How the virus will affect China’s retail sector

Jack Porteous from cross-border e-commerce company Samarkand Global examines how the Covid-19 pandemic will affect China’s retail sector, from even faster e-commerce growth to a rising focus on healthy living

Acceleration of new technology in e-commerce

Some argue that SARS sowed the early seeds of much of the e-commerce innovation that came in its aftermath. JD nearly closed down after its stores, originally to be found in shopping malls, nearly lost all their customers. Shortly after the virus ended they launched JD.com, which is now one of the largest online retailers in the world. This time around, we can expect some experimental and under-used technologies to be rolled out more quickly – notably drone use in logistics, but also potentially online user experience solutions. Innovations such as virtual dressing rooms, ‘magic mirror’ style make-up previews, and user-friendly personalisation solutions for products will be rolled out quicker than had been intended.

Luxury spend starts to move in-market, and online

Chinese nationals make up one-third of global luxury spend, with this billed to rise to 40% by 2025. Yet only 9% of global luxury sales happen in Mainland China, and currently, only 10% of these sales are completed online. This means that, until now, most of that spending had been done overseas, in stores. In combination with falling tariffs and more global luxury brands having a presence on Chinese platforms, we will likely see a behavioural shift. Luxury consumers will commit more easily to purchasing products online while they can’t travel, and their local Burberry or Gucci store is closed. Brands that offer a good online service will be able to turn this phenomenon into a permanent shift in their customer journey.

Focus on healthy living

Already a firmly established trend in 2019, and expected to continue into 2020, the COVID-19 health scare will almost certainly sharpen the focus of many Chinese consumers on healthy living. Home exercise has become common. Shanghai’s local government has even rolled-out online videos starring Olympic champions to motivate people to stay fit while stuck inside. Expect to see increased demand for nutritional supplements, healthy food and snacks, and sports and fitness equipment and accessories, as well as products which improve the hygiene of your home environment – for example air purifiers, domestic cleaning products, and healthtech products.

A nation of chefs

Social media platform Douyin has been bursting with content of people showing off their newly-honed culinary skills. With so much time at home, people have been getting experimental in the kitchen. A new nation of amateur chefs could see this hobby becoming more common, creating greater opportunities for homeware, and food and drink brands.