As we near 2023’s half-way point, retail sales in China have seen marked improvements during the first few months following the complete removal of Covid-19 regulations. In the first quarter of the year, retail sales rose steadily at 5.8%, and in March, there was a notable uptick, with a 10.6% increase in retail sales compared to last year. This represented the highest growth rate since June 2021.
Read on to find out the top five trends that brands should watch out for in the second half of 2023.
As the world’s largest e-commerce market, China had over 1 billion consumers shop through e-commerce channels in 2022, making up 45.3% of all online retail sales worldwide. Within China, online sales channels accounted for 51% of all sales in the country.
E-commerce growth has continued throughout the Covid-19 pandemic, and this trend is unlikely to stop even with Covid-19 restrictions now removed. This is especially true as the purchasing power of Gen Z consumers, who grew up with technology and are the most digitally savvy generation, continues to increase.
Brands who want to succeed in China must consider online sales channels in their market entry or expansion plans and reach customers where they are shopping for products.
Source: Statista – in cooperation with MOFCOM China, February 2023
Over the past year, the metaverse has become increasingly substantial in China, with more brands testing the waters and expanding into this segment. The metaverse can be explained as a virtual world that allows for greater integration of the digital and physical, in areas ranging from socialisation and shopping to work. Technologies include those within the fields of virtual and augmented reality.
The metaverse presents uncountable new opportunities for brands, businesses and developers, as shown by the over 16,000 metaverse-related trademark applications from Chinese companies. Many of the big tech companies in China, including Alibaba, Baidu, Tencent and ByteDance, have released their own metaverse ecosystems, wherein users can create avatars and interact in a virtual environment. In fact, since the second half of 2021, over 37 digital collections have been released by brands on Alibaba’s Tmall Luxury Pavilion, purchased by thousands of customers.
Compared to countries such as the US and the UK, Chinese consumers are showing greater interest in the metaverse, especially as it relates to gaming. In fact, among Chinese consumers who are interested in the metaverse, over 82% are optimistic about its future benefits, which is much more than among those in Western countries.
AI-generated virtual influencers are amassing huge numbers of followers and becoming celebrities in China, with the industry expected to increase from $870 million in 2021 to $6.7 billion in 2025. This comes at a time when China is cracking down on human celebrities and influencers, with virtual influencers becoming safer, scandal free alternatives.
Technological advances have allowed these virtual influencers to hold live streams, walk down virtual runways and pose alongside products, just as a real influencer can. Especially among fashion brands, working with virtual influencers in China has become increasingly common.
Although the fanbase for human influencers is much larger than the growing fanbase of virtual influencers for now, they are certainly a trend to keep an eye on.
Over the past ten years, the pet industry in China has seen a 2,000% growth rate. Chinese pet owners are increasingly treating their furry companions as beloved family members or children, and are more willing to spend on them. The younger generations in China are moving away from the traditional family unit, with many preferring to live alone and looking to pets to fulfil their emotional needs.
As a result, all categories within the pet market are seeing surges, from pet food and pet toys to pet tech devices and clothing. The entire pet industry is expected to reach US$113.9 billion in 2025. With over 76% of pet owners in China under the age of 30, online purchase channels are at the forefront of the pet market.
Healthy, premium and natural pet foods and treats are hugely popular among pet owners, who are mostly young, highly educated consumers living in higher-tier cities. These consumers are not only interested in their own health but also the health of their animal companions.
Other trends include pet tech devices such as automated feeders, smart cameras, or smart litter boxes, many of which can connect to WiFi and be controlled by apps on mobile devices.
Another trend that has surged over the past year is a fascination with the outdoors. From skiing to camping, Chinese consumers are more willing than ever to try out new hobbies and activities, especially after the end of Covid-19 restrictions.
The Winter Olympics in Beijing helped to drive interest in winter sports, leading to a growth in sales of winter sports equipment among Chinese consumers. Moreover, the popularity of Team China’s Eileen Gu, who won the gold medal in the Freeski Big Air event among others during the Winter Olympics, has also added to the excitement and hype around winter sports. Many of these new enthusiasts are first-time skiers and require an entirely new set of clothes and gear, making China a budding and still not fully tapped market for brands within this category.
Aside from winter sports, Chinese consumers are also showing greater interest in hiking and camping as summertime activities, which is a market that is expected to increase to above $100 billion by 2025.
This article was first published in The RED Edition Issue 8 by RedFern Digital
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