Cushman & Wakefield today released its annual Experience Matters: Insights on China's Retail Market in the Era of New Consumption report. According to the report, China's consumer market is changing. Retailers and landlords of retail properties in China are currently exploring new market segments and emerging demand opportunities to create new scenarios that realize value.
Between October 2021 and March 2022, Cushman & Wakefield surveyed 2,491 consumers in 18 cities in China and interviewed a number of executives working for retail brands. By observing trends in China's retail market in the new consumption era, Cushman & Wakefield hopes to help retailers and owners of shopping centers improve their business strategies so that they are better placed to capitalize on any new commercial opportunities that arise in China's retail market in the future.
Shaun Brodie, Head of Occupier Research, Greater China, Cushman & Wakefield said, “With the development of China's economy, consumer demand and living and purchasing habits have changed perceptibly. Retail brands and shopping centers have continued to actively seize the business opportunities brought about by new consumption, not only by adopting new technologies to realize the digitalization of all aspects of retail and by improving the efficiency of the whole value chain and by reducing operating costs, but also by actively innovating and formulating new business models to create refined retail services, retail products and retail space.”
China is estimated to be the second largest consumer economy as measured in purchasing power parity (PPP) terms. According to the China National Bureau of Statistics, China's total retail sales of social consumer goods increased from RMB21.03 trillion in 2012 to RMB44.08 trillion in 2021, doubling during the decade.
China's total retail sales of social consumer goods (2008-2021)
Source: National Bureau of Statistics, Cushman & Wakefield Research
China's consumer market is changing. Affected by multiple factors, including China's economic development, population change, the expansion of the Internet and the spread of smartphones, COVID-19, and consumer behavior, to name a few, consumption in China has transformed.
Alongside this transformation is China's "new middle class," and how their consumption pattern has changed. As China becomes the world's second largest economy, the number of middle-class families is growing in China. Today, the middle-income group in China stands at over 300 million people. Moreover, it is expected that China's new middle class will exceed 500 million people by 2025. China's "new middle class" has changed their consumption pattern. Today, this group is more willing to pay for spiritual consumption, their consumption characteristics in different cities is differentiated and they are interested in healthy, environmentally friendly goods, products, and services.
What’s more, according to statistics from The Seventh Population Census in China, in 2020, there were about 265 million people counted as Generation Z in China, accounting for 17.4% of the total population. They have a number of consumption characteristics that also need to be taken into account by retailers in the region, such as focusing on purchase experience and quality, passionate about recommending and buying recommended products, spending money to save time and being a driver for the “his economy.”
Meanwhile, in 2020, the global outbreak of COVID-19 not only had a huge impact on the global economy and retail market but will also change people's consumption behavior for some time to come in China. But shopping centers are still important for Chinese consumer consumption. Consumers in China are not only satisfied with shopping in retail properties, but also expect shopping centers to become places for recreation, socializing and tourism.
Duke Zhen, Managing Director, Head of Retail Services, China, Cushman & Wakefield, said: “The continuous upgrading of Chinese consumption and the wave of modern digitization has brought both new opportunities and challenges to retailers and landlords of shopping centers in China. The relationship between brands, online/offline retail and consumers is being reshaped, with consumers having become the center of the entire industry ecosystem. As the consumer scene becomes more diverse, the way brands and consumers communicate will also become more varied and interesting.”
Finally, in recent years, with the continuous expansion of the consumer market, the advance of technology, the intensive introduction of favorable policies and strong capital investment, retailers, and landlords of retail properties in China have actively seized the new consumer opportunities that have arisen. China's retail market continues to introduce new business models, new type of services and innovative retail formats to adapt to the ever-changing consumer groups and consumption patterns. Our report points to five major trends which have occurred in China's retail market, and they are:
- Online ‘guochao’ (or national trend) brands are now opening brick and mortar stores
- Lifestyle brands are in the ascendancy
- The Metaverse will lead a new wave in retail and social experience
- The ‘socializing +’ scenario is now empowering brands and shopping centers
- Tourist attraction-type shopping centers are on the rise.
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms in the world, with approximately 50,000 employees in over 400 offices and 60 countries. In Greater China, a network of 22 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2021, the firm had revenue of $9.4 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com
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