11 March 2016
2016 Chinese New Year Sales: Qingdao
Over the Chinese New Year period, the combined turnover of the 10 major commercial enterprises in Qingdao was Rmb506 million, up 3.26% year-on-year. Sales were most outstanding in the case of such items as household appliances and telecoms equipment, while demand for cosmetics was also high. The shift from traditional consumption to spending on leisure and entertainment was also a notable trend this year.
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.
In Qingdao, Spring Festival consumption showed the following characteristics:
Themed shopping stimulated spending
A number of special promotional activities - including the 2016 Qingdao Spring Festival Shopping Fair and the Spring Festival Bazaar - were staged, all actively pushing such themes as “quality life, happy shopping” and “promote consumption to improve livelihood”. Among the interactive promotional activities that successfully drove spending were the Liqun Group’s Year of Monkey Gifts, Mykal’s Happy Spring Festival & Valentine’s Day, Hisense Plaza’s Confess Your Love on Valentine’s Day campaign, the Likelai Group’s Golden Monkey Spring Festival Bazaar, Suning Appliance Group’s New Year Goods Delivery Service throughout Spring Festival and Gome Electrical Appliances’ Spring Festival Gala.
Online shopping remains popular
Among the 17 cities in Shandong, Qingdao ranked first in terms of the popularity of online shopping (14.6%). Online shopping not only drove up overall consumption levels for the whole city, it was also said to have knocked about six percentage points off the growth rate of the sales of physical stores.
1) Consumption of household appliances and telecoms equipment was a bright spot while sales of smart household appliances and mobile phones were particularly impressive. More than 50% of total smartphone sales were accounted for by five leading brands - Apple, Huawei, Xiaomi, Meizu and Samsung. Overall, sales of household appliances grew 8.9% year-on-year, while those of telecoms equipment saw a 20.7% increase compared to the same period last year.
2) Cosmetics proved a pleasant surprise. Although they were affected by such factors as the growth in online shopping, throughout the Spring Festival period, many major cosmetics companies still prospered. Overall, they were still able to chalk up a strong growth of 14.4% year-on-year and show increased brand awareness among cosmetics consumers.
3) Spending on foodstuffs and clothing showed steady growth. Garments, headwear and footwear, foodstuffs, beverages, as well as liquor and tobacco, were still key traditional shopping items during the Spring Festival. These five categories accounted for 58% of total sales. Among these items, the sales of garments and beverages grew 2.8% and 0.9% respectively.
4) Jewellery sales dropped sharply. During the Spring Festival, the sales of all types of jewellery items went down 21.8% year-on-year. It is expected that overall growth in spending will be dragged down by two to three percentage points as a result.
5) The catering market continued to flourish. Locals and tourists alike were primarily looking for special - but reasonably-priced - green food. The true potential of mass-market dining also became obvious. A number of the large and medium-sized hotels actively responded to market needs and changes by introducing value-for-money and specialty dining services and were able to register turnover growth of more than 7%. Overall, though, the demand for mass-market dining grew to the extent that tables were difficult to come by in certain establishments, including Haidilao Hot Pot, Grandma’s Home and Chuange Dumplings. In particular, the turnover of KFC grew by more than 3% year-on-year during the Spring Festival period.
Increased spending on leisure and entertainment
The shift from traditional consumption to spending on leisure and entertainment was a clear trend this year. With 57% of the people in Shandong enjoying travelling for leisure purposes, Qingdao has become a popular destination. Going to the gym, karaoke and movie going all proved popular during the Spring Festival. Citywide, box office receipts are expected to exceed Rmb20 million.
Shopping malls target both niche and mass markets
i. Shopping malls with distinctive customer positioning attracted more customers.
ii. Shopping malls with comprehensive business formats were able to draw more shopper traffic
The Hisense Plaza (high-end + shopping mall), MixC Mall (fashion + shopping mall) and Suning (specialised in appliances) all posted more than 15% growth in turnover. Shopping malls with traditional formats, however, showed varying degrees of sales decline.
The following table illustrates consumer spending patterns in a number of different Qingdao shopping locales throughout the CNY holiday:
|Shopping Mall||Hisense Plaza||Liqun Shopping Mall||Weekly Square|
|Grade||High-end||Mid-range||Mid- to low-range|
|Top-selling items||Clothing, children’s products, household products||Greengrocery and meat gift boxes, liquors, jewellery etc.||Clothing and accessories, gifts|
|Average spend per customer (Rmb)||2,000||160||150|
|Year-on-year sales growth||Over 20%||-2.6%||15%|
|Promotional tactics||(1)Valentine’s Day “Confess Your Love” campaign|
(2)Lucky draw for VIP members (100 iPhones, 1 car)
|Given the customer mentality during post-festival period, campaigns such as red packet lucky draw chances upon purchases of designated amounts and Valentine’s Day activities were organised.||New Year’s goods as gift upon any purchase; other Monkey-themed promotions.|
|Sales highlights||(1)With Phase 2 operational, turnover shot up sharply|
(2)Young fashions and light luxuries were popular
(3)Sales increase was highest for children’s products and household products
|Mobile phones and telecoms equipment posted fairly good sales growth||(1)Steep discounts promoted the sales of clothing and accessories and helped increase shopper traffic|
(2)Integrated marketing gimmicks added to the fun and appeal of shopping
|Online selling||Not available||Turnover of online store down 5% year-on-year||Unsatisfactory performance of online store; no contribution to overall sales|
As a renowned high-end department store in China, the Hisense Plaza has adopted the latest business-format mix of “high-end department store + shopping mall”. With its Phase 2 development coming into operation, not only is there an increase in sales floor area, there is also a substantial enrichment in business formats and an upgrade in the overall shopping experience. The expanded Hisense Plaza now offers an additional 6,800-m2 theme dining and leisure zone; a 2,100-m2 kids’ zone; double-decker stores for top international brands such as LV and Burberry; and an additional 1,000 upgraded parking spaces. These features are said to have driven the store’s turnover growth by more than 20% during the Chinese New Year period.
Jackson Mu, Qingdao Office