Retail sales in China grew by 13.2 percent in the first half of 2013, slowing slightly. Per-capita disposable income of urban households rose by 9 percent while urban household consumption expenditures grew by 7.2 percent.
In the first half of 2013, the total retail sales and per-capita consumption spending of urban households reached RMB11.1 trillion and RMB8,784 respectively.
Guangzhou had the highest year-over-year retail sales increase of China’s seven major cities, rising 15.6 percent. Tianjin and Hangzhou followed with a 13.3 percent and 13.1 percent retail sales growth, respectively. Beijing and Shanghai had the highest retail sales among these seven cities but lower growth rates.
Retail sales were chiefly driven by the urban population, which accounted for 86.5 percent of total retail sales in 1H13; but rural retail sales grew at a faster rate, according to research from Li & Fung. Urban retail sales increased by 12.5 percent year-over-year to 9.6 trillion yuan in the first half of 2013. Rural retail sales rose 14.3 percent year-over-year to 1.5 trillion yuan in the same period.
The specialty stores segment had some of the fastest growth. Both local and international specialty retailers are expanding aggressively. International players that have entered the China market included Topshop, Forever 21, and Hollister.
While growth in the luxury segment has decelerated, it still holds promise due to the rise of household disposable incomes, rise of individual wealth and middle class affluence, urbanization, and increase demand for luxury goods in smaller cities. Luxury retailers have already started to change their China strategy given the evolving retail landscape. Some are focusing less on aggressive store openings and more on improving store productivity. Others are going into lower-tier cities. “Luxury brands no longer see tier 1 cities as a springboard to raise their profile, but have started to push their sales nationwide, ” Li & Fung writes in a recent report.
Online shopping’s popularity continued to power China’s retail market. As Chinese consumers get more comfortable with shopping online, growth is not expected to abate anytime soon; instead online commerce has the power to alter China’s retail market.
image credit: chris