Amway targets young customers for expansion

An outlet of Amway Corp in Yichang, Hubei province. The company will build more experience centers in Beijing and Guangzhou, and renovate and upgrade its existing stores in second-and third-tier cities. [Provided to China Daily]

Amway, the US direct-selling giant, has revealed plans to expand its presence in China, both physically on the ground and online, and to appeal to younger customers, to arrest declining revenue from its biggest overseas market.

Doug DeVos, its president, said on Tuesday the company will build more experience centers in Beijing and Guangzhou, and renovate and upgrade its existing stores in second-and third-tier cities into experience centers.

Amway opened its first Chinese center, or plaza, in Shanghai last October, and a new one in Shenzhen on Tuesday. The centers allow customers to sample products, view product demonstrations and learn more about Amway's science and product development.

DeVos said that in today's retail industry it is still important to serve the customers and deliver high-quality products at physical locations that are more than just shops.

They should be places to experience and embrace brands, he said, and set up relationship with the Amway "family", and be more responsive to the market place.

The company's e-commerce operations, he said, are still determined by a strong sales force, who is offering its services on digital channels to source, purchase and deliver merchandise.

"We can use the physical locations to train and build stronger relationships, supported with the technology and tools staff need to help customers," he said, adding Amway's e-commerce strategy is still developing.

Its emphasis is on product sharing, training and accurate market information, and understanding its marketplace and individual customers better, and then applying that to how it sells goods, he said.

In an effort to attract younger customers, the Michigan-based company plans to employ and train younger sales staff in China, under the age of 35.

Last month, Amway announced sales of $10.8 billion for the year ending Dec 31, 2014, a decline of 8 percent from 2013, which it blamed on lower revenues in China and fluctuation in foreign currency exchange rates.

The company, however, continues to exhibit strong long-term growth. It has expanded by 68 percent over the last decade and achieved sales growth in 13 of the last 15 years.

In China, its results have been strong with growth rates over the past 5 and 10 years of 27 percent and 45 percent, respectively.

Amway's sales in 2014 were largely concentrated on nutrition, beauty, durables and home care products. Its nutrition sales continued to lead the way, accounting for 43 percent of all direct selling revenue.

Guangdong Governor Zhu Xiaodan met DeVos last Tuesday and expressed enthusiasm for the company's plans in the southern Chinese province. DeVos said Amway's emphasis will be on creating a strategy focused squarely on increasing its domestic Chinese sales.

Frances Yu, the company's chief marketing officer, said: "The demands of Chinese consumers for a higher quality of living has required us to provide a whole system of lifestyle solutions, creating massive opportunity for the company."