Analysis Of Several Trends Of China'S Consumption In The Future

In the past 35 years, China's retail industry is undergoing changes that no one can ignore.

Various types

The rapid rise of traditional retail industry is facing unprecedented challenges.

2016 is an interesting year.

On the one hand, we see that although the mainstream e-commerce platform is still eroding the retail share of the line, the growth rate has begun to slow down. On the other hand, most of the traditional retail enterprises have already formed a relatively pformation plan, from the big fly fat flying net to BBK's supermarket +

"Electric appliance" business mode, and then to Carrefour active layout of convenience store channels, multi industry business pattern is emerging.

So what's the future of retail in China? At this interesting time node, this question is more and more thoughtful.

Retail is the business form that is most close to consumption and people's livelihood. To understand the direction of retail development, it may be a good perspective to cut through from consumers.

Several trends of China's consumption in the future

1, the disposable income of residents continues to grow, and consumer desire for consumption continues to rise.

According to the statistics released by the National Bureau of statistics in early 2016, the per capita disposable income of the residents in the whole country in 2015 was 21966 yuan, an increase of 8.9% over the previous year, and a 7.4% increase in real terms after deducting the price factor.

GDP growth over the same period of 6.9%.

With the rapid growth of per capita disposable income, the confidence of Chinese consumers has been surprisingly strong in the past few years, despite the slowdown in macroeconomic growth.

In the fourth quarter of 2015, Nielsen global consumer confidence survey showed that China's consumer confidence index was the highest in 107 major economies, followed by the UK (101), the United States (100), Germany (98) and Japan (79).

Although the growth rate of China's economy slowed down by only 6.9% in 2015, consumers' consumption desire continued to rise.

Upgrading of consumption: upgrading from mass products to high-end products

Sustained and undiminished consumer confidence is a strong support for consumption and the momentum of consumer upgrading is strong.

On the one hand, the growth of the category of high-end products is much faster than that of the public.

As shown below, consumers begin to upgrade their consumption in large quantities, especially in cosmetics, liquor, milk and other products.

On the other hand, we can see that in some consumer goods category (such as food and daily necessities), the growth of category begins to be driven by price increase rather than consumption growth.

This is clearly reflected in the data below.

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2, changes in consumption structure: the proportion of service sector spending continues to increase.

In the government work report of March 2016, Premier Li Keqiang pointed out that China's structural adjustment has made positive progress in 2015.

The proportion of service industry in GDP has risen to 50.5%.

On the one hand, it shows that the consumption of residents is shifting rapidly from products to services. On the other hand, we can see that there is still a huge increase in the proportion of our services sector compared to the 80% GDP in the United States. This structural change will continue for quite a long time.

The data below clearly confirm this point.

How will these consumer trends shape China's retail industry?

Another key dimension of China's retail problem

In fact, it is not clear that the trend of China's consumption can help us fully understand the future pattern of China's retail industry.

Retail is a highly related industry with physical distance, income and lifestyle. China is a country with a vast territory and a huge gap between the rich and the poor.

Generally, the averaging data can only help us see some directions, but can not explain the changing path and future pattern of retail sales in different regions.

For example, the urbanization rate in Shanghai is as high as 89%, while that in Guizhou is less than 34%.

Physical differences, residents' income and lifestyle will also have different demands on retail form.

If we define these 1 billion 300 million consumers, then can we give us more insight into retail pformation?

What we naturally think of is to divide towns and villages.

According to the sixth census in 2010, China's urbanization rate is nearly 55%.

But I think it is inappropriate to divide the consumers roughly into urban population and rural population. It also makes us miss a lot of important information.

The reason is that China's urbanization includes two major categories, one is the city and the other is the two.

The functions of urbanization and urbanization have been achieved in most towns, but most of the modern cities do not have functional towns, such as movies and buses, while nearly 20 thousand townships converge in China with more than 200 million of the population (according to the sixth census data).

That is to say, more than 400 million of the 1 billion 300 million people live in modern cities, more than 200 million of them live in towns and townships, and nearly 600 million live in rural areas.

In China, less than 5% of the area is concentrated in more than 400 million of the residents living in modern cities, and over 95% of the area is decorated with nearly 20 thousand townships, and the remaining more than 800 million residents are surrounded by the countless rural areas around the township.

The rough division of rural residents in modern urban vs is important and meaningful.

In addition to the geographical location and the income of residents, lifestyle differences, but also because the residents in modern cities are just able to enjoy the fast logistics providers.

Modern cities and retail

The past 3 years have been the 3 years leading by e-commerce.

Especially in the first tier to three tier cities, in the context of rapid growth of electricity providers, traditional retailers generally encounter the problem of passenger flow decline.

The following is a comparison of the average sales growth between 2013 years and 2014.

With the slowdown in the entire retail sector, polarization is emerging.

Shopping centres and convenience stores showed a relatively strong growth rate, while the corresponding professional shops, traditional small and medium supermarkets, department stores and other formats growth stagnation.

Under such a background, there are several trends that can not be ignored.

1, cross channel integration

As mentioned at the beginning, many traditional retailers have already completed the layout of many formats.

Over the past 3 years, we often mention online and offline, e-commerce and traditional retail, and in the next 5 years, a clear trend is that the boundaries between the online and offline industries begin to blur.

The electricity supplier can open physical stores, and traditional retailers are also moving towards the line. Competition no longer comes from online and offline mode, but begins to return to the essence of Retailing: who can serve consumers more efficiently.

In 2014, China's total retail sales reached 26 trillion and 200 billion, of which 23 trillion and 400 billion still came from offline sales channels.

Offline sales still dominate, but according to DDT's research, 59% of offline sales are affected by digital carriers.

The impact of digital carriers on consumers has penetrated into all aspects of the purchasing decision-making process, covering the whole cycle of consumer behavior.

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Realizing the importance of digitalization to consumers, it is easy to predict that retailers who have not yet put cross channel integration on the agenda have actually missed many important consumer communication channels.

Take the fast food products as an example, a report by Bain and Kantar shows that all channel retailers are rising.

Cross channel integration may be the best solution for more efficient service consumers.

2, the ultimate experience

If the past 3 years were defined as the opening up times of various new retail forms, then I would prefer to define the era of intensive farming in the next 5 years.

This is reflected in the following aspects.

1) the ultimate convenience: China's convenience stores are entering a period of rapid development.

Shanghai has always been the most developed city of convenience stores in China. In the vast majority of Shanghai's outer ring, there will be a convenience store within 1 kilometers.

Remember the year before last, I was concerned about the question: is the 24 hour convenience store in Beijing much less than Shanghai? Why?

I didn't expect the situation to be rewritten soon.

The convenience store format is less affected by the electricity supplier. The three major challenges are commodity innovation, franchise mode and new area.

- 7-11 general manager, Uchida Shinji

The rapid development of China's convenience stores has its driving factors. The following analysis is very comprehensive, I put it directly.

2) the highest price and operational efficiency.

The traditional retail giants represented by WAL-MART and big RFA are one of the representatives of the extreme price and operation efficiency.

In the context of new retailing, the traditional large businesses have tried to develop multi format mode, expand the market of offline cities, cultivate regional markets, and further improve operational efficiency.

Opportunities and challenges coexist in the next 5 years.

As shown below, even during the most challenging periods of 2014, retailers like Gao Xin retail, Yonghui, Huarun and Wuming still maintained a considerable number of stores.

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This expansion often stems from regional intensive farming and improves operational efficiency, such as focusing on the scale of development in a city / Province.

For example, according to a report by Kantar and Bain, Yonghui has 2.5 times the market share of Chongqing's largest competitor in its second largest market, and its market share in Beijing, the largest market, is 1.6 times that of Carrefour, the largest competitor.

WAL-MART is 2.1 times as big as its biggest competitor in Shenzhen.

After the establishment of key cities, these leading retailers began to expand their scale in the surrounding areas to build their leading position in the urban agglomerations.

In addition to the large traditional stores, under the background of macroeconomic downturn, because of the importance of cost performance and the need for inventory handling by retailers, there is still room for growth in discount department stores and discount supermarket stores.

Oteri J operates in commercial real estate to provide consumers with low quality products.

Although many of the oetles in China are dismal, the whole industry is still in a flourishing period.

3, individualization

The improvement of consumers' purchasing power and the improvement of their quality of life further strengthen consumers' self-expression demands.

Fashion and personality are becoming more and more popular.

Therefore, the mode of buyer's shop dominated by differentiation, personalization and niche brands is growing rapidly.

The buyer's shop is a business mode developed by Europeans, also known as "buyer's business". It refers to a store that combines different brands of fashion, accessories, jewelry, leather bags, shoes and cosmetics based on the unique fashion concept and interest of the target customers.

In Hong Kong and Taiwan, this shop is usually located in the shopping mall, and is an independent shop in the shop.

In Europe and the United States, this shop is dominated by street shops and has a history of nearly 100 years.

Although the form of the buyer shop is still in the nurturing stage in China, the business model of the buyer system is still one of the trends in the future.

We can see that all kinds of e-commerce platforms are booming.

4, specialization

In recent years, many high-end organic food stores, drugstores, mother and child shops and other community chain store performance has increased rapidly.

Whether it's a physical retail or an e-commerce platform, we all see the rise of an independent professional shop that ploughs an industry or category.

Some time ago, when I read this article, I was very enlightened: "the traditional enterprise that has been beaten everywhere to find teeth, see how this mother and baby chain can attack the Internet" - the new economy 100 people - know about columns.

In addition, under the trend of specialization of physical retailing, the change from "big to big" to "small and beautiful" is also taking place quietly.

For example, Muji's "independent travel shop": compared with Muji's regular retail stores, MUJItoGO. has smaller MUJItoGO and more concentrated products. It mainly sells products that are suitable for travellers to purchase, including lock wheel pull rod boxes, neck pillows, snacks, travel cosmetics, and so on.

Location is chosen at airports, railway stations and other pport hubs.

5, not only for shopping, but also a way of life.

If you remember a set of data at the beginning of the article, shopping center is still the fastest growing format in the offline retail format.

An important reason is that shopping is not only a highly efficient task for consumers, but also a way of life.

The demand of experiential consumption not only makes shopping centers one of the first places for people to relax, but also creates a large number of content providers, such as Xiao Hong Shu.

If you pay attention to the new shopping malls in recent years, you may come to a similar conclusion.

For example, although bookstores do not make money, many stores still open a big bookstore for people to relax.

Various cultural exhibitions, activities, lectures and other forms of display landed in retail stores and shopping malls, and the beauty of shopping and art in shopping.

All these help retailers and consumers establish emotional connections and integrate them into the life of consumers in a smooth and silent way.

To sum up, 5 years later, the retailers in the city may be different, but most of the formats are emerging today.

If we divide the demand of retail into three levels: "Availability" - > rich, convenient and affordable, > specialization, personalization and lifestyle experience ", I believe that in the next 5 years, there will be second levels of extreme experience and third levels of vigorous growth in cities.

But don't forget that there are still more than 800 million people living in towns and villages in China.

What will be their retail format and what opportunities will they bring to China's retail market?