2019 China's New Consumption Trend Report

By ibcsz 2020.02

Recently, the Linkshop’s adviser Liling on behalf of Linkshop to publish “2019 China's New Consumption Trend Report” at the 2019 Linkshop conference with the theme “New Consumer Service”.

▲Linkshop’s adviser Liling

The following is a summary of the report:

First of all, this is the first time that Linkshop has made such a report, which maybe to bite off more than you can chew. But we really want to do something for retail enterprises and retail industry, so I propose that made our own report for first time in this conference after reading a lot of research reports. The purpose of the report that find the opportunity & challenge of retail enterprises and retail industry.

There are seven major trends in this report, including: retail communitization, retail channel sinking, single economy, silver economy, lazy economy, personalize consumption and M-type consumption.

- Retail Communitization

Retail communitization have four important reasons:

Firstly, the core cities is declining. The second, third, and community-centered living circles have begun, especially in first- and second-tier cities, and even in third-tier cities.

Secondly, shopping need routinization and facilitation. What’s the convenient? That’s a trend that you can online shopping at home.

Thirdly, Diversified community life. Originally, our community store is more concentrated in the grocery store and cigarette and liquor store to buy daily necessaries, but now they are more concentrated on the Internet. With the diversification of community life, the content services of community stores need to be colorful.

Fourthly, the kinship of community business. You will feel like go back to home when you go into the community store. The shop assistant will greet to you, maybe will say: “Aunt Zhang, you haven't been here for a few days.” or “ Uncle Wang, your favorite avocado arrived today.” These can’t be achieve at online shopping. When we go to a shopping mall, it is the relationship between the customer and the business, but it is not the case to the community, it is more like an interactive relationship.

The expansion of the city, the diversity of life and people's emotional needs is increasing. So the retail have to communitization and the center of city is weakened.

- Retail Channel Sinking

The first that the urbanization rate is constantly increasing, and urban construction has promoted the vigorous development of commercial real estate.

On the one hand express the centre of shopping is sinking. The retail can rapid sinking is benefit by the construction of commercial retailers and real estate developers, they took many retailers to the second-, third-, fourth-, and even fifth- and sixth-tier cities.

On the other hand is the small-town’s people life are getting better, so that they will more demands for life. They working in the city to earning a lot of money, and go home to improve their living quality.

In addition, it is the demand of retail enterprises to make themselves bigger and stronger. That’s a important ideal that if you want to be the biggest and stronger and influence all country’s brand, you have to pay attention to second-tier, third-tier and even fourth-tier cities.

- Single Economy

At present, more and more young people chose be single. In 2018, the number of marriage registrations nationwide was 10.108 million, down 4.9% year-on-year, dropping for the fifth consecutive year, according to the Civil Affairs Bureau.

The first reason that I found many young people select be single, especially the young women. The second is the divorce rate in middle age is on the sharp upward trend now and being single again. The third that the single of senior citizens are increasing.

The three ethnic groups constitute the Single Economy, so being single not only belong to young, but also for the middle age even the senior citizens. According the latest survey of Tokyo show that in big cities such as Tokyo and Osaka, the single elderly families accounted for 11.8% of the total in 2018. If one city have 20%,even 25% families are the single elderly. What does this foreshadow for consumer market and retail function, so we should pay more attention to single group and they have some requirements of commodity. For example: small quantity, varieties, high quality.

Such as a supermarket of America where boss discovered a old woman picked and putted the banana many times, so he asked: “why you didn’t buy it? Actually this not expensive.” She responded: “That’s too much or one is not easy to break, and I don’t know whether you’re allowed sell one.” Since then, supermarket’s banana can be sold individually. Koreans also pack seven bananas one by one, from green to yellow, so that when you eat one every day, they are ripe.

Singles also have requirements for shopping places. Singles generally need privacy which is very important to them, so the environment for shopping places is very high. In addition, there are requirements for service that focus on convenience and privacy.

The last is the development of others commodity production. Some young entrepreneurs have asked me can we open a single-person restaurant? I said: Yes. Why not? The single economy is on the rise, and single requirements are special, so you may succeed.

- Silver Economy

Silver Economy actually is the senior citizens economy and we mentioned before. China's aging will cause great changes in consumption structure. The aging of population had an obvious growth and the requirements also have change.

▲Source:《National population development strategy research· population development forecast》

The elderly will have higher requirements on the cost performance. They are very sensitive about price, because it is not easy to earn money. Then there will pay more attention to health products and the experience.

I've always felt that what the Japanese are today is likely to be our tomorrow. The aging phenomenon of Japan will appear in Beijing and Shanghai and Hangzhou in the future.

Such as G.G Mall, is a shopping mall in AEON of Japan and was refurbished in 2013 year. The mall specially for the elderly and over 70% consumers are the elderly, where the commercial area is 16,145 square meters with five floors.

It’s worth noting that everyone should not think the aging is far away from you. The ageing of community residents is actually very fast. So what should we do as a community store at that time? Therefore, you have to face the challenge of aging.

Actually, these phenomenons of industry have some hints for retailer. I highly recommend that you look at the current status of Japanese retail to predict our future.

-Lazy Economy

Lazy economy means the after 1995 consumer which generally is 15-30age consumer. Although the number is falling, the total is still quite large.

Firstly, the young people have a characteristic that very self-centered. Secondly is the fast that they are eager to real time of shopping. Thirdly, their requirements change quickly. Fourthly, most of after 1995 are lazy, so they have highly requirement for takeout and delivery. The last is the main force of fan economy, so the fan economy has risen.

- Personalize Consumption

Personalized consumption is difficult to specify because personalisation can be personalized to a person, and that has various characteristics. 《Luxe》 published 《the 2017 China Fashion Consumption Survey Report》, showing that nearly 95% of respondents are interested in personalized customization. Among them, 55% are interested in clothing customization, and nearly 50% in jewelry.

What I particularly want to propose here is the personalisation of community stores. Be sure to customize your business according to your community, to sell your goods and provide your services.

For example, if your sales scope are the luxury houses, then you can sell packaged foods. If they asked you to be quick. But if you are in an elderly community, you can't be same. This is called personalized customization. For the goods, the various personalisation are very powerful now.

- M-type consumption

type consumption was proposed by Japanese economist Ohmae Kenichi around 2005. According to the 1995 Japanese consumer market and financial market, he proposed that Japan has entered the M-type society

M-type consumption was originally used to describe the transition of Japanese society from the middle class to the extremes of wealth and poverty (the middle class gradually disappeared). After we researched the article of Ohmae Kenichi and contrast the current development of China, the M-type consumption of China is coming soon.

Perhaps we can say: “ Has China's M-type society arrived?” We can propose the question and go to contrast them. But I prefer the view that the middle class is gradually disappearing.

The appearance of Pinduoduo is a good illustration of this question. As a phenomenon, it shows that the low-end consumers are growing rapidly, that is the phenomenon that the entire middle class in M-type society disappears and goes to the low-end. The other extremes is the high-end, It is said that luxury goods increased by 20% in China last year. Last year, China’ s highest-end department store SKP sold 12 billion, ranks No.1 in Asia. The high-end and low-end is going up. What hasn't? Why didn't go up in the middle? Because there is no hope for income, I dare not say that the economy is good or bad. Anyway, Mr. Fan Jianping said that the economy is not good.

Chinese economy will influence our retail, so every retailer grasp the situation and learn from each other, and then find out the what we want of the market shares.

The conference topic called: “New Consumer Service”, I hope that the retailer can treat our consumers and customers with heart, make shopping more relaxed and elegant.

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