10 March 2016
2016 Chinese New Year Sales: Chongqing
A spectacular growth in spending on services marked a significant shift in buying patterns in Chongqing when it came to this year’s Spring Festival. Demand for physical goods waned by comparison as non-product consumption accounted for more than half of the overall sales at many of the city’s shopping centres.
Figures from the Ministry of Commerce show that, from New Year's Eve to the sixth day of the Chinese New Year (7-13 February 2016), the total takings of retail and catering enterprises nationwide was more than Rmb754 billion, up 11.2% over the Spring Festival golden week last year. While a number of new sectors achieved impressive results, traditional New Year’s goods; mass market dining; cultural, sporting and entertainment activities; tourism and leisure activities also fared well throughout the festive spending period.
Staff at the HKTDC's mainland offices (Beijing, Dalian, Qingdao, Xi’an, Shanghai, Hangzhou, Nanjing, Wuhan, Chongqing, Chengdu, Guangzhou, Fuzhou and Shenzhen) made visits to a number of high-end, mid-high end and mid-range shopping centres in their respective cities before, during and after the Chinese New Year in order to ascertain just how the consumer market performed this year.
Throughout the 2016 Spring Festival, consumer spending in Chongqing proved buoyant, with many of the city’s major commercial districts, shopping centres, retail outlets and supermarkets organising a variety of sales promotions. According to the Chongqing Municipal Commission of Commerce, sales in the major shopping districts and in many of the more significant individual outlets grew by 12.6% - reaching a figure of Rmb7.48 billion compared with the same period last year.
Opting to highlight traditional cultural themes, many of the major shopping malls and specialty stores staged such events as zither performances, paper cutting shows, couplet writing competitions, family-friendly entertainment and palanquin parades.
In terms of bestselling items, products featuring traditional cultural themes, as well as those relating to parent/child relationships and respect for the elderly, all did particularly well. Overall, clothing for children and the elderly proved the most popular categories in the garments’ sector. In terms of individual products, Gome’s intelligent watch for kids proved a particular hit, with sales higher than expected. Demand for traditional New Year foodstuffs also remained brisk, particularly with regard to gift boxes, wine and tobacco, snack foods, cooked food, semi-processed food, seafood and frozen products.
A number of the major shopping districts, including Jiefangbei and Guanyinqiao, also organized their own marketing and sales promotions activities. Jiefangbei also opted to open a dedicated public WeChat account, using this to channel sales promotions and discount information to users in a bid to stimulate spending.
Overall, according to the local data, the three most notable emerging consumption trends in the city were:
1. Rapid growth in experiential consumption.
2. Rapid growth in Internet-plus consumption with WeChat Shake and other promotional tactics used in many major shopping malls. This saw large discounts offered across a variety of goods, boosting festive sales by more than 15%.
3. A notable increase in purchases in the fast fashion sector.
In terms of additional trends, two other particular developments were also apparent:
1. Spending in the services sector has overtaken the outlay on physical goods, with non-product spend accounting for more than 50% of the overall sales of many shopping centres.
2. With the continuing growth of e-commerce, the share of goods purchased from abroad online is on the rise. This has seen consumption outflow taking its toll on local consumption growth.
Overall, the growth of the mass consumer market in Chongqing also affected spending patterns. As a result of the current macroeconomic downturn, retail sales growth slowed down in the main urban districts, while the rapid development of other districts and counties also drew consumers away. Typically, public consumption is determined by frugality and affordability, both of which are becoming more scientifically determined by consumers.
The following is summary of the sales situation and e-commerce development for three leading Chongqing stores:
|Store||Times Square||Longfor North Paradise Walk||New Century Store (Daping Shangdu)|
|Top-selling items||Clothing, catering, jewellery, bags, food||Clothing, jewellery, cosmetics, shoes, bags and catering (jewellery is most significant)||Clothing, food, shoes, bags, home textiles, cosmetics|
|Price range (Rmb)||Clothing 2,000-20,000;|
Shoes and bags 500-5,000;
Shoes and bags 200-4,000;
Home textiles 100-8,000;
|Average spend per customer (Rmb)||4,000||3,000||1,000|
|Promotional tactics||Gift upon purchase of specified amount, eg. cash voucher redeemed with membership points and WeChat Red Packets offered by Ole Supermarket. This not only attracts members but also office workers in the vicinity.||Limited version membership card, gift redeemed with bonus points, gift upon presentation of DM, such as Pandora’s specially designed Rmb398 silver jewellery in order to attract young customers||Gift upon purchase of specified amount. Save Rmb3 or Rmb5 upon spending of Rmb10 on certain goods|
|Online vs Offline|
Due to the strong impact of e-commerce on traditional retailers, negotiations with well-known e-commerce operators have been undertaken. Co-operative ventures are expected next year. Brand differentiation of the physical shop has been improved by adjusting the mix of business formats and introducing more mass market eateries.
|E-commerce has made little impact on Longfor North Paradise Walk as it is a centre of experiential consumption. Some shops accept payments by Alipay or WeChat.||In response to the impact of e-commerce, New Century launched the Shijigou platform in 2013. About 60% of the items for sale online are imported in the form of cross-border goods. As of 30 March 2015, the website had 1mn registered members, with an average of 5,000 orders per day. As part of its O2O offer, a cross-border goods display is staged at the store. Shijigou plans to open an experience shop by the end of the year.|
Fiona Chen, Chongqing Office