademark infringement is 3 million yuan. For example, the fake Supreme stores in Beijing and Shenzhen were ordered to close, and Chinese consumers’ loyalty to the brand is extremely high, which is also an important factor to promote the closure of fake stores. (“Chinapeople.cn”) China’s government has also been implementing measures to get Chinese shoppers to buy their luxury goods at home rather than abroad, where most purchases by Chinese luxury shoppers still take place. It has cut import duties, for instance, and cracked down on daigou—agents who buy goods in cheaper markets, such as Europe, and ship them back to buyers in China. Luxury brands have also been working to adjust their prices, so they aren’t so comparatively expensive in China. (Bain, “Quartzy”) The new guidelines were discussed and approved at a meeting of the Central Leading Group for Comprehensively Deepening Reforms, convened by President Xi Jinping, according to a state broadcaster on Central China Television (CCTV).

According to the broadcast, Xi said China should “step up efforts from both the supply and demand side and actively cultivate niche markets within the key consumer sectors” (“The Business Times”).

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PEST Analysis of China Economical: •According to Bain & Company, China's youth apparel market exceeded $500 billion in 2017. Street brands account for about $33 billion to $35 billion of the youth apparel pie, a market that is growing rapidly thanks to luxury and fast fashion.

•Explosion of e-commerce in China Since 2009, clothing e-commerce has been growing year by year. Apparel accounts for one-third of all online stores. Sales in 2017 have reached 605 billion yuan, up 49.9 percent year-on-year. “The three most popular e-commerce websites for clothing are Taobao & Tmall, Jingdong VIP and secoo. And 70 % to 80 % of e-consumers say that they think more the design than the brands. Buying online has become an essential channel for the clothing market. There are several channels of sale in China, among them, the first channel is the shopping malls (69%) and the second is brand monopolized shops (42%). Most of the sales by these two channels are the clothes of high end or mid-range.” (“MaketingToChina”)

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PEST Analysis of China Social: •Individualism: There is a massive spread of individualism across the world with people trying to be as creative and unique as possible with clothing and lifestyle choices. Therefore, it is important for a fashion brand like Supreme to appear unique and attractive to those who wish to be different.

Supreme as an “exclusive” brand successfully attracts this sort of consumer. (Holmes,24) •Feminism/change in gender per captions In the past, women were expected to wear stereotypically feminine clothes and men were expected to wear masculine clothes. With the change in this, both men and women are dressing much more freely, and Supreme now attracts female consumers because a lot of menswear is now “acceptable” for women to wear.

•Celebrities effect: Celebrities wearing clothes by Supreme could either affect the brand negatively or positively.

A well-known and well-liked celebrity wearing their clothing could increase sales for the brand as some consumers feel the need to mimic celebrity fashion. However, if a disliked celebrity with a bad reputation wears the brand, it could ruin the brand and turn potential consumers away. (Holmes,24) •Label-thirsty In addition, in China, flashy logos are making a comeback as a status symbol, and luxury streetwear has gone mainstream in label-thirsty China. Supreme's red-and-white box logo has become arguably the purest symbol of cool fashion. This coincides with the needs of Chinese millennials for niche products and status. (Pan, “Quartzy”) •Being ethical With world tensions around brands being ethical due to recent issues about the pollution caused by the fashion industry, it’s important that all fashion brands now prove to be ethical by recycling and creating the least amount of waste and pollution as possible. (Holmes,24) •Counterfeits Counterfeit products are becoming more common for the consumers need to get an exact replica for a much more reasonable price or due to their need to purchase someone that appears “luxury” to feel much more empowered and at least feel like they can afford it. Supreme counterfeits are extremely popular due to it being a hyped brand right now, luckily for supreme that are websites that help consumers spot whether a product is a counterfeit or not to solve half of the problem. Meanwhile, more and more third-party identification teams have appeared in China, such as “Poizon” app, and “Hupu” online forums. (Holmes,26) 36

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PEST Analysis of China Technological •Social media These young Chinese are buying in large numbers online, in a shopping culture that is heavily influenced by social media and frequently playing out on networks such as WeChat, China’s biggest social-media app. WeChat is much more than just a place to share articles or pictures,owned by tech giant Tencent. WeChat has evolved from China’s answer to WhatsApp to an all-in-one app that let users order food, hail cars, and pay utility bills through its payment function.” Many Western luxury brands are steadily increasing their presence on the app to reach China’s young shoppers, as well as on sites such as Tmall, Alibaba’s business-toconsumer shopping platform. (Bain, “Quartzy”) Meanwhile, the increasing use of social media means that brands can no longer hide away from negative press or complaints online as people now tend to post complaints on social media sites such as Weibo or Wechat to publicly shame a brand. “This is the case with Supreme, and though the origins of the logo that has made them a worldwide brand may be somewhat controversial, Supreme is one of the rare brands that leverages controversy rather than being damaged by it.” (Logomyway) •Channel innovation offers more choices for local consumers - Online forums Hype Beasts, or those who collect apparel simply because it has a logo, believe online forums “paved the way for streetwear brands . . .each forum had a very important and unique contribution to the rise and relevancy of streetwear”. The forums work as a marketplace for finding desired streetwear products and discussing release dates. In China, there are some interactive platform specifically for boys’ fashion, for example, Poizon app, YOHOOD, Taobao,etc. and some forums such as LittleRedbook, Hupu, in which the Young men share their favorite things, most of which are clothing. (“MaketingToChina”) - Online shopping The improvement of technology, and with the majority of the millennial generation having phones in China, people are much more likely to shop online rather than going from a shop. For example, Tom Ford is following the trend for channel construction. In April 2019, Tom Ford unveiled its first official online flagship store in China, bringing customer-centred intimate services to China's high-end and mobile-orientated consumers. This is useful for Supreme because they have an online shop that people can buy from; it does however mean that people are much less likely to go into a store.

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•Street brand shop/buyer shop The official website can be said to be the second channel of major street brands. In addition, the street retail brand online collection store and the buyer-made brand collection store are emerging in the Chinese retail market. Tide brand collection store, (for example: I.T, punk1016) In short, it is a collection of products from multiple street brands in one store for unified operation. Buy a hand-made brand collection store, such as JOYCE, the goods are mostly selected by the buyer or the store's buyer team. The new retail has given the “street brand” a new boost.

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3.02 Cultural Insights - China Hip Pop Culture For hip-hop music in the world's most populous country, this marks a turning point. This genre has attracted a large number of fans since the 1990s, but even so, it is still basically a form of underground art. The government is wary of this, fearing that it may promote wrong values for good communist youth, even in the past prohibiting songs that “proclaim obscenity, violence, crime or threaten public morals”. However, Thanks to popular reality shows related to hip-hop culture, such as Rap of China (episodes have been viewed more than 3 billion times on China's online video platform iQiyi), now street fashion has been pushed from underground into the mass market. First, Rap of China launched in summer 2017. After a year, Street Dance of China followed the hype, and with the new season of Rap of China, the trend is still continuing, attracting more and more people’s attention.

“These shows inspire Chinese consumers to talk about streetwear culture and fashion, making the market more and more attractive as it’s quite new”. (“MarketingToChina”) Streetwear is, of course, indisputably associated with hip-hop, another area where keeping it real is held in high regard. Supreme’s brand culture is a great fit for China’s new mainstream culture, Hip-hop culture, which continues influencing the booming Chinese streetwear market. (“MarketingToChina”)

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The most popular are the rappers from Rap of China shows. They often show up wearing Supreme goods. “As Chinese people pay a lot of attention to their music and their shows, they are at the same time quite influenced by this new fashion. From that perspective, the show is incredibly significant to brands as it offers free marketing and promotion as well as product placement for their wares.” (“MarketingToChina”)“People even talk about “the Kris Wu effect” when speaking about this young fashion icon.” (“MarketingToChina”) He is one of China’s most celebrated singers and actors. Kris Wu’s massive popularity with female consumers has further aroused curiosity in the Supreme brand.

“Some Chinese stars such as Edison Chen and Shawn Yue are also leading the trend. Edison Chen even has own brand-named CDC.” (“MarketingToChina”) The main power of key opinion leaders (KOLs) is that they can attract people’s attention.

Letting them explain the products in their way, especially when working in the streetwear sector, keeps things authentic. This is the most important value for the streetwear market. (“MarketingToChina”) But the success of Supreme, and streetwear more broadly, makes sense when you look at how fashion and culture are changing. Clothes across the spectrum are getting more casual and drawing inspiration from sports, driving the popularity of items such as sneakers and sweatshirts. Hip-hop has grown from a subculture into the dominant musical form in the China, surpassing rock. Millennials and Gen Z represent a large and still growing share of fashion consumers, and they want community and authenticity. (Bain, “Quartzy”)

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- China Skateboard Culture In 2017, China's general administration of sport began to support and encourage skateboarding and began to promote skateboard culture, which is particularly compatible with Supreme's DNA. On August 22, 2017, the general administration of sport of China conducted a special survey at Daxing National Skateboarding Training base in Beijing. China has adopted the current policy to “go all out to prepare for the 2020 Tokyo Olympic Games” in skateboarding. At the same time, relevant policies and plans such as sports tourism have made efforts one after another. Whether skateboarding has changed the attitude of the Olympic Games or the Olympic Games will change the skateboarding culture, the skateboarding industry will eventually come to China in the spring under the trend of the times.

He Liang, the owner of a skate shop, said the ecosystem makes it a good time to promote skateboarding. No matter what kind of skateboard is selected for the Olympic Games, the sport will eventually reach the public and will surely be better promoted and developed.

Once more people come into contact with it, it may become another popular trend like Rap of China.

“Add in skate influences and a lot of attitude, and streetwear is basically the outcome.

Though people still talk about it as a niche, upstart movement, its signatures—casual clothes like hoodies and tees, graphic logos that seem made for the Instagram age, a fixation on sneakers, ties to hip-hop, and a shared sense of culture—line up neatly with those bigger shifts in the way younger generations of shoppers live and dress.” (Bain, “Quartzy”)

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3.03 Market Overview

-The Global Streetwear Industry -China Fashion & Apparel Industry -China Menswear Market -China Street Fashion Industry -Street Fashion Market in First and Second-Tier Cities -China GDP Information -China High End Street Fashion Consumption -Supreme Italy/Spain, Legal Fake in Shanghai -Future Outlook

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• What Is Streetwear ?

“One thing streetwear brand from Palace to Cav Empt generally share is an emphasis on graphic tees and sweatshirts, mostly for men. (There are plenty of women wearing streetwear today) But the category can’t really be defined by a single look.

Streetwear blends a diverse mix of styles: casual sportswear, military pieces, Americana of the sort Tommy Hilfiger designs, hip-hop and “urban wear” influences, skate references, workwear, and more” (Bain, “Quartzy”).

-The Global Streetwear Industry The rise of streetwear has come along with a shift in what younger generations think of as luxury and status symbols. In its 2017 report on the luxury market, the management consulting firm Bain & Company noted that high-end fashion brands are “investing in luxury streetwear” to attract younger shoppers. It estimated that the market for high-end sneakers grew 10% from 2016 to 2017, reaching €3.5 billion (about $4.2 billion), and t-shirts grew 25% to €2.5 billion (about $3 billion) (Bain, “Quartzy”).

“We have seen strong growth in casual apparel, for example luxury t-shirts, sneakers and rubber slides,” says Federica Levato, a partner at Bain & Company, in an email. “There are two factors driving this: firstly, the trend of ‘casualization’ of the dress code in many companies that were traditionally more formal, and secondly the growing importance of millennials (Gen X, born 1980-1995) and Gen Z (born after 1995) as buyers of luxury goods. ”For those young shoppers, a brand like Supreme can have just as much cachet as Louis Vuitton, which is probably part of the reason Louis Vuitton partnered with Supreme on a collection last year, and why Burberry teamed up with the Russian label Gosha Rubchinskiy” (Bain, “Quartzy”).

The emphasis of luxury product has gone from quality and craftsmanship into the uniqueness of the product, the younger generation are looking for something that stands out and makes them special rather than necessarily some traditional luxury brands (Bain, “Quartzy”).

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- China fashion &apparel market

“China will Become the World’s Largest Fashion & Apparel Market in 2019.” (“MarketingToChina”) According to Euromonitor, China will exceed the US market and become the world’s largest clothing & apparel market by 2019.Total annual apparel sales in china will reach $121 billion in 2019 (25%growth per year) apparel sales in the US is estimated at around $120 billion in 2019(+3% growth per year). The large Chinese population makes for a huge clothing market, which is the most important characteristic of the clothing market in China.

“In the Chinese clothing industry, the brands in the market can be separated into two different camps according to the consumption structure.” (“MarketingToChina”) The first camp is the high-grade clothing brands. The consumer for this part is the high-income group; they are interested in luxury, they have the ability to buy it, and they place more emphasis on apparel quality and service. The second camp includes the brands for the public following the mass line, such as Uniqlo, ZARA, and H&M, which are fast fashion and not expensive, making them especially popular for the young consumers.

In the current market, Chinese brands take the leading position in the mass-market segment. Chinese consumers blindly believe that international brands are superior to domestic brands. “Nevertheless, the high-end market is almost entirely occupied by foreign brands, especially French, Italian, American, German, Japanese, etc. Previously, the large shopping malls in the big cities mainly sell local brands, but with the increase of their positioning, as well as the influence of the entering of many foreign brands in the Chinese market, many local brands are forced to exit the market of the big cities and move to the second and third tier cities.” (“MarketingToChina”)

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-China Menswear Market According to the Menswear in China Report, “Menswear sales have risen by 7% in value terms in 2018, reaching CNY572.6 billion.The omnichannel strategy widens choices for local consumers in China. Premium men’s jeans and men’s outerwear recorded the most dynamic value growth in 2018.”

Menswear’s distribution channels are expanding, bringing more ways for local consumers to buy clothing and footwear. Innovative channel construction has been widely adopted by manufacturers, including not only domestic manufacturers but also international manufacturers. As one of the famous men’s wear brands in China, Youngor Group actively introduces the German 3D human body scanning and fitting system and accelerates its development through the construction of smart stores. Through this system, each VIP customer can try on the products of their choice in the virtual service and choose the style and fabric that suits them best. (“Menswear in China”,1) The power of celebrities in advertising is one of the driving forces in Chinese menswear and the fan economy is increasingly popular. In China, men usually acquire tips for wearing apparel from their companions and friends, many of whom are fans of local celebrities. (“MarketingToChina”)

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China Street Fashion Industry Streetwear fashion is a promising market in China.

A report released in March 2018 from Ofashion and Nielsen showed the growth of streetwear consumption in China from 2015 to 2017 was 3.7 times higher than non-streetwear apparel, reaching 62 percent last year, compared with 2016. In the meantime, China has great market potential and is completely worth exploring. According to figures from Tmall, China's largest b2c e-commerce platform, streetwear growth in 2018 was 60 percent higher than average apparel category growth. Based on this online market alone, the development of local street brands is rapid, and the public’s consumption level of street-brand clothing is high. (Retail in Asia)

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- Street Fashion Market in First and Second-Tier Cities

Shanghai fashion week 2018AW MODE TALK industry conference jointly released the world's first big data on street fashion product trends and user analysis report with Nielsen. Through in-depth research on China's high-end young fashion user group, Nielsen analyzed China's streetwear brand consumption in a comprehensive interpretation of the future development trend of the street fashion market.

As early as ten years ago or even earlier, Under the early influence of street culture and sneakers, street fashion products appearing in magazines have become a focus in the first and second-tier cities of China.

Up to now, the street fashion market consumption in first- and secondtier cities has remained at a high level. According to the analysis of the report, the millennials and Gen-Z are the main consumer groups of streetwear. Streetwear consumption power of young people born after 1995 is most concentrated in first-tier cities and the southeast coast Shanghai, Beijing as the representative of east China, north China street fashion consumption power is the strongest, south China, southwest followed. Second-tier cities are led by Chengdu, Hangzhou and Chongqing.

The coverage of pop culture in different cities has different impacts on street fashion. The consumption base of first- and second-tier cities is powerful, street fashion consumption is in the leading position in China, and the growth rate is relatively stable. In terms of purchasing channels, first-tier cities pay more attention to practical effects. Daigo, overseas online shopping apps, and buyer shops are the channels to get exclusive goods quickly. In addition, the consumer information channels in firsttier cities are more extensive, and more attention is paid to the vertical trend e-commerce app and the public number of trend information.

According to the CBN Data Report, Shanghai's millennials are not only the backbone of the current society but also the main online consumers.

The per capita consumption strength of Shanghai's new consumers is becoming the strongest, nearly three times of the overall consumption per capita of the millennials and Gen-Z. In the past two years, the number of consumers and the amount of consumption in Shanghai are on the rise, and the consumption power of the newly rich people is approaching the backbone of the consumer market. Shanghai has the largest millennial population and represents the largest market for streetwear. Shanghai is now becoming a benchmark city on the streetwear scene, alongside New York, Los Angeles and Tokyo. This is confirmed by the popularity of its Fashion Week and the YoHood convention.

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- China GDP Information Since China’s initiation of its economic reforms that welcomed foreign trade, the country has registered extraordinary economic growth. The power of the economy lies in the country’s creation of a more market-oriented environment which is fueled by relatively cheap labor and economies of scale. It is the fastest growing economy in the world, with a GDP of $23.12 trillion, which is approximately a 9% annual increase over the last 20 years. Since 2015, the GDP growth rate has lowered to an average of 5% annually, and the country is now characterized by slower, safer and more sustainable improvement. The success of the economy can also be attributed to the increased access to foreign markets by having joined the World Trade Organization (WTO) in 2001. China is now one of the world’s largest trading countries and global economic forces and the second-largest economy after the United States (“MarketLine: PESTLE Country Analysis Report: China,” 23).

It is worth mentioning that China, as the most visible developing country, has the second ranking in GDP ($13.11869 trillion) in the world and has sufficient spending power. According to the 2017 Global Retail Development Index report, China has the highest score of market-attractive (100) GDP per capita ($15424) and national retail sales (3128 billion), which means that China’s shift to a consumption-driven economy is the driving force behind global retail and the expansion of apparel and fashion.

- China High End Street Fashion Consumption Blurring the lines between streetwear and luxury as heritage brands appeal to Millennials. Streetwear appeals to a highly influential young consumer base. Luxury streetwear is, therefore, granting traditional high-end brands greater relevance in the eyes of their Millennials and Generation Z shoppers. (Beauloye, “Luxe”) Rather than buying traditional luxury status symbols such as Prada handbags, the report suggests, they’re looking to new products, such as Balenciaga sneakers, Gucci tshirts, and streetwear. In Bain’s findings, uniqueness and newness were among millennials’ top considerations. It squares with other findings on what attracts millennials to luxury. A 2017 survey by Deloitte of millennials in various countries, including China, found that uniqueness and quality was what most were after. “Heritage and aspirational qualities are less important,” Deloitte noted. (Bain, “Quartz”) Supreme is synonymous with the new luxury. As the boundaries between luxury and streetwear continue to blur, a new territory has been discovered in which to activate young Chinese consumer spending. According to the trend analysis of the recognition degree of different street fashion consumers from Nelson company, Supreme brand is favored by the core users who make a wide range of purchases. The peripheral products embodying Supreme’s attitude towards life, such as toothbrushes, lighters, and accessories, are also popular. The street fashion customers of the public will buy Supreme’s street fashion clothes under the influence of the fashion trend, which makes Supreme’s market recognition and acceptance grow at the fastest rate in 2017.

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Fakeness.

Fakeness.

Fakeness.

Fakeness.

Fakeness.

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Supreme Italy/Spain, Legal Fake in Shanghai On December 10, 2018, Samsung China

Meanwhile, Supreme NY has inquired

announced cooperation with Supreme Italy

into the legality and learned that

(a Legal Fake), which was later criticized

Supreme Italy does not have a

and discussed by global social media and

registered trademark in China, so it

affected the whole world. According to a

is prohibited to carry out any sales. It

Supreme NY off icial statement, “Supreme

has issued a judicial order to prohibit

is not working with Samsung, opening a

anyone f rom selling products with

flagship location in Beijing or participating in

Supreme Italy and Supreme Spain

a Mercedes-Benz runway show. These claims

trademarks and to seek help f rom

are blatantly false and propagated by and

Chinese law enforcement authorities to

propagated by a counterfeit organization.”

enforce their trademark rights. (Duke,

After that, Samsung China terminated its

ETtoday)

cooperation with Supreme Italy.Supreme

Supreme Italy on Huaihai middle road

Italy/Spain opened in Barcelona, Spain in

in Shanghai announced it opening

2019. The Italian brick-and-mortar store has

in March 2019, and the brick-and-

been closed due to a lawsuit by Supreme

mortar store on Wuzhong road in

NY but is currently opening new stores

Shanghai is being renovated. During

across China, including the 7-floor flagship

the decoration period, some unknown

store in Beijing’s Sanlitun district. It also

people used graff iti to write “fakeness”

announced plans to open 70 brick-and-

on the decoration. This also shows the

mortar stores around the world. Supreme

loyalty of street fans to Supreme and

Italy’s trademark was legally registered, what

the popularity of the Supreme brand in

is known as a Legal Fake. A Legal Fake refers

China.

to the practice by some companies who rush to register the relevant trademarks long before a foreign fashion brand lands in the country. Netizens who support the original Supreme in reaction to the Supreme Italy announcement declared “never buy and stamp out counterfeit products.” (Prisco, CNN style)

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Future Outlook According to Passport's Country Report on China Menswear, Menswear is projected to see a current value CAGR of 4% (1% at constant 2018 prices) over the forecast period and reach CNY693.9 billion in 2023.

In the long term, millennials are poised to keep driving sales. Boston Consulting Group estimates that consumers 35 and younger will make up 65% of China’s consumption growth through 2020. These shoppers tend to be digitally savvy, and the access to information they’ve grown up with makes them highly opinionated, Bain says. It can be predicted that Chinese men's wear market is a potential market worth exploring. For Supreme, China also has a high-quality and loyal young customer group, whose demand for niche street brands and authenticity.

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3.04 Competitors’ Analysis

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-Direct Competitors Domestic Street Brands & Foreign Brands That Have Entered

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Domestic Street Brands

CLOT Website: www.clot.com CLOT was founded in 2003 by Edison Chen and Kevin Poon. Since then, the company has been known for selling unique lifestyle products and launching its own line of products in 2004. CLOT are more than just clothes; they celebrate individuality, infuse a local culture of life and character and instill creativity and inspiring ideas that bridge the gap between east and west, which is at the heart of the brand.

Products of this brand include clothing (t-shirts, shirts, sweaters, coats, jeans, trousers and shorts), footwear and accessories (belts, sunglasses, hats, socks, toys, etc.) and bags (backpacks, totes and wallets) at prices ranging from $80 to $2,000. The range of sizes is consumer-friendly for women, although their target audience is mainly men aged 18-35.

The brand also has a wide influence on the fashion industry, which can be proven by its cooperation with many well-known brands, such as Levi’s, Nike, Adidas, Converse, SSUR, Pepsi, Bandai, Lacoste and so on.

The brand is mainly sold in the company's integrated stores “ACU” and “JUICE” (The main brands include: Adidas, Recon, Visvim, CLOT, Undefeated, iDiom, Subware, OriginalFake KANGOL, and Nike) and it has three brick-andmortar stores in Shanghai. Celebrities and fans of street brands are regular customers.

MADNESS Website: www.mdnsonline.com MADNESS was launched in 2014 by Shawn Yue, a well-known Hong Kong Chinese star.

Shawn Yue daily style evokes a military style as well as Japanese street fashion and functional styles. MADNESS’s clothing design is based on Shawn Yue’s fashion sense; the core values of MADNESS are based on quality first; the jeans washing water technology and products produced are made in Japan, expressing the clothing’s the truest sense. In a short three years, MADNESS has developed rapidly, becoming the most sought-after fashion brand.

Its brand launched its new sports line along with MADGIRL in 2016, targeting female consumers. The products of its brand are diversified and priced at $70-$800 in line with its target group of 16- to 40-year-olds.

MADNESS started as an official online store only. With the expansion of the brand and the demand of the masses in the past two years, MADNESS has opened its first brickand-mortar store in Taikoo Li, Sanli Tun, Beijing’s most famous fashion district.

The collaborations with other brands and artists, including CARHARTT WIP, Ron English, NEIGHBORHOOD, DESCENDANT, and Vans, have been well received.

Foreign Brands That Have Entered:

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Foreign Brands That Have Entered

Bape

Off-White

Bape was created by Japanese designer Nigo in November 1993. Its products are designed for children, women, and men.

Partnerships range from clothing brands to housewares, from Pepsi to CHANEL, and Bape has collaborated with hundreds of brands and artists, playing a crucial role in broadening Bape’s audience. In addition, Bape strictly controls the number of each product, creating a strong sense of scarcity in the market. Mr. Bathing Ape is a highend branch series of A Bathing Ape, which is more of a street style, combining street elements with high-quality clothing. Mr. Bathing Ape accords with the favor of mature and sedate tide personage more, series with the suits, ties, shirts, umbrellas, leather shoes that has given priority to dozen.

In May 2011, Hong Kong I.T. acquired the Japanese street brand BAPE and adjusted the original supply chain, shifting most of the production from China to Japan, and no longer controlling the quantity of products to meet the market demand. Aape is a brand derived from BAPE acquired by Hong Kong I.T. Compared with BAPE, the style is more suitable for young people, and the price is also relatively accessible, lower than BAPE. Its price target ranges from $35-$200. Now Bape has six physical stores in Shanghai.

Though BAPE caught the attention of consumers in the Asian market in the fastest way, the negative effect brought by this quick attention is the reduction of brand image and the threat of a large number of fake products.

Off-White c/o Virgil Abloh is a high-end fashion streetwear brand founded by Virgil Abloh, an American designer, in 2012. The purpose of the establishment is to enable street fashion to combine high-end fashion, gather men's and women's clothing from different seasons, and even launch furniture and other products. Off-White also cobranded with major brands such as Nike, Levi's, Jimmy Choo and IKEA. Since 2014, it has been the focus of numerous overseas students, domestic college students who like high street and stars. Off-White sells for a relatively high price compared to its peers, around $200 to $7,000, but the quality of the brand is a concern. Although Off-White's overall pricing is higher than Supreme, they launched a “parity” collection “For All” to attract more fans and consumer groups.

The brand has three physical stores in Shanghai and just opened its second flagship store in Hong Kong last year. Offwhite's ambitions for the Chinese market are clear.

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-Direct Competitor Analysis The growing trend of street fashion has spawned a crop of Chinese designer brands hoping to get fashion-conscious consumers to buy in — and buy domestic. Recent research from tech giant Tencent shows that it’s working: People born in or after 2000 tend to be more interested in domestic brands than international brands, believing that “buying local” means they’re supporting the country. This is undoubtedly a hint for Supreme which has not yet entered the Chinese market, because Gen-z is one of Supreme's target consumer groups. At present, the market has been divided by some domestic brands. Therefore, Supreme needs to enter the Chinese market in time to deepen its relationship with Chinese consumers.

One big brand that has threatened Supreme the most is Bape. Bape has products that are very similar to Supreme's simple designed products. They also have all the hype of the people and they can provide some lower prices on their products. Bape also collaborates with more brands than Supreme does, which means they can get more marketing and advertising done. Another competitor is undoubtedly Off-White, and like Supreme also has a fascinating and recognizable logo. Off-White also co-branded with major brands such as Nike, Levi's, Jimmy Choo and IKEA. Although Off-White's overall pricing is higher than Supreme, they launched a “parity” collection “For All” to target get more fans and consumer groups. Of course, the most important element is that Off-White and Supreme are also suitable for hype's approach to enhance brand influence. The only difference is that Off-White and Bape provide enough inventory for consumers. In other words, excessive commercialization will give Chinese consumers visual fatigue. It should be noted that Chinese consumers, especially millennials and Gen-z, prefer products with a niche. Therefore, Supreme's hunger marketing and Thursday's limited release are the key to its success in China, as well as the key to its brand image and value.

-

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Balenciaga was founded by Cristobal Balenciaga, an artist from Spain's Basque country. Owned by Gucci, it is part of France's Kering group.

After Balenciaga changed its creative director from Alexander Wang in 2016, the design style of Balenciaga's clothes, shoes and bags have gradually transitioned from the original urban feelings to the current street fashion sense of Demna Gvasaliam, one of the first and most successful brands to incorporate street elements into luxury.

It has two physical stores in Shanghai.

Balenciaga's Speed Trainer and Triple S shoes have become must-haves for Chinese students and street enthusiasts alike.

The most recent 19ss collection continues the high street style of “big silhouette structural design” and “brand logo repetition as design element”. Its products are priced at $500-8000 offers a variety of luxury brands, including ready to wear (in addition to couture, ready to wear includes children) jewelry, accessories, shoes, bags and leather goods, and sunglasses. Its target consumers range from 5 to 40 years old.

Nike is an American sporting goods manufacturer, and officially became Nike, Inc. on May 30, 1971. The company mainly produces sports shoes, sportswear, and sporting goods and sells them under its own brand. The products of its brand range from $40 to $250.

The customers are children, men, and women, and the age range is from 3 to 50. There are 19 brick-and-mortar stores in Shanghai.

Collaborations with street brands have made waves in the fashion industry in recent years, most notably in 2017, when Virgil Abloh and Nike began what is considered the greatest and most ambitious sneaker collaboration of all time.

The collection, called 'The 10,' includes a full line of sneakers from Nike, Air Jordan and Converse, which Abloh has dismantled and remade and has won praise in the secondary market. Street lovers would rather pay more than 10 times the premium for shoes to keep up with the latest trends.

-Indirect Competitors

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Indirect Competitors Analysis Both luxury and sports brands are trying to join the market, and young and fashionable streetwear style is the key to grab this market. However, Balenciaga or Nike, even if they had some series item related to the street culture, are still a luxury brand or sports brand, and their price is different for the target consumers who cannot often purchase. In other words, the core consumers of these brands are different from Supreme, and the diversity of product styles is also different. For Supreme, as a veteran street brand, it still has enough loyal consumers and market influence for street lovers around the world, especially in China.

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IV. Target Consumer Identification 4.01Target Consumer Analysis 4.02 Demographic 4.03 Behavior 4.04 Psychologic 4.05 Target Consumer Profile

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Target Consumer Analysis The main consumers are still the millennials and Gen-z (more than 400 million) from the ages of 18 to 35 who “love street fashion trends, like to express themselves, show off their easy-going personalities and enjoy skateboarding, hip-pop music.� Even if the product premium is as high as 20% to 30% or even higher, there are still consumers willing to pay for it. The subculture associated with street brands is attracting a large number of core consumers to buy or even collect at all costs, and street fashion products account for the vast majority of the personal expenses of these highly enthusiastic core consumers.

According to consumption power and brand penetration, consumers are divided into core consumers, middle consumers, and mass consumers. Core street fashion consumers have been exposed to the street fashion and streetwear culture since junior high school and high school. They love sports and have broad interests.

They have a good understanding of the stories behind the street fashion brands and the styles of their leaders, and their purchase frequency will be higher.

The top 10% consumers comprise 48% of the market share, and the top 20% only accounts for 18%, making the market concentration obvious. (Crystal, Ladymax) According to a Street Fashion Product Trends and User Analysis Report with Nielsen, core consumers will pay more attention to the history, design philosophy and cultural attitude of the street brands. Already an indispensable part of life for these consumers is chasing the brand. Even high-end streetwear accounts for 60% to 80% of total personal expenditure. These consumers collect street fashion products and enjoy going on the journey their search takes them; the popular street fashion becomes essential to their personality. They are keen to share their goods in their circle of friends on social media, and they love to mix and match their Supreme items with luxury goods to show their fashion style. (Crystal, Ladymax)

Middle-end street fashion product consumers are obviously influenced by celebrity hipsters, but they don’t pay attention to the story behind the brand and instead care about popularity and recognition. The public street fashion product consumers only started to contact the street fashion brands in recent years.

They are only aware of the well-known street fashion products and are not very interested in the street fashion culture. (Crystal, Ladymax)

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4.02 Demographic Supreme's target demographic are men aged 16-35, namely millennials and gen-z. Millennials are more educated and globally aware. According to the Boston consulting group, 25 percent of Chinese millennials have a bachelor's degree or higher. Forty percent of shopping is done online. (Fbicgroup, 1) The most loyal fans tend to be the brand's young fans (mainly concentrated in 20 to 28 years of age). The target customers are likely to be engaged in creative work such as graphic design or marketing. Another part of the target customers may be Chinese students or freelancers. In terms of salary/family income, due to the price of clothes, the disposable income of the target customer is expected to be around $1,000$5,000 per month, unmarried. Target customers are concentrated in China's first-tier cities such as Shanghai.

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4.03 Behavior In terms of the behavior of the highest target customers, the most prominent feature is that they are habitual and brand loyal customers. They are typical trendsetters, with a snobbery among Supreme fans. The reason is that Chinese consumers are more likely to compare who has the most items and who can get the latest drop collection goods the fastest than the brand history.

Since Supreme's target customers are millennials and gen-z, the lifestyle habits, shopping habits and social media choices of this group will be analyzed from the following aspects.

-Life habits: •Pay more attention to healthy lifestyle.

They go out to eat with friends, go to the gym 3 times a week, visit the spa twice a month, and travel abroad 1-2 times a year.

The improvement of health, food safety and quality awareness has also given rise to the demand of Gen-Z and millennials for health maintenance and healthy diet. •Social media: 80 percent of China's Internet population regularly visits social networking sites and online communities, mostly once a day. Millennials in China are the most important users of social media.

According to a recent report by the Chinese academy of social sciences and the Tencent research institute, post-2000 social media penetration is 99 percent. Seventy-three percent of those born in the 1980s and 1990s log on to social media apps such as WeChat and QQ every 15 minutes. (Fbicgroup, 9) •From live streaming to video watching and sharing, live streaming on social networks is very popular among Chinese millennials.

According to Iresearch, China's video live streaming market is expected to reach 87.3 billion yuan by 2019. (Fbicgroup, 9)

-Shopping habits: • Travel spending is up: millennials are becoming the majority of Chinese outbound travelers. According to Goldman Sachs’ estimates, millennials now account for 67 percent of all outbound Chinese tourists, the most powerful consumer group. According to a study commissioned by the Singapore tourism board, the average Chinese millennial spends more than twice as much on each trip as the average millennial in Asia. (Fbicgroup, 5) • omnichannel shoppers: Chinese consumers are no longer going to the brick-and-mortar stores of a single brand to buy clothes, especially the target consumers in first-tier cities. They will buy the latest clothes through daigou, an overseas online shopping app or online platforms. Even social media has become the new shopping platform, with WeChat overtaking t-mall as the most popular shopping platform, with many millennials and Gen Z choosing to buy products on WeChat. Of course, some new apps, such as “Poizon” and “YOHOOD”, have also gradually become the preferred shopping method for target consumers, because fans can make sure that the product is genuine when they buy it (such apps all provide the function of verifying fake products).

celebrities and the rich second generation”.

Therefore, the target customers have a wide range of interests, and music is one of the keys. Typical Supreme clients mainly listen to urban music and hip-hop music, and major artists include domestic hip-hop singers Kris Wu, Team Wang and Higher Brothers, and foreign singers Drake and Kanye West. Therefore, Supreme Shanghai stores often play the music of these artists in their stores to build a closer relationship with their fans.

4.04 Psychologic From the psychological graphics of Supreme’s target customers, it is clear that many Supreme fans have a unique lifestyle.

Its core customers are “skateboarding brats, graffiti artists, fashionistas and rappers or

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4.05 Target Consumer Profile Xiang Chen, 17 Lives in Shanghai •Currently in his senior year of high school •Financial support from parents •Spends his free time skating with friends and making trips to Hong Kong to shop •Enjoys listening to hip-hop and rap music, a fan of Team Wang, Kris Wu, and Eminem •Loves to read street fashion official accounts like Pozion or Yohood •Closet consists of basics from domestic street brands like Randomevent, Madness, and some goods from Supreme, BAPE and HUF Sneakerhead •Few pieces from BAPE and Supreme •Always excited about the next drop •Wants to attend foreign college in Southern California so he can be around the skate culture more.

Luke Zhang, 33, married •Living in Hong Kong, working as an analyst in the Hong Kong stock exchange, •Financial analyst 's annual income: $250,000.

•Proficient in English, French and Chinese.

•Growing up in Hong Kong, he spent his leisure time reading quarterly magazines, collecting second-hand cameras, and taking photos with his passion for photography •Likes to travel around Europe and southern France •Listens to AŞAP Mobs, Drake, The Weeknd and Jay Choo.

•Describes himself as a street fashion enthusiast, concerned about the quality and craftsmanship of clothes and design details. Most of the clothes in his wardrobe are pieces from Acne, Visvim, Off-White, Theory.

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Nikki Li, 25 years old, Single

Living in Hangzhou, fashion editor at Bazaar in Shanghai

Annual income: $150,000

She graduated f rom Shanghai Donghua University to study fashion design.

After graduation, she entered the magazine industry as a fashion blogger. Loves to collect vintage and delicate objects.

Likes to listen to R&B and hip-hop songs, is Kris Wu’s big fan.

Likes to mix and match styles such as Chanel with streetwear, half of the wardrobe is a luxury, and a very popular limited-edition Supreme cooperation

Joins a party or works out after work She can balance between work, family and social life.

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V. Primary Research 71

5.01 Research Objectives

- Research consumer statistics to identify factors that influence consumer spending in streetwear - Research the impact of consumer income levels on street apparel consumption - Research the impact of Supreme's consumers on shopping, design, fabrics, popularity, service, niche, price and other factors - Determine if consumers understand the Supreme brand and are willing to buy Supreme products - Determine Chinese consumers' loyalty to Supreme, attitudes toward fakes and whether consumers support Supreme entering the Chinese market.

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5.02 Research Design and methods The purpose of this primary research is to increase the visibility and competitiveness of Shanghai Supreme boutiques. The project's main research methods include interviews with Supreme boutique owners and employees and one-on-one interviews with domestic streetwear enthusiasts and a domestic street brand manager. Online surveys will provide insight into the market by collecting data from domestic and foreign streetwear brand shoppers. The survey involves 100 respondents from China, which gave the researcher enough quantitative data. Different technology platforms were used, such as Tencent Survey. [the goal was to receive 100 responses, and I received 115]

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I also visited Los Angeles and New York Supreme stores to experience high-end streetwear brand boutiques. I observed architecture, interior design, hardware, software and customer satisfaction. At the same time, I also visited a rival store (Off-White) in China. In addition, I contacted a secondary market seller (in other words, a person who buys Supreme products in America and resells them in China) for an interview to get more information about the field.

5.03 Research Analysis.

1. Competitive Stores Visits/Interviews

-Vicky, Zheng, Shanghai Off-White flagship store sale Objectiveďźš Document the competitor's store design and product plan through observation Limitation: As Sale does not represent the views of all consumers / they may have a high level of loyalty to certain brands, so the views are not very objective /

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Limitation: As Sale does not represent the views of all consumers / they may have a high level of loyalty to certain brands, so the views are not very objective Opinion: Vicky said that their main customer base is concentrated in the rich second generation and international student groups; because the brand is positioned as a luxury, the price is much higher than other street brands. It is not the consumption of ordinary consumers who just come here and don’t buy any single items, so OffWhite has certain threshold for most street lovers. In addition, the store provides an “order” service, and when the size the consumer needs is not in stock, they will provide the order service. According to the sales data in the store, for example, when the sales volume of a certain product is extremely high, the goods will be replenished to the warehouse within a few working days. In addition, some clerks will have a close relationship with some “resellers” because the presence of reseller can guarantee the performance of the salesperson and also ensure that reseller gets the limited-edition goods in advance. In other words, this relationship is a win-win for both seller and reseller.

Observation: In addition to the men’s and women’s clothing area, there is a discount zone. The number of retailers in the store is 8 on weekdays and will increase to 10 on weekends or holidays. The store size is about 300 square meters. The product display is open, the decoration style is a minimalist industrial style, and the in-store music plays the current hip-hop songs or R&B songs of the Billboard chart. There are two large fitting rooms.

Analysis: According to the interview, it can be seen that domestic street brand consumers are more polarized. Off-White’s target consumer groups in Shanghai, China, are mainly high-income people and the rich second generation. In addition, from the in-store “order” service and quick replenishment, it can be seen that Off-White is a commercialized street brand. In other words, excessive commercialization may lead to negative effects such as reduced brand appeal. Therefore, attention should be paid to this in Supreme’s strategy. In addition, the relationship between salecleck and reseller is not conducive to the rights of consumers, which is also a problem for Supreme to consider—how to control the negative influence of reseller and the loyalty of the employees. From the observation, Off-White set up discount areas in the store, which should not be considered by Supreme, because the weekly inventory of Supreme products is very limited.

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The Reseller in China

FMU is one of the few streetwear stores in Shanghai dedicated to the Supreme brand.

The shopkeeper is named Wilson Wong.

Objective: Understand the buying habits and concerns of enthusiasts (target consumers) for Supreme; learn what attitudes Supreme fans hold towards Supreme entering the Chinese market/

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Limitations: As both consumers and sellers, they are not objective about Supreme’s presence in China, because their interests are involved.

Opinion: Wang says the store's most prized items include t-shirts with the box logo, such as a cross with Louis Vuitton, and a white box logo T-shirt for Supreme’s 20th anniversary. The t-shirts, sealed in frames, cost more than 10,000 yuan ($1,460).

This is also a big strategy of Supreme, because after 2014, they did not produce t-shirts with the box logo, but only released some logo t-shirts co-branded with other brands. Wang says the store's customers are as young as 10. Before we spoke, a father and teenage son left the store with a $5,000 hoodie. “Children today are familiar with pop culture from an early age. Many parents don't mind splurging on luxuries to reward their hard-working children.” Since Supreme has neither physical stores nor online stores in China, consumers will turn to buyer stores or secondary market platforms. The box logo has appeared on Chinese ICONS such as rapper Kris Wu and actress Yang mi. Each of them is a fashion influencer in China and has their own large millennial following who are eager to emulate their style of dressing. From the point of view of the reseller, they only need to purchase the same type of product the star buys or stock up on a specific number of the limited quantities of merchandise, which will definitely up the bids on the price.

When talking about whether to support Supreme's presence in China, Wang said that as a reseller, he remained neutral, because customers could go directly to Supreme's official brick-and-mortar stores to buy at the original price. They may lose customers, but he says he doesn't feel much pressure because, as a veteran reseller, he understands how hard it is to buy the items he wants in stores, and Chinese customers will still go to his stores. And for him, he can easily ask scalpers from China to buy in the queue.

Analysis: What we can know from the interview is that the age span of domestic consumers is large, and their acceptance of pop culture and street culture is high. The premium level of box logo t-shirts shows the Chinese consumers' desire for Supreme. In addition, the star effect not only increases the brand awareness of Supreme as a “free” sponsor, but also stimulates the consumption power of Chinese fan culture and street service. Regarding Supreme's entry into the Shanghai market, they hold a neutral attitude as stakeholders, because their potential market may be divided up. However, as a reseller, he foresaw that “Supreme Shanghai would be very hot.”

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Domestic streetwear brand manager

Domestic street lover and domestic streetwear brand manager: Born after 1995, Jiahai Luo is representative of the young designers of today and manages “Tri Segga,� a streetwear fashion brand.

Objective: To understand the thoughts of local street fans on the most popular brands at present/to understand the attitudes of fans towards Supreme entering the Chinese market/to understand the buying habits of fans (target consumers)

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Limitations: Luo is very familiar with the street market and has a high acceptance of fashion, which does not represent the views of all consumers. They may have high loyalty to some brands, so his views will not be very objective.

Opinion: Because Luo runs his own street brand (mainly in the form of an online store), he can see the sales data on the e-commerce platform of his store every day. Luo says that customers plan their purchases in an organized planned way. For example, when a brand launches a new series, there will be a holiday promotion. Interestingly, Luo says that because their designs are non-sexual, half of their customers are women. In addition, they have enough street style (they will upload their photos to the store platform as a comment on Luo's products). Luo says that more and more Chinese consumers, especially millennials and gen-z, choose street wear. In addition, Luo runs the WeChat official account of their brand and often USES this way to warm up their new collections and the latest trends. In this way, he says, they can boost sales and get closer to customers.

When asked whether he supported Supreme's entry into China, he said, “of course I do. Although it may bring some competitive pressure, it is definitely a healthy competition. We can learn and grow from the street brand market in China. And in some ways, it is certain that Supreme has recognized Chinese street culture. . . that's something to be proud of, because Supreme is the doyenne of streetwear.�

Analysis: An e-commerce platform is very important for streetwear brands. It not only provides data for sellers to analyze, but also helps street brands seize the market more quickly. As we know, our main consumers are millennials and gen-z, and they prefer shopping online. Among them, it can be seen from the order data that Shanghai, the city with the highest sales volume, is a mature market that cannot be underestimated. The main market of Chinese streetwear consumers are no longer just men, and the potential of the female market is huge. In addition, social media is the main choice for brand promotion. People supports Supreme's entry into the Chinese market. Good competition can promote the development of Chinese streetwear industry.

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Supreme’s Target Customers

Supreme’s Target Customers Xiaoming Huang, a returning student f rom abroad who now lives in Shanghai and has bought Supreme for 6 years.

Objective: To understand the domestic streetwear market/to understand the preferences of domestic consumers/to deeply understand the most attractive features of Supreme for consumers /to understand the vision Supreme hopes to achieve/ Huang is male and cannot know the potential of the street market for Chinese women.

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Limitations: As respondents come from wealthy families, there is no pressure to consume high-priced items.

But it does not represent all millennials. As Supreme's loyal fans, it does not fully represent all potential customers in China Opinion: Huang said, “We see each of the hottest declines as a validation . . . Now there are so many consumers who want Supreme products, but there is no official physical store of Supreme in China.

I have been looking for and sticking to the opportunity to buy products from Supreme's online store, [using a] buying bot to regularly snap them up and then sending them directly to China overseas. Nowhere is this more evident than in China.” In China, loyal fans are willing to pay double or even triple the normal price for authentic Supreme merchandise or pay a premium just to get the latest collection on before everyone else.

Huang once traveled to Japan, where 5 to 15 new products would be released at the same time on a specific day. He said that even if you find a good position in the queue, there is no guarantee that you have a serial number because they're going to invite you to the new product launch based on whether or not you've received an official email, which they send out to some of their loyal customers. This will waste a lot of time and energy, rather than choosing to buy from the secondary market or reseller shops.

When it comes to his favorite item. Huang said that what he wants most is an authentic box logo item, which is only sold in December or co-branded every year. He added, “Supreme has two seasons a year, and the first season runs from February to June 19 or 20 weeks. Season 2 runs from August to December. So, in July and January there were no new releases at all, which captured consumers' curiosity and expectations. This also leads to our planned purchases, where they often make multiple purchases in one transaction. Part of the reason is that Supreme created seasonal collections, but new collections come out every week.”

Huang said that from the very beginning, he liked to wear Supreme because of fashion trends, but later he was deeply influenced by Supreme culture, and even people around him were influenced.

When it comes to fakes and the fake “Supreme Italy” in Shanghai, Huang said, “I believe that the younger generation has a very high sense of brand loyalty and intellectual property rights, and we would rather not buy the authentic products than the fake products for small profits. In addition, if Supreme can officially open a physical store in Shanghai, it will be a positive blow to fake products.” Huang said he often uses “Poison” and “Yohood” software and WeChat official account to follow up on the latest fashion updates, and also logs on to “Supremecommunity” to view the latest drop items.

Analysis: Through interviews with two Supreme fans, we can clearly see that they tend to buy products from the same brands as Supreme, Palace, North Face, Comme DE Garcon, Stussy and Stone Island.

They are typical trendsetters, with a snobbery among superfans, especially when it comes to learning about the brand's history. They are picky people with fashion taste and dress very fashionably.

Also, with respect to queues, this is why Supreme launched its online registration this year - creating a virtual Monday queue before Thursday's queue - to ensure the privilege of queuing in person for shopping. It is a normal phenomenon for consumers to use a bot to snap up new products, but it often makes some consumers angry, because they may not be able to buy new products even if they buy bot, while some resellers can get them. Some consumers think that this is what Supreme needs to improve.

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Online Surveys

Through the one-week tencent questionnaire survey system, questionnaires were distributed to customers aged between 25 and 55. 115 copies were recovered, 200 views were viewed, the recovery rate was 59%, and the average completion time was 2 minutes and 22 seconds. 99% of respondents (114 respondents) f illed out the questionnaire through WeChat.

Since streetwear is a growing industry in China, it is important to understand the factors that affect customers’ streetwear purchases and their attitudes. The questionnaire will help me explore the broader customer prof ile and ensure that loyal consumers can cope with the geographical expansion of the brand and bring new customers to the new era.

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Gender: The results of 115 questionnaires showed that people aged 23 to 28 accounted for the largest proportion, accounting for more than one third of the total number, and people aged 18 to 23 accounted for a large proportion. The data collected are also consistent with the age groups of the customer groups I initially proposed for Supreme. They represent Supreme's most powerful consumption power.

Age: In the questionnaire, the proportion of women is higher than that of men, which is also in line with the conclusion of Luo's interview. Chinese female consumers are a large consumer group in the streetwear market.

Geographically Geographically, the first-tier cities, led by Shanghai, are the main consumers, and they have sufficient economic foundation. The proportion of third-tier cities is relatively high, and the third-tier cities are the second-tier cities. It can be seen that third-tier cities are also a huge potential market.

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Education level From the perspective of education level, the majority of graduates are undergraduates. It can be concluded that college students have a high acceptance of street fashion, which is also in line with the high education rate of millennials, the target customer group in secondary research.

Do you know street brands?

It can be seen from the survey results that 77.4% of respondents know street brands, which also proves that street fashion has become the mainstream of China's clothing consumption market.

Supreme's future development in China is guaranteed.

What is the highest price range of street brands that you can accept?

As a result, more than a third of consumers are willing to pay $75 to $150 per item, and 20% of consumers are willing to pay more for a higher price range. It can be seen that Chinese consumers have a high acceptance of the pricing range of street brand products. Whether it is below $75 or $225, a considerable number of people will choose to buy them. As for Supreme, its products are not priced as high as those sold in the secondary market. On the contrary, the original intention of founder was that customers who wanted to buy in the store could get the items they wanted. Therefore, Supreme's diversity in price positioning ($30-$700)is in line with Chinese consumers.

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What is your monthly income or living expenses from family (student)?

Your monthly spending on apparel is?

Most respondent’s income ranges from $1,000 to $1,800, with another $300 to $900 accounting for a certain proportion. This income is higher for young consumer groups, in addition, according to the amount of consumption of clothing each month the results of the survey, the target consumer spending $150 to $300 a month, main cross analysis of these two sets of data can see an interesting results: even the low income ($300 - $900) of consumer groups, most of the people still spending ($150 $300) this almost occupied most of their income.

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What sources of information do you have about street brands?

In order to better understand young people's understanding of the street brand approach to diversity, the survey was conducted in a multiple-choice format. It is obvious that the younger generation is greatly influenced by social media (88.7% of the total). In particular, three social platforms, including its WeChat official account, Little Redbook and microblog, have become the main choices of target consumers. Network influence also nots allow to ignore (occupy half of the total), as the secondary research target consumer behavior analysis, young generation is addicted to webcast and vlog, many fashion bloggers will integrate their daily life and introduction of some fashion brands into the short video, which makes it easier and more vivid for the audience to understand the brand culture. This will be an important message for Supreme, because Supreme can skillfully use social media and online publicity to expand its influence in the future.

How often or by what time do you buy such clothes?

As a result, the proportion of “unfixed, ready to buy or launch new products” accounts for 68.7%. In addition, festivals and seasonal promotions in China are also one of the reasons to promote consumers to buy clothes. As Luo and Huang said in the interview, their consumers always buy new products when they launch new collection, and the purchase quantity is high. That's exactly what Supreme's Thursday drop does. Supreme created seasonal collections but launched new ones every week. “Dealeon noted that traffic to the brand's website is likely to soar by 1,6800% on the first trading day of the new quarter, illustrating how consumers plan their purchases” (Winter,12-13).

In addition, holiday elements are what Supreme needs to consider when entering China. How to maintain the exclusive image of the brand and keep the attention of Chinese consumers needs to be considered. For example, it is a good choice to launch clothes with Oriental elements during the festival.

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What factors do you pay most attention to when choosing to buy streetwear?

In order to better understand the influence of clothing elements on target consumers, Supreme can better understand the needs of target consumers and promote brand development. This question is set as a multiple-choice question. According to the results, style design and fabric quality and price are the elements that consumers care most about. In addition, personality niche and fashion trends and color matching also need to be considered. As mentioned in the analysis of Supreme brand weakness in secondary research, Supreme needs to strengthen the development of design. At present, apparel design is still relatively simple, but it is undeniable that Supreme has done the utmost in product diversity. All kinds of daily necessities, such as toothbrushes, vacuum cups and even bricks, stimulate consumers' curiosity.

What Channels Do You Usually Buy Street-Brand Clothes?

In order to better understand the diversity of consumers' shopping habits, this question is set as a multiple-choice question. According to the results, most consumers will choose a network platform such as Taobao, Yohood, Poizon and other well-known e-commerce platforms. Nearly half of the people choose the brand's official website and brick-and-mortar stores. This is the same as the shopping habit analysis of target consumers in secondary research. When online consumption is more, the reason why half of the people choose physical stores is to avoid the risk of online shopping -- buying fake goods. For Supreme, both the brand's official website and physical stores can be provided to customers.

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Which of the following street clothing brands do you prefer to buy?

In order to deeply understand the target group's love for street brands, we set multiple choice questions. The results were positive, with Supreme unquestionably the brand of choice, with more than half of the people choosing Supreme. In addition, Champion, which is mainly based on basic style with low price positioning, and Off-white, which is luxury positioning, are also popular among the audience. This is an important message for Supreme, because both Champion and Off-white have occupied part of the market share in the Chinese street brand market, and Supreme, which has not officially entered the Chinese market, should seize the opportunity to enter the Chinese market as soon as possible to shorten the distance between consumers.

Why do you choose street brands?

In order to have a deeper understanding of customers' consumption psychology, questionnaire found that more than one third of consumers buy street brands because their designs interpret their own fashion style.

In addition, some consumers buy streetwear brands in order to pursue niche and show individuality. For Supreme, the weekly items will never be resold. In other words, all items are

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What do you think about fake goods, such as the recent establishment of two fakeness physical stores “Supreme Italy” in Shanghai?

In order to understand the attitudes of target consumer groups towards fake goods, we can see that more than half of them choose to resolutely resist fake goods, and 41.7% of them remain neutral but will not buy them. This is good news for Supreme. High loyalty consumers are important for the maintenance of brand image.

Do you expect Supreme to open an official physical store in Shanghai, China?

Judging from the results, nearly 60% of consumers remain neutral, and 38.3% of consumers very much want Supreme to set up shop in China. As Wang mentioned in the interview, some stakeholders are neutral, because Supreme's opening of stores in China may affect the interests of reseller. In addition, in the questionnaire “What Channels Do You Usually Buy street-brand Clothes?” 29.6% of consumers also choose daigou and 16.5% choose buyer stores. Even if Supreme opens in Shanghai, it still cannot avoid the fate of speculation from scalpers or resellers. So, this segment of consumers remains neutral because they still can't get what they want in a physical store. This is what Supreme needs to consider, although the inflated prices in the secondary market make consumers crazy about Supreme's products and enhance its influence. However, the negative impact is that some customers lose patience with Supreme.

However, the support of 38.3 percent of consumers is also very important. Because it also proves the loyalty and popularity of Supreme consumers in China. This is positive for Supreme's future development in China.

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VI. VI. Research Key Findings 90

1.“Supreme is a New York brand, but now it is also a global brand.”– James Jebbia, Founder •Investment from Carlyle Group suggests Supreme’s potential to expand.

•Streetwear fashion is a growing trend. High-end street fashion is driving global retail growth, with a business value of 263bn, according to Bain & Company.

•China shift to a consumption-driven economy, the country is the driving force behind global retail and the expansion of appeal and fashion.

2. Street fashion gaining popularity in China and this trend is steadily increasing •Hip-hop culture goes mainstream in China, Government support of skateboarding.

•Growing popularity of Supreme among Chinese customers.

•Competitor brands are already operating in China and domestic streetwear brands is developing rapidly.

•400 million Millennials and Gen-Z in China promise street fashion consumption performance.

•WeChat official account, Little Redbook and Weibo, three social platforms, have become the main choices of target consumers.

•Style design and fabric quality and price are the elements that consumers care most about •Geographically, the first-tier cities led by Shanghai are the major consumers •The potential of the Supreme's Chinese women's market is huge.

3.Brand loyalty and intellectual property awareness are building among China’s millennials •Counterfeit in China are under control because of the government’s strict policies •The adverse effect of reseller‘s higher prices has disbanded some of loyalty customers

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Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis Analysis

Key Findings Key Findings Key Findings Key Findings Key Findings Key Findings Key Findings Key Findings Key Findings Key Findings Key Findings Key Findings 92

International expansion is a major aspect in growth strategies of various fashion and apparel businesses.

Extending operations globally offers great opportunities for businesses to diversify, grow, and develop rapidly. The summary and key f indings of the secondary research and primary research underscores benef it Supreme could reap by expanding to Shanghai, China. In view of the study f indings, this analysis focuses on benef its as revealed in the chapter under the broad categories of new markets, diversif ication, access to talent, competitive advantage, online business models, strength of the Chinese economy, and foreign investment opportunities.

Access to New Markets

Key findings in the secondary research point to China’s population of more than 1.4 billion people as a major benefit for Supreme in expanding to Shanghai. As cited in secondary research, Euromonitor revealed that China will become the largest fashion and apparel market in the world in 2019. International expansion is a major aspect in growth strategies of various fashion and apparel businesses. Extending operations globally offers great opportunities for businesses to diversify, grow, and develop rapidly. The secondary research discusses that China will surpass the United States in 2019. Sales from the industry could exceed $121 billion in 2019, representing a growth of 25%. The US would hit $120 billion, representing a growth of 3%. More importantly, as noted in the research findings, the large population in Shanghai and all of China provides the most important Chinese market feature. In that regard, the expansion to Shanghai is beneficial to Supreme, as it enables the company to conquer new market territory and have a wider reach, thereby increasing sales.

Diversification

Expansion to Shanghai, China presents opportunities for Supreme to diversify its asset base and product offerings, which is essential in covering the business’ operations from unforeseen events. In view of a dynamic and rapidly changing global market for fashion and apparel, the expansion can enable Supreme to offset potential negative growth in one region by attaining growth in other territories. Moreover, the company can use the expansion to introduce new products to the unique Chinese market. This is crucial in ensuring a positive revenue flow. As discussed in the findings, Supreme can diversify under three main categories. First is the menswear category that could see the business offering more alternatives for the growing market segment.

Second, under the street fashion category, Supreme can explore the underutilized segment by offering more interesting products. Third, other than Shanghai, China has many other first and second tier cities that offer opportunities for diversification.

Competitive Advantage

Expansion of Supreme into Shanghai, China would give the company a competitive advantage over global market competitors. As revealed in the findings, other industry brands are already operating in China.

Therefore, moving into China could enable the company to increase brand awareness and stay ahead of competition. In view of the study findings, this analysis focuses on benefits as revealed in the secondary research under the broad categories of new markets, diversification, access to talent, competitive advantage, online business models, strength of the Chinese economy, and foreign investment opportunities. Moreover, under the technological aspect, the findings paint Shanghai, and China as a whole, as a technology savvy market.

Consequently, the expansion would enable Supreme to access new technologies and other aspects of the industry ecosystems to enhance business operations. Additionally, Supreme would benefit from an improved business image, as operation in China could support brand recognition. The recognition is crucial for Supreme’s future business undertakings, such as further expansion, marketing campaigns, and contract negotiation among other scenarios.

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•

Supreme would reap the benefits of the heavy penetration and usage of e-commerce, mobile and other online applications among the target market. As discussed in the article under technological factors, social media, online forums, online shopping, and websites (Beauloye 1) offer exciting opportunities for Supreme, as a large portion of the market relies on these platforms for information and shopping.

• The research summary and findings reveal many benefits for Supreme’s geographic expansion to Shanghai, China, as the company would attain success in in the country by carving exclusive niches on online platforms to leverage the clients’ loyalty and love for luxury items.

Foreign Investment Opportunities

Expansion to Shanghai, China offers Supreme additional opportunities for investment in the global fashion and apparel market. As discussed in the findings under the PEST analysis, China moved to improve the investment environment for multinational companies, which offers initiative for companies like Supreme to take. The political and economic climate in China supports the development of new resources in the new market and establishment of important connections to enhance Supreme’s competitive edge and bottom line (Marketingtochina.com). China offers Supreme lucrative opportunities for investment, which may be limited in the US because of large market penetration and high competition.

Being a luxury brand, Supreme would benefit from the Chinese government’s promotion of buying luxury products for companies operating with the country. The company could also invest in the rapidly growing ecommerce, which would enable the firm to tap into the online shopping-oriented population.

Target Customers The target customers for Supreme are loyal with millennials promising to drive growth in the luxury fashion and apparel industry (Hawgood 1). The country’s GDP growth coupled with high spending power promise long-term market performance, which would benefit the company. A view of various aspects, such as PEST analysis of the country, cultural insights, market overview, analysis of competition, target consumers’ identifications, and marketing strategy point to a promising future of Supreme in China. Other than the political, economic, social and technological factors, market dynamics and consumer characteristics promise to benefit Supreme.

Overall, according to the summary and findings of the research articles, Supreme’s geographic expansion to Shanghai, China, underscores benefits Supreme could reap. The company’s target customer is crucial in the company’s success as they would act as brand ambassadors focusing on the strength of Supreme products.

Impression of New Chinese Cultural Mainstream Expansion to China presents Supreme access to new and unique cultural mainstream that offers new opportunities. In addition, the country’s hip pop culture and skateboard culture offer exciting opportunities for the company (Hazan 1). Overall, China offers Supreme lucrative opportunities for investment, which may be limited in the US because of large market penetration and high competition. In that regard, the promise of foreign investment opportunities offers many benefits for the good of Supreme’s overall strategy and bottom line.

New Online Models Supreme would reap the benefits of the heavy penetration and usage of e-commerce, mobile and other online applications among the target market. As discussed in the secondary research under technological factors, social media, online forums, online shopping, and websites (Beauloye 1) offer exciting opportunities for Supreme, as a large portion of the market relies on these platforms for information and shopping. The research summary and findings reveal many benefits for Supreme’s geographic expansion to Shanghai, China. Supreme could attain success in China by carving exclusive niches on online platforms to leverage the clients’ loyalty and love for luxury items. Considering substantial presence of competitors, the company would use online networks to establish the brand. In that regard, besides having a strong presence online, Supreme should partner with major stores across the country to facilitate shopping and purchase of its products. Overall, the analysis brought out key benefits including new market penetration, market and product diversification, access to creative talent pools, competitive advantage, online business platforms, strength of the Chinese economy, and foreign investment opportunities.

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Conclusion The research summary and f indings reveal many benef its for Supreme’s geographic expansion to Shanghai, China. A view of various aspects, such as PEST analysis of the country, cultural insights, market overview, analysis of competition, target consumers’ identif ications, and marketing strategy point to a promising future of Supreme in China. The analysis brought out key benef its including new market penetration, market and product diversif ication, access to creative talent pools, competitive advantage, online business platforms, strength of the Chinese economy, and foreign investment opportunities.

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VII. Supreme Boutique Overview

7.01 Business Partnership Supreme has no dealers and all products can only be ordered through its off icial website or queued in its physical stores. They don’t license Supreme. Supreme directly manages all its stores. According to China’s ministry of commerce, the number of stores set up by foreign retailers is expanding rapidly and the trend of sole proprietorship is obvious.

The number of company-owned models of foreign retail businesses is increasing. The trend is clear. Therefore, Supreme will enter the Chinese market as a foreign enterprise, allowing Supreme to operate without the support of local or domestic partners. Of course, Supreme uses third-party companies to f ind corresponding technical teams, such as security companies that build social media platforms, store decoration teams, store security systems, etc.

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VIII. Marketing

Strategy

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8.01 Strategy Objectives

Supreme's 4p strategy does not want to deviate from the strong ideology of Supreme's brand essence, which attaches great importance to authenticity and street culture. The approach to consumer planning will keep this core value in mind when marketing to consumers. All strategies combine with the brand image of Supreme, aiming to help Supreme find suitable community locations as well as with the media favored by Chinese consumers to conduct promotion and intensify the relationship with loyal customers in an attempt to control the resale culture of street clothing brands. The strategy focuses on building a distinctive and self-aware brand in the mind of the target consumer.

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8.02 Price Strategy Supreme will adjust the selling price of its products in China based on this pricing strategy by referring to the sales price of its competitor Off-White in China, which is generally 6% higher than that in the United States. (price comparison between off-white's official website in the United States and China below, the exchange rate of US dollar to RMB =1: 6.75).In addition, Supreme has always been attracts the target audience through the reasonable price position ($32-$742, For details, please refer to the chapter of Supreme Current Market Strategy in compamy overview above) and the high quality which let consumers are more willing to consider buying products.

T-shirts/Shirts ($40-$127) Top/sweaters ($106-$212)) Jumpers and hoodies ($127-$159) Outerwear/leather jacket ($233-$742) Trousers and jeans ($85-$160 Hats ($50-$95) Skateboard decks ($53) Accessories ($32-$233) Shoes (The shoes sold in the store are generally of other brands or co-branded shoes. It’s priced around $200) Stickers (free with purchase) Also, because of the scarcity model of Supreme, the inventory of each product is limited, so the supply is less than the demand, and consumers are more willing to buy. Therefore, Supreme Shanghai store will continue the original price strategy.

Price Strategy Price Strategy Price Strategy Price Strategy

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8.02 Place Strategy

- Location identification: • Why Shanghai Shanghai is a municipality directly under the central government of the People's Republic of China and one of the most developed cities in China. It is one of the centers of international finance, trade and shipping. The main industries include commerce, finance, information, manufacturing, etc.

As one of the largest cities in the world, Shanghai’s population by 2016 was 2419.7 million, of which 59 percent, or 14.39 million, were registered residents. With a 2017 GDP of $453.701 billion, China is also the world's major economic zone. Per capita GDP is $18,756. Shanghai has more than 6 million wealthy people. (“Shanghai Municipal Statistics Bureau”) In addition, the survey found that, geographically, the first - tier cities led by Shanghai are the major streetwear fashion cities. In other words, Shanghai has the largest number of target consumers and enough purchasing power, making it one of the most influential cities in China and the world market and the most effective choice for Supreme to expand its market influence in China.

Secondly, in the secondary survey, it was found that Chinese consumers have begun to prefer domestic travel shopping, instead of going abroad to buy brand products. Through investigation, in August 2018, Shanghai received 715,900 inbound tourists, up 0.07 percent year-on-year, according to the Shanghai tourism administration. In August 2018, there were 604,555 overnight visitors to Shanghai, including 491,108 foreign tourists, 39,770 from Hong Kong, 2,437 from Macao and 71,040 from Taiwan. From January to August 2018, Shanghai received 5.5 million inbound tourists, up 1.59 percent year-on-year, according to the data. These data prove that Shanghai has a very high number of tourists and this trend is rising steadily. Supreme's establishment in Shanghai benefits not only local consumers in Shanghai, but also Chinese consumers in other regions and even tourists from other countries.

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Changle Road.

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Why This Street: Changle Road is one of the trendy areas of Shanghai and is known as a Harajuku (or trendy area) in Shanghai. It is also a trendy gathering place offering entertainment, catering and shopping and is frequented by young people. Changle Road has kept the maple trees and small buildings representative of old Shanghai and joined with mainly shop boutiques and buyer's retail formats to create a trendy new area; according to the real estate consultancy firm meaning of statistics, at present 60% of shops in the neighborhood are restaurants and bars, 40% are retail stores, including fashion, design, and creative class stores. (Jiemian News, 2016) Magazines showcase the fashionable things stars like Chen Guanxi and Fujihara are wearing, and they can be seen walking and shopping in Changle Road. NPC, JUICE, SSUR, MU821 and other fashion stores are all concentrated in this area. (Cheung, 2018) 102

Changle Road is an important east-west street with a total length of 3327 meters in the Huangpu, Xuhui and Jing 'an districts of Shanghai, China. Changle Road is mainly filled with traditional Shanghai elements such as garden houses and new hutong. At this intersection, Changle Road has a steady flow of people. In addition, the average income of Huangpu district, Xuhui district and Jing 'an district is 159,800 yuan ($23800), which has enough spending power for Supreme merchandise. (“Chamiji”) In addition, every Thursday (“Drop day”) there will be hundreds of people waiting in line, and even more people when the new and more exciting products are put on the shelves. The narrow street would not bear the load at all. And both sides of the street are residential buildings and other retail outlets which may cause disturbance to these individuals or businesses. So, the security company that runs Supreme’s stores will control the flow of people to Supreme on Thursdays. Not only will it control the flow of people, but it will also greatly reduce the potential safety hazards (serious queue-jumping) and enable consumers to better arrange their schedule.

• Place Boutique Near Competition To “Edge Out” the Fakeness and Attract Loyal Fans The location of Changle road, China’s only and first official brick-and-mortar store, is also a positive response to fakes. Huaihai Middle Road, the main street near Changle road, is the most heavily trafficked area in Shanghai. However, the fake Supreme Italy mentioned in the above chapter is opening a physical store in Huaihai Middle Road. The aim is self-evident: fakeness creates the illusion of authenticity on the busiest streets. However, counterfeit stores fail to understand that the most important values of Supreme brand culture are skateboard culture and street culture. The commercialization of Huaihai Middle Road is totally different from the brand image. The combination of traditional Chinese culture and modern street culture and fashion on Changle Road is in line with Supreme’s target consumers’ pursuit of minority and individuality. It also fits the brand culture.

• Low Rent Competitiveness Ben Chueng, lifestyle and culture editor of the fashion media HypeBeast, said that the rent of the 10-square-meter hip-shop MU821 is 25,000 yuan ($3,800 / month) and the rent of the NPC is 100,000 yuan ($15,000 / month). Changle road rents are rising 7-8% a year. “However, compared with the surrounding areas, especially the Jing ‘an and Huaihai business districts, the rent of shops here is much lower and the increase rate is relatively stable, so merchants can have a relatively healthy business competition environment here”. (Cheung,2018) •

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Space design Space design Space design Space design Space design Space design Space design Space design Space design Space design Space design Space design 104

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You can have anything.

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When it comes to in-store decor and design, Supreme has since expanded its target audience, but looking back over the years at its various boutiques, it does maintain a precise and uncompromising aesthetic that continues to this day. For decades, the interiors of these stores looked eerily similar. Rustic, bright, many right angles and popular colors, most importantly, a highly curated selection of skateboard decks hung on the wall and they always respected this core of their culture—skateboard culture.

Supreme’s goal is to set up a friendly skateboarding area in each boutique and provide it to consumers and skateboarders. The merchandise layout is designed to be open, and the store will play hip-hop music and skating video, as well as interviews with famous skaters, to meet the needs and likes of consumers and build strong and loyal connections with brands and consumers.

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Supreme official website will open China region as well as the online stores

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Supreme has established stores in the United States, the United Kingdom, France, and Japan. There are also different online stores, but they share the same website. So Supreme will open the official website of China after entering Shanghai, China.

When the user is in a different geographical area and enters the Shop section online, it will assign them to the designated country according to its own rules. After clicking into the Shop, in addition to the time under the Supreme logo, the city abbreviation will be marked; NYC for the US official website, LDN is the official website of the United Kingdom, TYO is the official website of Japan, as shown below (the interface accessed on the computer), and shows “CN” is China. In addition, shoppers can rely on the price tag/language of the item to distinguish the area (all options are in Chinese).

Supreme’s official website is also very important as it is used to advertise and promote their upcoming series. It will also provide the WeChat public account and the official Weibo user name, and release Supreme news directly to WeChat push and Weibo update.

Their online website presents a minimalist look in the store, and the website only opens online stores on “drop day” (Thursday). The rest of the online store is only used to provide customers with an up-to-date view of the latest collection of items and details to satisfy consumers’ curiosity about the product.

In addition, if consumers want to apply for queuing qualifications, you need to go to Supreme’s appointment page to register your application at 11:00 pm Beijing time (synchronized with the US Supreme website, 11:00 am New York time; customers can also apply on WeChat’s official account. For details, see the WeChat section of the “pre-launch” section).

After filling in the relevant identity information, the user will receive the information and address information from the website and will depart to the Supreme Shanghai store on “Drop day”. The security guard distributed random number plates. It should be noted that if selected, no one can go in another’s place, and the ID information (consumer’s ID and the credit card used for registration) is strictly checked at each step. This also put an end to the practice of reselling.

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Product Strategy Product Strategy Product Strategy Product Strategy Product Strategy Product Strategy Product Strategy Product Strategy Product Strategy Product Strategy 112

- Assortment plan: Supreme Shanghai boutique assortment plan will be consistent with the other boutiques (See the chapter on Supreme boutique and Supreme current product strategy in compamy overview above for details), products are divided into two season sale on plan each year, the first quarter from February to June 19 or 20 weeks. Season 2 runs from August through December, with no new series released in July or January. In-store products will be new on “drop day” every Thursday and will never be remanufactured. Products will be provided according to the seasonal products, such as spring and summer to provide short sleeves and hoodies, autumn and winter mainly provide coats, sweaters and so on. In addition, Supreme's production should remain at the current level and not increase significantly in order to maintain its brand value. But it still will maintain joint frequency and limited amounts of merchandise.

• New Anti-Counterfeiting Technology With the increasing popularity and value of the Supreme brand, Supreme has also been imitated by some undesirable manufacturers. In an effort to ensure that the Supreme market doesn’t get destroyed, Supreme will announce a new anti-counterfeiting technology that puts an ultra-violet Supreme Logo on the inner lapel seal to give consumers extra control over shopping. In addition, each product will have its own unique QR code and bar code. As a secondary security, users can bring the products purchased from the secondary market to the store and professional shop assistants will provide authentication service (see the authentication service in the “post-launch” section for details).

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With the growth of Supreme's influence in Shanghai boutiques and the development of domestic street brands in China, it is a sign of recognition and respect for Chinese street culture to choose domestic brands with great influence to cooperate. In addition, the long-term market influence of domestic street brands can help Supreme expand its influence on a larger scale. So, choosing a brand is a crucial consideration. 1. Domestic brands must have international influence and Chinese elements. 2. Brand core culture and design are consistent with Supreme.

China Li-Ning is one of the leading sports brand enterprises in China, which mainly provides professional and casual sports shoes, clothing, equipment and accessories. With brand marketing, research and development, design, manufacturing, distribution and retail capabilities, it has established a large supply chain management system and retail distribution network in China.

With the rise of street culture, Li-Ning brand mainly draws on the concept of sports, combines streetwear and sports culture, and has a 90s style, hoping to create a unique culture with Chinese street characteristics. In 2018 and 2019, China Li-Ning appeared twice in Paris Fashion Week. Many internationally renowned models such as Bella Hadid wear T-Shirts launched by Li-Ning brand, attracting attention at home and abroad. Therefore, China’s Li-Ning is undoubtedly a joint brand in terms of market influence and understanding of Chinese culture (Jess, “MINGS”).

Communication of street culture

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Media & Promotion Strategy Media & Promotion Strategy Media & Promotion Strategy Media & Promotion Strategy Media & Promotion Strategy 116

First of all, Supreme is mainly uses email in countries other than China for its mail marketing, including sending information to qualify for “Drop day” queuing (Details can be read in the “Supreme strategy” section). However, compared with foreign consumers, Chinese target consumers have very different views on social media. For example, American consumers mainly use email and message as the main way of communication, and mainly use Instagram and Facebook social software. Through questionnaires, the target audience in China mainly uses WeChat as the main way of communication, and mainly uses social software such as Weibo, WeChat off icial account and Little Red Book.

Nowadays, people are so connected online that in order to reach consumers, street brands have to establish their presence online and manage their online reputation. Therefore, Supreme needs to adapt measures to local conditions and communicate through Chinese social media for its success in the Chinese market.

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•

Wechat

Wechat Official Account Marketing: Let Consumers Cannot Help Check Every Day “Official Account” In China, WeChat is the most competitive platform in 2018 which is an effective, economical and widely accessible tool for brand promotion. For Supreme, they will create their official account on WeChat. People will follow Supreme official account and become a fan. However, when follower subscribe to Supreme's official account, there is a lack of news releases. The official account subscription only provides two functions: 1. Remind the subscriber which store the new products will be sold in this week. If the subscriber receives the email, he or she can go directly to the number and queue up. 2. Internal information is pushed to a few specific users. These users will be Supreme's loyal customers or they may be randomly selected. Supreme has established a good relationship with the organizers of these communities and has done a lot of promotion work within the communities. For such a precise channel, the effect of its dissemination need not be said.

Supreme has entered a very different track from other brands’ official account. It still tells consumers: “you chase us, not us.” This “high cold” attitude, in fact, makes users on every push extremely looking forward to the audience every day have the impulse to turn over the official account, in case they were selected to become a “special user.” Consumers could show off this in the circle of friends, this also properly meets the consumer psychology of Chinese consumers, to obtain a unique feeling. In fact, Supreme will pay attention to the readership and fan comments per tweet, monitor the data in real time and adjust the strategy appropriately.

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Weibo • The Hot Spots and New Trends of Weibo: Celebrity Effect As mentioned before, there are many hip-hop stars in China who wear Supreme's clothes and even have the “Kris Wu” effect. They mainly promote their fashion outfits on Weibo and have the support of popularity. Fans and audiences have noticed them wear the brand Supreme one after another.

Weibo pages have also become the best tool for fans to communicate with stars. It's very popular now, especially among young people. Supreme will take advantage of this by working with Chinese street skaters and hip-hop artists, who will upload pictures or vlogs of them wearing Supreme pieces to Weibo platforms and create “Supreme” hashtags to generate buzz. Meanwhile, Supreme will set up an official account to push new products and publicize street culture from time to time.

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Viral Marketing

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Viral Marketing: Promoted by Cooperating with Famous Fashion online forum Like HypeBeast to Sparks Conversation of “Limited Supply”.

Supreme made millions of trendsetters realize that there are still such popular brands in the world. Everything is limited, and everyone is rushing to buy them. On the other hand, since Supreme has always been mysterious about the next new product release, these media have become the best channel to satisfy fans' curiosity. Each week, these media outlets are filled with speculation and discussion about who Supreme is working with and what products Supreme will release. These topics are continuously spread and fermented in the fashion circle, and Supreme's fame also increases exponentially. Last year, HypeBeast published a total of 113 Supreme related articles, generating up to 200,000 social media retweets.

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Online Street Culture Community •Set up a street culture community on the official website of Supreme in China As mentioned in the “Supreme video” section, Supreme will post their approved skateboarding shorts and hip-hop shorts on their websites and social media. This is undoubtedly Supreme's respect for its street culture and the promotion of street culture. Therefore, on the official website of Supreme in China, we will set up a street culture community. Street enthusiasts, skateboarders, hip-hop artists and graffiti artists can upload their proud works (any type such as video or image) and Supreme will focus on people who are part of a specific subculture, such as surfing, punk rock, or skateboarding. Supreme's official website will be selected to announce the approved segment video. It is the most direct way to express Supreme's respect for China's street culture and the fastest speed to strengthen the relationship with the Chinese street community.

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Outdoor Advertise

• Outdoor Advertise: Posters, Brand Stickers and Graffiti Posters and brand stickers for the open-event will be located near Supreme's stores, especially near stores where Supreme fans will also buy, stores such as NPC, JUICE and other street wear and sneaker stores in the area.

Graffiti artists will be used to create murals to make the store more visible. Since the typical Supreme consumer has an overall interest and appreciation for visual effects, another focus of the campaign is through social media

Limited-Edition Box Logo T-Shirt for Opening new store According to previous surveys, the box logo T-shirt is a core product for supreme, and its market appeal is extremely high.

Consumers are eager for it. For China's first boutique, the store's limited box logo is not only the largest. The degree of attention attracts consumers' attention and can express the importance attached to the Chinese market. The series will be only available instore to ensure there are no online bots that are maliciously snapped up. The maximum guarantee of a fair and equitable purchase environment, and the income of this box logo limited series will be donated 100% to Chinese welfare institutions.

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Establish Authentication Service In view of the existence of Supreme Italy in Shanghai, in order to protect the interests of consumers and maintain the relationship with customers and protect brand intellectual property, the service is capped at 50 per day (except for “Drop day�). Customers can make an appointment on WeChat and bring their Supreme goods to the store; then the professional clerk will help customers identify authenticity. This service will be given after the store is opened. Fortunately, Supreme has sought legal protection of its intellectual property rights from the Shanghai Industrial and Commercial Department, and the Shanghai Industrial and Commercial Department has initiated an investigation.

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Exclusive event Objective: The goal is not only to rebuild the damaged relationship between consumers and brands by restoring consumers' confidence and satisfaction with Supreme’s brands through exclusive activities so that they can trade their products fairly.

Why: Since Supreme's product costs balloon when resold through resellers, such events were necessary. These resellers take advantage of high demand for an already limited number of products, knowing that consumers will pay their own prices in order to have the highest prices. This led many Supreme fans to lose faith in the brand and the community. While there is a symbiotic relationship between Supreme and the resellers (in other words, the resellers are responsible for making Supreme’s brand more recognizable and exclusive), they also need consider their fans who might become jaded or angry if they have to pay more for products. So, an exclusive event will help solve the resale problem and help reconnect consumers and brands, as well as communities.

In addition, it gives consumers the opportunity to create emotionally responsive experiences, such as fun and brand engagement, which is very beneficial for cultivating long-term brand relationships and promoting a positive attitude toward Supreme (even if they can’t fix the problem of resellers).

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The essence of the Supreme brand is to promote skateboarding culture and its characteristics such as fairness, respect and community awareness. This activity will be promoted on the Supreme community page by using its Wechat official account and Weibo to provide consumers the latest information of specific events (such as date, time and place). It will also explain the event mission statement and the rules and regulations that will be applied in the campaign. The campaign's advertising campaign will begin in the summer at the end of July.

This activity will create a secure and legal environment with a set of rules and regulations that participants need to follow. Failure to comply with the rules may result in disqualification. The idea is for everyone to be fair and safe, ensuring quality and increasing the brand's reputation. Participants can also view and try on products. It's also important to create the right atmosphere because consumers have to participate in the whole event, not just the product offered. Therefore, music and skateboard activity areas will be provided.

Supreme's publicity photos around the store will be posted on social media pages. Social media will also feature a raffle, which will draw prizes on the day of the event, offering a chance to win rare Supreme products to attract consumers to the event.

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IX. Marketing Budget 9.01 Marketing Annual Cost Allocation

According to the activity cost on the off icial website, the initial development cost of the technical team is usd 50,000, and the later maintenance and maintenance cost is usd 16,000 per month. For example, there are three or four times a month for new products that require technical support.

For the limited edition box-logo T-shirt, the design and development cost and production cost are about 10,000 dollars, and the total sales cost is 400 pieces, so the cost of each piece is 25 dollars. The f reight for 400 items is $4,000. So the total budget during the launch period is $14,000.In addition, exclusive events during post launch are held in the store, so there are no other f ixed expenses (such as venue rental costs) except for other employee expenses ($2,038 per day /13 employees) and poster and other promotional expenses ($10,000). Since new products can be displayed in advance during the event, the revenue will be about 36,000 dollars. So the total surplus is 23,962.

To sum up, the total budget of Shanghai Supreme’s annual publicity campaign is $333,638.

The total cost of Supreme's geographical expansion is made up of decoration cost, rental cost, human resource cost, freight cost (since all Supreme products are manufactured

by US manufacturers, they need to be shipped to China) and publicity cost. This table shows the annual Supreme Boutique's basic budget is $364,4038.

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9.02 Annual Sales of Supreme boutique in Shanghai

In accordance with the market strategy of Supreme in Shanghai, the state adopted the scarcity model and limited the daily number of people to 200 in order to guarantee the exclusive nature of the brand.

The product schedule is also arranged according to Supreme's previous product plans. Therefore, it is estimated that the sales volume in 2020 will be $1008,000, and the net profit in 2020 will be $6437,962 after deducting the remaining fixed budget expenses.

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X. Conclusion Massive evidence points to the fact that the Supreme's expansion to Shanghai China reveals many benefits for the brand. For instance, the brand would reap the benefits of the heavy penetration and usage of e-commerce, mobile, and other online applications. Despite being a skate brand, this brand operates as a luxury fashion label. The brand’s SWOT analysis indicates that it has many strengths and opportunities and a few weaknesses and threats. The PEST analysis also illustrates that China has suitable conditions that support the Supreme investment. Nevertheless, the main challenge facing the brand is counterfeit products because consumers need to get similar products for a reasonable price. Supreme’s main competitors include brands such as Madness, CLOT, Off-White, and BAPE. Indirect competitors include Balenciaga and Nike. Its consumers are the millennials and gen-Z, habitual and brand loyal customers and hip-hop fans. Supreme’s main expansion target is China because of China’s shift to a consumption-driven economy. Besides, streetwear fashion is a promising market in China; thus, it is worth exploring. Supreme conducted research in the Chinese market to increase its competitiveness and visibility of its boutiques using the interview method and found the brand appeals to the target market. Findings analysis brought out key benefits including new market penetration, market and product diversification, access to creative talent pools, competitive advantages, online business platforms, the strength of the Chinese economy, and foreign investment opportunities. An overview of the Supreme boutique illustrates that it manages all its stores; thus, it has no dealers. Supreme uses the 4Ps to ensure it does not deviate from its ideology. It uses price strategy to adjust its prices, place strategy to identify suitable locations, product strategy to invent, rebrand, and produce its products, and promotion and media strategy to market its products. The essence of the Supreme brand is to promote skateboarding culture and characteristics. Therefore, investing in China benefits the Supreme as it will support brand recognition and improve its image. Although Shanghai’s foreign investment opportunities are promising to Supreme, it has to counter the threats clear in its SWOT analysis.

If Supreme can do this, it can bring brand awareness to a promising market. No matter where they go, Supreme’s expansion is a win-win situation for all involved.

Supreme has conquered the U.S., Europe, and Japan, but not China. Opening a shop in Shanghai is the perfect way to expand their map throughout the world.

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