By Xinhua writer Zhang Zhongkai
BEIJING, June 22 (Xinhua) -- Emily Li, a 31-year-old financial professional in Beijing, spent over 4,000 yuan (about 582.2 U.S. dollars), about one fifth of her monthly salary, on cosmetics products during the recently-concluded mid-year online shopping festival.
These purchases include not only a big-brand eye cream which cost her nearly 1,000 yuan (about 147 U.S. dollars), but also moisturizing lotions from a lesser known home-grown brand that each cost less than 100 yuan after discount.
"Brand names matter less to me now. Premium quality doesn't necessarily come with expensive price tags," Li said.
Increasingly affluent Chinese consumers, like Li, are displaying fresh shopping preferences and habits, creating a robust yet evolving retail market.
ROBUST GROWTH
Official data showed that May retail sales expanded 8.6 percent year on year, quickening from an increase of 7.2 percent registered in April. Total retail sales expanded 8.1 percent year on year in the first five months of this year, with online sales posting robust growth momentum by growing 17.8 percent.
China's fast-moving consumer goods (FMCG) consumption remains robust against downward economic pressure, while transformation in retail models is picking up pace, according to the latest China Shopper Report from global management consulting firm Bain & Company and shopper behavior observer Kantar Worldpanel.
Total FMCG spending continued its rebound last year, expanding faster from last year's 4.7 percent to 5.2 percent, according to the report based on research of the shopping behaviors of Chinese consumers across 106 FMCG categories.
Data from the mid-year online shopping festival echoed the rebound. E-commerce platform Suning saw orders for pan-FMCG products surge over 240 percent during the promotion period.
"Amid the FMCG market's recovery, we continue to see premiumization playing an important role, as Chinese consumers favor goods that promise to improve their health and lifestyle," said Bruno Lannes, partner in Bain's Greater China Consumer Products Practice.
Among them, home care and personal care categories grew at a fast clip, while food and beverages maintained a slower pace, the report showed.
DYNAMIC LANDSCAPE
China's retail market is seeing fast-growing small brands, which are doing an impressive job of serving specific consumer needs, responding in everything from research and development to digital marketing with agility and flexibility, said Jason Yu, general manager of Kantar Worldpanel Greater China.
Smaller brands are the growth leaders, which outperformed the top five brands in all categories except makeup and packaged water, the report showed, pointing out that that Chinese consumers now crave for more diversity in shopping.
"There were about 3,000 shampoo brands in China 10 years ago, which mainly sought to gain market share with lower prices. Now the number of shampoo brands might be even bigger, but they are focusing on catering to individual demands and niche markets with high-quality products," Yu said.
Meanwhile, the report observed that local players continued to gain market share over foreign competitors on an aggregate basis. Chinese brands have grown by 15 percent since 2016, contributing 76 percent of market growth in 2018.
The new retail model also keeps gaining ground in China, as more and more offline stores connect online to reach and serve customers, especially in the food service sector.
As Chinese consumers continue to become more sophisticated and the channels available to them become more advanced, companies have to understand and incorporate the new retail model and focus on a customer first mentality to win in this emerging new battleground, said Derek Deng, Bain & Company Partner.
