Closing in on the 618 shopping festival today, industry magazine Market Morning Post(營銷早報) identifies 5 key China retail trends for the coming year. Global brands who are hoping that the China market can help to lift their business in a tough year should make a note of these insights. Re-Hub can help brands and retailer who want to transform their business to successfully compete in the new dynamic.
1) Consumers Want Constant Upgrades and Newness
China is at a stage of consumption where consumers are now constantly looking to upgrade to ‘new’ or ‘better’ products and this demand is far higher than elsewhere. Consumers consistently upgrade their smartphones and home gadgets and are always on the lookout for the next new thing.
Overseas brands are reminded that they need to be consistently delighting consumers with unique and exciting upgrades if they want to succeed in the new China.
2) Consumer Segments are Becoming Diverse & Complex
In fast-changing China, traditional consumer segmentation such as ‘white collar’ or ‘high end consumers’ have become redundant. Chinese companies are already starting to segment at a way more precise and in-depth level than is found elsewhere. “White collar” is thus split into “frugal, investment-focused white collar”, “fun-loving white collar” or “homebody white collar”.
Foreign brands need to throw away the MBA textbooks and be constantly trying to understand changes in the market and segment consumers in a way that actually reflects the intricacies of modern China and its 1.4 billion consumers.
3) Rapidly Evolving Lifestyles Give Rise to New Winning Product Categories
Everywhere in China has experienced a rise in salaries, consumption power and consequently greater exposure to the outside world. This has generated new hot product categories and hit products that appear almost overnight.
One prescient example is the surge in popularity of DIY. In 2012, US Big Box retailer, Home Depot, left China , with most critics attributing their failure to the the company not understanding that China was ‘a do-it-for-me market, not a do-it-yourself market’. People preferred to pay for someone to do something for them and the metropolitan class felt manual work was beneath them.
In 2020, the Chinese man who is capable of ‘building and fixing’ for the betterment of his family is now glorified by society as a paragon of new masculinity. Shandong tool brand ‘Max Power’, spent 100 Billion RMB on a re-brand to position themselves to take advantage of this trend and have enjoyed a number of hit products on E-Commerce
4) China’s Digitization Will Only Continue
China is the most digitally advanced retail market in the world. Nearly anything can now be bought online and the country boats tens of millions of entrepreneurs and small business owners who are exclusively online focus.
This will not stop and every service provider in China, from drugstores to banks, needs to put paramount focus on investing in and improving their digital experiences.
5) China Consumers are Increasingly More Pragmatic in Regards to Luxury Purchases
Savvy Chinese consumers are now no longer wowed by overseas luxury brands and are unwilling to pay exorbitant prices just because a product is imported.
The world marvels at the size of the Chinese luxury sector, but when one looks closely a lot of the outside impressions of China luxury consumption are outdated. Before, Chinese were willing to pay big money for overseas luxury brands or any imported product. In the last five years Chinese from all strata of society have become frequent travelers and their tastes and perceptions have matured to the point where they are no longer so easily wowed by foreign names.
On Chinese social media, consumers are now more excited by ‘affordable luxuries’ like a 2000 RMB Coach bag or a Chanel lipstick. These type of everyday luxury products now account for 60% of luxury purchases.
Article insights are content attributed to Market Morning Post(營銷早報)