RETAIL, CONSUMER & E-COMMERCE
BMCP R&D Team
• Retail, Consumer & E-Commerce: Fashion and Luxury Goods
• Retail, Consumer & E-Commerce: Mother and Baby
• Retail, Consumer & E-Commerce: Household and Lifestyle
• Retail, Consumer & E-Commerce: Beauty and Skincare
Do you know who your Chinese consumers are? They are younger every year, born digital and resonate differently to consumer brands messages than their counterparts in other parts of the world.
As the Chinese consumer economy continues to grow in the wake of Covid-19, BMCP’s Retail and Consumer team can help support your brand at every stage of developing your presence and impact in China. From learning about China’s consumer economy, discovering and analysing your brand performance in-market and optimising your brand presence online, to directly engaging with Chinese consumers: we are here to support you along the way.
China has become one of the world’s most important retail markets, meaning there are many opportunities for overseas companies to take advantage of in the wake of the ever-increasing buying power of China’s middle class. There is currently a particularly high demand for premium quality products, ranging from high street brands to heritage goods, and for craftsmanship across the food, fashion, and entertainment markets.
As the consumer landscape in China continues to evolve at a rapid pace our team can enable you to:
Develop your understanding of the China market through BMCP Consumer Masterclasses, Consumer Surveys and China Gateway services.
Discover opportunities through meeting with Chinese buyers, uncover your brand’s performance online through BMCP’s virtual and offline meet the buyer programmes and digital audit and e-analytics services.
Optimise your market approach and assimilate your brand with China’s online ecosystem through our digital events, workshops and live steaming services.
Engage strategically with the market, exposing your products to Chinese consumers on the ground through BMCP’s China Consumer week, Great International Brand’s Festival and Super Brand Day.
An Overview of China’s Retail & Consumer Sector
Policy Shifts Stimulating Consumerism & Prosperity
The three key factors inflencing the increasing consumption of imported products are changes in family structure (including the second-child policy), the desire for new experiences, and an increased awareness of the quality of purchases made.
Beyond this, a growing per capita disposable income affords consumers both a level of comfort and a sense of luxury to their lives beyond what they knew in the past.
Total retail sales of consumer goods in China reached over £4.8 trillion in 2019, with a Compound Annual Growth Rate (CAGR) of 9.4% over the past five years. With many staying at home, the COVID-19 pandemic saw a rise in use of E-Commerce. China has numerous e-commerce platforms.
Taobao, Alibaba’s C2C platform, reaches 600m Monthly Active Users (MAU) and is the world’s largest e-commerce website. China’s largest B2C platform is Tmall, also owned by Alibaba, with 500m registered customers. Other major players in Chinese e-commerce include Kaola (Alibaba, over 30m MAU), JD.com (417m active users Q2 2020) and RED (or ‘xiaohongshu’, 100m MAU).
For the first quarter of 2020, Alibaba listed a 34% YoY revenue increase, while JD.com also saw a revenue growth of 33.8%. CBEC platform usage increased by 65% in the first three months of 2020 and is forecast to have reached a 2.6% annual increase by the end of the year.
China has the largest market and the highest growth rate for online retail sales in the world. The market reached a value of £1.24 trillion in 2019, and the total online retail sales for consumer goods reached £991 billion, accounting for over one fifth of total retail sales of consumer goods.
The top three online sales categories in 2019, in terms of market share, were apparel and accessories, daily necessities, and household appliances. Sales of cosmetics, furniture, and jewellery grew faster than other categories in 2019. Cosmetics, food and drink, and daily necessities accounted for approximately 73% of total CBEC sales in China in 2019, and cosmetics had the highest YoY growth rate at 46.2%.
Tmall, JD.com, Kaola and RED offer CBEC platforms. The largest is Tmall Global: access to their large but highly competitive market is invitation only and expect to pay a deposit, annual fee, and sales commission.
In 2019, the Double 11 E-Commerce Shopping Festival reported the largest sales figures of any shopping event in the world. The 2020 Festival set new records: a $56 billion sales boom demonstrates China's sustainable consumption power.
Technology Driving Greater Accessibility
China’s offline retail market embracing new technology to enhance the retail experience, including Artificial and Virtual Intelligence, as well as block chain technology.
Second-tier cities, third-tier cities, and even rural locations are becoming a key battleground for both domestic and international retailers, and particularly for those that focus on online business.
Development of smart logistics, along with the rapid adoption of smart phones and mobile commerce, is increasing the number of consumers able to access and buy international brands online.
Social Media, KOLs, KOCs and Livestreaming
With the unparalleled power of Chinese social media and e-commerce influencers over their followers, there is little doubt that Key Opinion Leader (KOL) marketing should be a key consideration for any international brand when setting their China marketing budget.
During the Covid-19 China lockdown in February 2020, millions of Chinese consumers turned to live-streams for both e-commerce and entertainment and as the consumer economy rebounded strongly, China had 562 million livestreaming users back in June and one the most dynamic influencer markets in the world.
Key Opinion Leaders and Key Opinion Consumers are essential advertising bases. Both are trusted by large followings and are frequently sent samples by brands. Some of the most important work is done in E-Commerce livestreaming – a relatively new industry with a combined revenue of US$98 billion in 2019. In October 2017, Viya (an important KOL and E-Commerce live streamer on Taobao Live) made a small Chinese fur shop obtain 70m followers overnight.
Idol endorsement is also an effective retail sales boost, brands promoted on social media platforms like Weibo: in 2020, the stock of all companies endorsed by dancer Wang Yibo rose by an average of 32%.
Fashion and Luxury Goods
The increasing number of young, wealthy Chinese shoppers from first- and second-tier cities has attracted a large proportion of global retailers to China. Although this market continues to be buoyant, luxury retail has recently become a politically sensitive topic because of a ban on government officials receiving gifts, and in response to this more conservative and risk-averse political climate there has been a shift towards the consumption of lower-profile luxury goods, of which the burgeoning fashion for streetwear is a good example. The appeal of streetwear has also been boosted by popular reality shows that refer to urban and hip-hop culture. More luxury brands are beginning to target young adults by releasing limited edition co-branded collections in collaboration with popular street fashion brand
Mother and Baby
The number of babies, the desire to “upgrade” what one has already bought, and product diversification have all contributed to the growth of the mother and baby market in China, with baby diet supplements and baby care products acting as the key drivers of demand. Buyers of mother and baby products show a preference for omni-channel shopping which echoes the New Retail and Smart Retail concepts of seamlessly integrating E-commerce, social media, and offline retail stores, while high quality, efficient, convenient, and stylish designs are in high demand by the new generation of mothers.
Household and Lifestyle
Following the continuous improvement of living standards in China, its consumers show an increasing willingness to spend money on household goods and international tourism. A consumer survey by the Hong Kong Trade Development Council shows the demand for children’s furniture, outdoor furniture, and eco-friendly furniture is growing, while a 2017 Outbound Tourism report, jointly released by Ctrip and the China Tourism Academy, notes that Chinese outbound travellers spent £86.8 billion during their trips in the preceding year, a high proportion of which was done via Alipay and WeChat Pay – young travellers’ favoured payment methods. UK shopping centres and shops equipped with these two mobile payment options are more likely to attract these shoppers and their wallets.
Beauty and Skincare
Beauty and personal skincare products are the second-most frequently bought products by consumers on cross-border E-commerce platforms, demonstrating the scale of the market. A study by Euromonitor shows that Chinese consumers, especially those born in the 1980s and 1990s, have a strong preference for high-end international skincare products. Although mandatory animal testing still poses a major hurdle for British beauty and skincare brands wanting to access the China market, cross-border E-commerce provides an alternative channel to reach Chinese buyers through. It is also worth noting that the UK government actively engages with the relevant China policy makers on the issue of mandatory animal testing with the aim of creating more export opportunities within the framework of the current regulations.