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2016 Chinese New Year Sales: Guangzhou

As with 12 months ago, CNY sales in Guangzhou continued to decline this year. For 2016, though, the fall was significantly smaller than the 11.26% recorded in 2015.

Photo: Floral tributes: Tianhe’s bustling New Year’s flower market.(Xinhua News Agency)
Floral tributes: Tianhe’s bustling New Year’s flower market.
Photo: Floral tributes: Tianhe’s bustling New Year’s flower market.(Xinhua News Agency)
Floral tributes: Tianhe’s bustling New Year’s flower market.

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.

As ever, Guangzhou’s major department stores seized on the holiday season as an opportunity to promote sales. The success of these initiatives is analysed below.

There are nine major department stores in Guangzhou - Grandbuy (Xindaxin, GBF and Grandbuy Gold Building), the Guangzhou Friendship Store, TeeMall, Mopark, Simgo, Dongshan, China Plaza, Wangfujing and U-City. Collectively, they recorded a turnover of Rmb524.2 million across this year’s CNY golden week, a drop of 1.06% year-on-year.

For many in the retail industry, this came as little surprise. Department stores have been widely seen to be in decline for a number of years now, the consequence of weak consumption patterns and the rise of the e-commerce sector. Added to this, more and more local residents are now travelling overseas during the holiday season, inevitably resulting in fewer shoppers and weaker sales in the domestic market.

Sales Turnover of Selected Guangzhou Department Stores
CNY 2016

Department StoreSales Turnover (Rmb Million)
Guangzhou FriendshipClose to 100
China Plaza33

Throughout the holiday period, many of the city’s department stores undertook major promotions in order to boost sales. These activities included hosting shopping festivals and sales exhibitions of New Year goods, as well as offering substantial discounts and special bargains in conjunction with the local business district, the flower market, the lantern market, the food street and a number of other retail communities. The overall intent was to create a dedicated Spring Market, combining leisure, entertainment, shopping, catering, tourism and business elements.

As the seventh day of the Lunar New Year was also Valentine's Day, this was seized on as an additional channel for stimulating consumption. As a result, as well as traditional New Year items, spring fashion, gold bars, home appliances, jewellery, watches, and CNY and Valentine's Day cosmetics gift boxes all proved highly popular with consumers.

According to staff at the Grandbuy Department Store, New Year’s goods were purchased as gifts as well as for personal consumption. Among these, cookies, almond candies, Chinese sausages and dried seafood soup packs were the best selling items. There was also considerable demand for rice, oil and other foodstuffs. Overall, the warm weather fuelled the sale of spring clothing, with spring fashion dominating floor and window displays and lightweight clothing widely purchased.

During the second half of the Spring Festival holiday, the weather turned a little more humid. In Grandbuy’s home appliances department, this led to increased sales of dehumidifiers and clothes dryers.

Over at the Guangzhou Friendship Department Store, this year the store recorded a 30% increase in the sales of Valentine gifts in the run-up to Valentine's Day.

With its value rising throughout the Spring Festival holiday, gold sales were notably buoyant. According to the manager of the Dongshan Department Store, the outlet sold out its entire stock of 1,000g, 500g, 200g and even 50g Year of the Monkey-themed bars during the Spring Festival period.

Shopping Centres Go All-Out to Attract Customers

Many of the shopping centres in Guangzhou made all-out efforts to attract customers through a range of promotional activities across a variety of themes. This is best illustrated by examples from the Tianhe district, one of the city’s retail hubs.

In addition to its longstanding attraction - the Grandview Aquarium – this year, the Grandview Mall also staged a Lego Star Wars exhibition, complete with towering 2.4-metre models and the opportunity for visitors to build their own spaceships, which could then be incorporated into scenes from the movie.

By comparison, Taikoo Hui opted to host an exhibition with the theme of "a hundred birds paying homage to the phoenix on New Year’s Day”. This saw photos of bonsai trees enlarged to decorate the mall in the style of a Lingnan garden, allowing shoppers to enjoy a rich South China ambience as they celebrated the Spring Festival.

Over at One Link Walk, shoppers were invited to pose for photographs in front of huge peony decorations. For shoppers in the Yuexiu district, the Central Plaza was the setting for a Guangzhou local cultural fair, with lucky money envelopes – complete with auspicious proverbs – handed out to passing purchasers. In addition, Peng Jiazhi, a famous Cantonese story-teller, was on hand to tell stories in the local dialect.

The CNY promotion for shoppers in Zhuhai’s Rock Square, meanwhile, was dominated by a five-metre Lucky Cat and a 500-square-metre peach blossom garden.

Surging Demand for Experiential Businesses

As the demand for experiential businesses continues to rise, the provision of entertainment and catering services has become an ever more effective means for shopping centres to boost their retail sales. In light of this, the Happy Valley Mall plans to restructure its internal layout and is looking to convert the stores on its first six floors into restaurants in order to increase the space allocated to catering businesses. This will increase the overall catering space by more than 10,000 square metres, some 24% of its total commercial floor space.

There have been similar moves at the Grandview Mall, where floor B1 has been converted into a stylish food hall, which now houses a number of popular fast-food brands. The store also invested more than Rmb1 billion in ensuring its Grandview Aquarium, cinemas and Star Wars project were all completed before Chinese New Year. In order to put this into perspective, this investment is equal to the expected sales revenue of a large department store over a 10-15 year period.

In the case of the Happy Valley Mall, catering and entertainment now account for 60% of its commercial floor space, with the remainder reserved for retailers. The mall now plans to augment its experiential offering with the addition of a zoo and an art centre.

Following the 2015 downturn in CNY spend in the city, many cited a lack of differentiation in the local retail offerings, as well as the rise of e-commerce, as the root causes of the problems. Over the last 12 months, this has seen a number of Guangzhou’s department stores cast around for new business models and new profit centres. This has led many of them to reassess their brand offerings, marketing and target markets.

Natalie Lu and Christine Deng, Guangzhou Office

Content provided by Picture: HKTDC Research
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