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2015 Chinese New Year Sales: Hangzhou

It proved mixed result for Hangzhou’s consumer market during this year’s Spring Festival. While its catering sector continued to grow, consumption in other sectors remained stable, yet with an underlying downwards trend. The combined total sales of 47 of the city’s leading businesses - including department stores, supermarkets, household appliance retailers, telecoms stores, restaurants, bars, KTV parlours and cinemas - was recorded as Rmb4.565 billion during the festival period. While this represented a drop of 2.5% over last year, it was a smaller decline than that seen during the same period last year. 

Photo: Paper-cut art and lanterns: Decoration at the People’s Square in the Xiaoshan District of Hangzhou. (Xinhua News Agency)
Paper-cut art and lanterns: Decoration at the People’s Square in the Xiaoshan District of Hangzhou.
Photo: Paper-cut art and lanterns: Decoration at the People’s Square in the Xiaoshan District of Hangzhou. (Xinhua News Agency)
Paper-cut art and lanterns: Decoration at the People’s Square in the Xiaoshan District of Hangzhou.

Figures from the Ministry of Commerce show that, from New Year’s Eve to the sixth day of the Chinese New Year, the total sales of retail and catering enterprises nationwide amounted to Rmb678 billion, up 11% over the Spring Festival golden week last year. At the same time, year-on-year growth dropped 2.3 percentage points. HKTDC's mainland offices in Beijing, Dalian, Qingdao, Xi'an, Shanghai, Hangzhou, Nanjing, Wuhan, Chongqing, Chengdu, Guangzhou, Fuzhou and Shenzhen, made market visits to a number of high-end, mid-high end and mid-range shopping centres in their respective cities a week after the Chinese New Year (19-25 February 2015) in order to establish just how holiday sales fared this year.

Unlike previous years, many Hangzhou department stores were rather quiet throughout this year’s Spring Festival period. For 2015, Intime Group’s department stores were again closed for two days, from Chinese New Year’s Eve to the first day of the New Year. According to trade analysts, this is a clear indication of the way the market is evolving, with not only consumers altering their behaviour, but business operators also changing. It is believed that this represents a transition to a New Normal for Golden Week consumption.

According to historic data, sales at Hangzhou department stores are traditionally at their lowest points on Chinese New Year’s Eve and on the first day of the New Year. This year proved no exception, with Spring Festival consumption peaking before the holiday.

Statistics compiled by the Hangzhou Municipal Commission of Commerce show that, on the day before Chinese New Year’s Eve, sales at seven department stores netted Rmb73.95 million, 2.3 times the average daily sales in the period from New Year’s Eve to the fifth day of the New Year. At the same time, the combined sales at 11 supermarkets amounted to Rmb28.08 million, 2.9 times that of the average daily sales in the period from New Year’s Eve to the fifth day of the New Year. According to figures released by Lianhua Huashang Group, the average daily sales of its stores in downtown Hangzhou in the five days running up to the New Year (13-17 February) topped Rmb87.14 million, 3.1 times that of their sales in the five days during the festival (18-22 February). 

During the Spring Festival period, a promotional campaign, under the theme of “A Sumptuous New Year”, was launched in Hangzhou. Various trade and industry associations, as well as several commercial enterprises jointly organised some 40 activities. These were all designed to highlight “quality of life, leisure, entertainment and fashionable shopping”, while emphasising such values as familial love and harmony. These promotional activities were described as “rich in content and diverse in format”.

Bolstered by both the lower gold price on the international market and Spring Festival traditions, sales of gold jewellery at department stores, supermarkets and hypermarkets proved brisk. The trade in gold bars and jewellery items at the Lianhua Supermarket was valued at more than Rmb26 million, ranking it among the top 10 of its sales league.

Smartphones, smart home appliances and tablets are all seen as must-have items for 2015. In line with this, during the period from Chinese New Year’s Eve to the fifth day of the New Year, the average customer flow at Apple’s flagship store at Lakeside Intime was around 3,000 people. At the same time, sales of computers, communications products, consumer electronics (the so-called “3C products”) and digital home appliances grew 31.5% year-on-year at the Lianhua Supermarket.

The following is summary of the sales situation of three leading Hangzhou stores:

StoreHangzhou Tower Shopping CityMixCWest Hangzhou Intime City
GradeHigh-endHigh-endMid-high end
Top-selling ItemsClothing and accessories, supermarket-type consumer goods, cosmetics, food, home appliances, toys, jewellery, watchesClothing and accessories, watches, cosmetics, food, home appliances, toys, jewellery, supermarket-type consumer goodsCatering, clothing and accessories, leisure entertainment, beauty and hair care, jewellery, toys, supermarket-type consumer goods
Price Range (Rmb)100-20,000100-50,00050-20,000
Average Spending per Customer (Rmb)2,000-3,0002,000-3,0001,000-3,000
Year-on-year Sales Growth-6%-20%+10%
Promotional TacticsPromotion in the form of offering up to 50% discount on all product categories Launched WeChat account to provide customers with up-to-the-minute information, such as discount offers by the store; customers can stay home and have their favourite clothing items delivered to their door stepPromotion in the form of offering discounts ranging from 15% to 70% Children’s wear shops: changing their product mix to offer more cotton and linen items; setting up children’s play area outside the shop; devoting more efforts to customer data management for dissemination of new product informationPopular activities such as Valentine’s Day and internal sales promotions Cooperating with Alibaba to offer online-offline sales, providing faster and more convenient shopping service and expanding consumer base

Shirley Pan, Hangzhou Office

Content provided by Picture: HKTDC Research
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