By LIU Yan

Shanghai has won over most brands to open their first stores in the city.

According to incomplete statistics, the number of first stores opened in Shanghai reached 498 in the first half of 2019; in the third quarter, the number reached 96, out of which 32 were first stores to open in mainland China.

The term "first store" refers to the first store opened by a reputed brand in a certain area, be it the first store in the world, the first store in Asia, the first store in China, or the first store in the region. It also includes new opennings of old stores, when the store showcases innovative business model or retail philosophy, such as concept stores, experience stores, flagship stores, etc.

Among all the first stores, retail and catering are the most common in Shanghai. According to winshang.com, a specialized website on retail research and metrics, in the third quarter of this year, there were 40 retail and catering first stores opened in Shanghai respectively, accounting for 41.2% of the total number.

Two of the most noteworthy first stores opened in Shanghai were Costco and McGimachi imachi. Costco opened its first location in mainland China in Shanghai at the end of August. It was so popular that it had to close down four hours after openning because of the overflow of shoppers. McGimach imachi, a milk tea brand that appeared in Jay Chou's new music video, "Don't Cry", opened a flash shop in Shanghai. More than 300 people lined up in half an hour on its first day of business and scalpers raised the price to as high as 800 yuan (around $112) a cup.

Beijing had the second largest number of first stores. In the first half of 2019, the number of first stores opened in Beijing reached 328.

Brands choose the location of their first stores very carefully. Many factors come into consideration, such as city population, level of economic development, consumption power, level of business infrastructure, and retail atmosphere. Generally, first-tier cities tend to be more attractive.

Compared with first stores opened Beijing, in terms of store quantity and quality, Shanghai has the upper hand. Of the 498 stores opened in Shanghai in the first half of the year, there were 136 stores that were the first nationwide, accounting for about 1/3 of the total, while Beijing had only 70.

“First store economy”, a term describing the positive impact in economic development a city enjoys when it leverages distinct resources to attract domestic and foreign brands to open first stores, became more widely known.

According to a report published by RET Chinese Commercial Real Estate Research Center, the term "first store economy" has long history. First store economy emerged with a decade-long budding period beginning in 2005. In 2015 and 2016, as more shopping centers and cities starting to recognize the value of first stores, the first store economy entered a period of development. Since 2017, statistic analysis of first stores became systematic and reached a period of rapid growth. The outbreak period began, when cities rushed to introduce subsidy programs to attract first stores in the begging of this year.

Shanghai was the first city in China to put forward the concept of "first store economy". In June 2018, Shanghai tailored nine measures to remake itself into a "premier global launchpad of new products." It plans to draw up specific standards regarding "global launch of new products" and "opening of the first flagship store", and to strengthen trademark protection for new products.

On March 15 this year, the Beijing Municipal Bureau of Commerce issued Measures to Encourage the Development of First Stores, which provided financial support for foreign and domestic brands that open their first stores in Beijing.

At the same time, Chengdu issued the Chengdu Work Plan for Promoting Economic Development of First Stores and Chengdu Work Plan for Promoting Development of First Stores and Small Stores to Build an International Consumer Center to encourage setting up first stores and launching new products in Chengdu. It also puts forward the goal of opening more than 230 new first stores in 2019.

It is worth noting that Chengdu, introducing 237 first stores in the first half of 2019, ranks third after Shanghai and Beijing, surpassing two first-tier cities Shenzhen and Guangzhou.

Mercedes-Benz's first experience store Mercedes me, specialty coffee shop % Arabica’s first location in Southwest China, and Huawei Honor's first global concept store Honor Life, were all launched in Chengdu.

The concept of “first store economy”suggests that the more concentrated first stores are in a city, the more they can reflect the city's business maturity and vitality. When a brand chooses a city, it tends to benefit the city’s commecial development. While a city may be attractive on its own, it can also attract companies through subsidy programs, which may product direct results. As more cities join the subsidy band wagon, the competition for “first stores” will only be more intense.