Chinese LeEco has closed its the only electronics store in Russia

MOSCOW, August 1. /Offset. TASS Anna Toporova/. Chinese Internet holding company, manufacturer and seller of electronics LeEco has closed its first and only mono-brand store in Russia, which has not worked for years due to high rental costs in Moscow TRTS “the ARTIUM”. This was reported TASS the head office of the company in Russia Victor Xu. Informed the Agency about the closing of the store, said several sources close to the company, and store employees.

“Brand store showroom LeEco, shopping and entertainment complex “atrium” in Moscow stopped work on August 1. During the launch phase LeEco in Russia flagship store of the brand image played an important task, but today there is a great need for expensive showroom in the center of Moscow. We analyzed the flow of visitors and sales at this point and came to the conclusion that the costs of the rental store are not justified. In this regard, own store brand, it was decided to close and focus on sales through partner retail networks and the Internet. LeEco products are available in all regions of Russia in the stores MTS, DNS, “Eldorado” and “Know-How”, commented the closing of the store President LeRee (“daughter” LeEco created in 2016 to conduct business in Russia, Eastern Europe and the CIS) Victor Xu.

Queues during open

LeEco was launched in the Russian market of scale: the bright presentations of their products, strong advertising campaign and sales. Against this background, the opening of the first store in LeEco Mall “atrium” in Moscow on 15 October 2016, accompanied by large queues.

In the launch of this outlets LeEco has invested $1 million, told TASS earlier the President Victor Xu LeRee, and if successful, the company planned to open in the Russian regions 150-500 stores by the end of 2018. It was assumed that the products under the brand name LeEco will be implemented not only through its own stores, but also in major retail chains.

The flagship for advertising

The closure of the flagship is a natural stage of the life cycle of any new brand, experts say. The store is open, it goes to a press release, there is an influx of buyers and then the store starts to operate normally, attendance is falling, says the head of the Department of trade and real estate consulting company ILM Egor Levchenko. The most striking example is Zara Tverskaya, he says.

“Trade there is objectively dead, shopping in conventional malls work much better than the flagship store space renting,” – said Levchenko.

Launch of mono-brand store LeEco needed to advertise a full exit of a trade mark on the market, says the expert. “When the shop has exhausted its potential, that is, the brand entered the market through numerous distributors and online, hold expensive point in the “Atrium”, one of the most expensive from the point of view of the rental places in the city, was inappropriate. Easier for buyers to order electronics over the Internet than to go to the store,” – said Levchenko.

The cost of renting in the “Atrium” varies depending on the platform, he continued. In crowded places in a small square footage it could be $3 thousand per square meter per year excluding VAT. Large areas rent could reach $5-10 thousand per sq. m. per year, the expert explained.

The problem of global LeEco

LeEco, founded by billionaire Jia Latinum in 2004, brings together in a single vertically integrated system China’s largest online video platform and a library of video and audio content, the Studio, its own line of smartphones and televisions, as well as the unit for the production of mobile applications and services. Monthly audience of the Internet platform LeEco is over 800 million unique users.

In addition, LeEco produces a model of smart bike and is involved in advanced developments in the automotive industry, in partnership with the Faraday Future and Aston Martin. The company has also established its own electric car with samebecause autopilot. Earlier, the President and founder of LeEco Jia Wetin announced the company’s intention to invest in the Russian economy up to $1 billion within three years.

However, in early July, 2017 the BBC, citing Chinese media reported the arrest of personal accounts of the Chairman of the Board of Directors Jia Latina by the decision of the Shanghai court, in connection with accumulated debts, wrote the newspaper “Vedomosti”. The assets belonged to the company founder, his wife and three affiliated entities in the amount of 1.24 billion yuan (at the time of publication – $183 million). The decision to arrest was made after the company LeEco’s failure to pay interest on the loan obtained for the financing of units of smartphones. Then the President LeEco Russia and Eastern Europe Victor Xu commented on the publication and confirmed through a press-service, Russia remains one of the priority markets for LeEco.