2020 China Retail Outlook
I like to share my experiences. I’m Suzette Moerman. CEO and founder of a group of companies. Caracter Community is specialized in retail profitability and commercial excellence. In 2015 I founded Caracter China. Shanghai and Hong Kong is where we’re based and I travel on a regular basis to connect with my local team and partners.
A look at 2019
2019 has been a challenging year for China, compared with its huge success in the past 40 years. The trade war with the US, staggering economy, rising unemployment, the swine fever, and the Hong Kong issue all together challenge the government’s leadership. Nonetheless, the country defended the 6% annual growth rate successfully finally.
2020 looks grimmer, starting with the coronavirus. But we should not be so pessimistic. 6% would remain the hard target.
Chinese retail market
Specifically for the Chinese retail market, traditional retailers are expected to continue contraction nationwide, while focusing on food category in order to differentiate from e-commerce. Large stores such as hypermarkets and supermarkets would rely on other formats of catering and entertainment in the complex together to attract shoppers. Which means shopping malls would be the most important shopping destination at weekends. Neighbourhood stores which provide daily fresh produce and necessities are expected to swamp the market, as the smaller format has proved to be very successful in recent years.
As for e-commerce, it would grow fast, but slower than previous years as there is not many new categories to penetrate. Online retailers will also seek to integrate offline business in an effort to attract more shoppers. It would not be surprising if traditional retailers are to be acquired by e-commerce players in the near future. The line between online and offline retailing will be blurred. Meal delivery will remain the most important sector and the cost will be rising so much that new technologies will be needed for the last mile.
There are not many international retailers still operating in China and the new comers, ALDI and COSTCO are not expected to expand rapidly. As regional retailers have grown stronger, it is rather difficult for nationwide expansion. In fact, national retailers are expected to withdraw from certain weak regions and focus on the few promising regions.
Trends & Challenges
No matter if it is online or offline, international or domestic retailer, fresh products will be the key for success in the next few years. (we will talk about this in a next blog.) Other categories that can help make differentiations, such as private labels and imports, will attract all kinds of retailers, which then poses a great opportunity for international suppliers in sectors of fresh produce, snacks, confectionery, beverage, mother and children’s products, etc.
In conclusion, although facing a number of challenges, China remains the fastest growing economy, the biggest retail market, full of opportunities as well as changes. But are you ready?Terug