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Five retail trends to learn from in 2020

by Pearl Zhu
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Andrew Atkinson from China Skinny gives the lowdown on 5 trends likely to establish themselves as major factors in any brand’s development in China in the coming months

As we pull curtains on a year forever marked with an asterisk, some may see it as foolish to reflect on big emerging consumer trends, as they may be deemed “pandemic-fuelled” and easily erased at the push of a syringe – but China tells a different tale. China has been in full stride for much of the year, and although Covid has been a factor, many trends have developed independently of the virus. Let’s take a look at the key ones.

2020: the perfect storm for traceability improvements

Cows in field

A national blockchain platform will enable the exact provenance of food products to be logged

When you next sit down to your bacon and eggs, how much more would you pay to know with absolute certainty where those animals were raised? The kind of diet they were on? That they never came close to a cage or a crate?

After a lull in marked improvements in consumer-facing traceability applications the last several years, 2020 contained the right mix of events to up the standard. One of the pandemic’s lingering effects has been the public on high alert to stories of Covid samples found in imported food products and on packaging. China’s huge investment in establishing a national blockchain platform is said to reduce costs for developers by up to 97%, and it is only a matter of time until a purchase journey includes a scannable experience to assure you of the exact provenance of the product being bought alongside a myriad of other packets of information timestamped onto a supply-chain report.

How much more would you pay to know with absolute certainty where those animals were raised? The kind of diet they were on? That they never came close to a cage or a crate?

Of course, this is where domestic brands will take a lead, with the government already pouring money into traceability infrastructure to support high-trust categories like infant formula. It will take a savvy effort from foreign trade organisations to enact something similar, but in the meantime, there are providers who are aware of these market shifts and the need for foreign brands to mitigate this market risk.

Community group-buying growing and expanding to premium categories

Group buying will expand outside of the traditional grocery category

When the government has to step in to try to pour water on a surging commerce channel you know something’s going right (just look at daigou for the past decade). On the 22nd December 2020, the government announced restrictions on China’s internet giants spending millions to own and operate this thriving localised purchasing channel.

Essentially it works on the back of China’s very dense living situations – with often thousands living in a series of apartment blocks within a compound. These compounds will have leaders or ‘group buyers’ who organise big purchases on behalf of the residents through retailers or even directly with brands. Often operated through WeChat group chats with fellow residents, the leader will gauge orders and then take care of everything for you. Pay your fee, walk downstairs, grab your goods and it’s as easy as that.

It is a great tool for smaller brands who are active on the ground to gain some traction for their brand, and we expect 2021 will only see this channel become further established and brands increasingly outside of the main grocery category beginning to leverage it.

A country falling out of love? Maybe the only thing the government cannot control

Low birth rates and high divorce rates mean China is increasingly a nation of singletons

Chasmic gender gaps, unbearable social pressures, severely limited socialising through childhood – whatever your view is, it is clear that the lack of love in China is beginning to seriously worry officials. Despite relaxing the one-child policy, China’s birthrate is still slow. At April’s People’s Congress, China enacted its first ever civil code, with an entire chapter on marriage and family. The new regulations come in to force in 2021 to try to hold back skyrocketing divorce rates: reports of overwhelmed registry offices in December abound as many rushed to get their divorces through. Estimates now suggest that China’s single adult population tops 250 million.

In almost every category we work in, we are seeing an increasing need for product, marketing and branding that connects with the single consumer – or one that is breaking with the entrenched familial-focused mindset that has defined Chinese lifestyles for generations. It’s not just the data that supports this all-consuming trend, but in the thousands of conversations we have with young Chinese people we have started to note the real fall in the number of people aspiring to a government-endorsed family life.

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China embraces a new kind of thrift

As a burgeoning second-hand market emerges, quality craftmanship will prove a hit

Chinese notoriously love a deal, and commerce platforms have been pushing the envelope on discounting tactics since day one. My colleagues even recently complained that you now need a mathematics degree to understand what combination of vouchers you’re entitled to and the price you need to pay on Singles’ Day. Nevertheless, this deal-hunting has always been limited to new products, but 2020 saw the concept of desirable second-hand goods emerge.

Now, for the first time, this concept of ‘thriftiness’ has entered the consumer psyche, with some measurable impact. Government researchers have predicted second-hand goods sales to top £103.5 billion this year. The Alibaba second-hand goods platform Xian Yu kicked into gear in February and March, with users looking to ‘Marie Kondo’ their lives under lockdown.

In almost every category we work in, we are seeing an increasing need in product, marketing and branding to connect with the single consumer

Keep in mind that most consumers in China have never before bought secondhand goods. Now that millions have taken the plunge on the platform (or elsewhere — WeChat groups have been brimming with secondhand sell-offs) and have had a positive experience with it, brands need to sense what this means for connecting with their consumers. Suddenly longevity is starting to climb up the list of needs for certain products. By no means does China have the ‘buy it for life’ mentality that you see in the West, but when paired with burgeoning messaging around sustainability, this area could quickly grow.

Our research into UK perceptions has shown that craftsmanship and quality is the dominant association in China – something that may grow in importance in-line with this trend.

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Ethical branding set to surge

The demand for eco-friendly and sustainable products is growing, especially in the cosmetics sector

Foreign brands have long waited for Chinese consumers to adopt the same values when assessing sustainability and ethics in a brand. Mid-2019’s milestone regulation saw Shanghai initiate a recycling system – becoming the first city in China to do so. Slowly but surely other cities have followed suit.

Our Category Trackers survey thousands of respondents each quarter on a variety of brand and product factors. It has been hard to ignore the steady progression that ‘eco-friendly production’ has had through the rankings.

Perhaps the biggest impact on consumer sentiment is in the beauty category. This year saw the draft legislation to remove the requirement for animal testing pass, and all signs point to everything being set in stone in early 2021. This will usher in a number of new entrants with immense marketing budgets who are well-known for their cruelty-free messaging globally.

These are just a handful of the consumer trends that we have really seen coming to the fore in 2020, and ones we would recommend are considered when planning your China engagement for 2021.

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