{"id":816301,"date":"2026-07-22T10:15:19","date_gmt":"2026-07-22T10:15:19","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/816301\/"},"modified":"2026-07-22T10:15:19","modified_gmt":"2026-07-22T10:15:19","slug":"chinas-consumption-future-will-be-driven-by-small-luxuries","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/816301\/","title":{"rendered":"China\u2019s Consumption Future Will Be Driven By Small Luxuries"},"content":{"rendered":"

\n\tAgainst the backdrop of flat retail<\/a> sales growth in the first half of 2026, China<\/a> has set a clear consumption target under its 15th Five-Year Plan, which aims to lift total retail<\/a> sales of consumer goods to around 60 trillion renminbi, or around $8.8 trillion, by 2030, which translates to an annual growth rate of 3.7 percent in retail sales from 2026 onward.<\/p>\n

\n\tApproved by the State Council last week, the plan marks the first time Beijing has introduced a national-level, five-year blueprint specifically dedicated to expanding consumption, underscoring its growing importance as a long-term economic priority.<\/p>\n

\n\tHowever, the world\u2019s second-largest economy remains in the midst of a structural reset. A prolonged real estate downturn, employment pressures and uncertainty surrounding rapid advances in artificial intelligence have contributed to a more cautious consumer mindset, with households prioritizing savings over spending.<\/p>\n

\n\tAccording to official data released last week, despite strong export growth<\/a> \u2014 China<\/a>\u2018s exports jumped 27 percent in June to $412.4 billion, the fastest growth since October 2021 \u2014 domestic retail sales registered a lackluster increase of 1.4 percent year-over-year from January to May.<\/p>\n

\n\tTo reach Beijing<\/a>\u2018s goals, the definition of consumption has evolved to include the service industry, in addition to sectors including consumer goods and catering.<\/p>\n

\n\t\u201cFuture consumption growth will be driven primarily by the expansion of services,\u201d said Dan Wang, director on Eurasia Group\u2019s China<\/a> team. Based on the five-year plan, high-quality service should benefit sectors such as elderly care, child care, culture and tourism, health, and sports.<\/p>\n

\n\t\u201cIn the traditional retail sector, where the focus has largely been on the physical products per se, polarization will inevitably become more pronounced, as the value-added proposition continues to rise in importance.<\/p>\n

\n\t\u201cChina now has been promoting an idea of \u2018servitization of manufacturing,\u2019 which essentially means that industrial products \u2014 including consumer goods \u2014 will increasingly incorporate service-based features, for example \u2014 a musical massage bed,\u201d Wang added.<\/p>\n

\n\tAs artificial intelligence<\/a> opens up new possibilities across home goods and beyond, this year\u2019s World Artificial Intelligence Conference in Shanghai <\/a>offered a preview of that AI-driven lifestyle \u2014 from gadgets including humanoid robots and agentic phones to AI companion plushies. Such consumer-facing innovations could gain further traction among consumers as government-led initiatives accelerate adoption.<\/p>\n

\n\tFor James McDonald, senior director of research at Savills, a global real estate services provider, that mandate has already trickled down to shopping malls and department stores, where more traditional service offerings \u2014 such as fitness centers, wellness providers, children\u2019s education studios and entertainment-focused businesses \u2014 have become increasingly prominent.<\/p>\n

\n\t\u201cThe shift toward services should help malls differentiate themselves from online retail, as many services require face-to-face interaction and cannot easily be replicated through e-commerce,\u201d said McDonald.<\/p>\n

\n\t\u201cThese tenants also encourage repeat visits and help generate footfall throughout the day rather than concentrating activity around lunch and dinner periods,\u201d McDonald added.<\/p>\n

\n\tFor luxury<\/a>, a more discretionary category, that means a period of consolidation will continue, according to McDonald, with brands scaling back in once-promising second-tier cities while continuing to compete for prime retail locations in first-tier markets.<\/p>\n

\n\tLater this year Louis Vuitton<\/a> will open a high-impact flagship at K11 Musea<\/a> over looking Hong Kong\u2019s Victoria Harbour; Herm\u00e8s<\/a>\u2018 only Maison store in the market, launched in 2014 along Shanghai\u2019s Huaihai Road retail artery, is prepping for a major upgrade, and a stone\u2019s throw away, Dior<\/a> is slated to open a new flagship alongside Louis Vuitton\u2019s The Louis, the brand\u2019s much lauded visionary experiential retail project.<\/p>\n

\n\tFurther down the pipeline, the dual openings of SKP<\/a> and MixC in Guangzhou are expected to create a new luxury retail cluster in a city still widely recognized for its manufacturing heritage.<\/p>\n

\n\tAs China\u2019s shopping mall landscape undergoes a structural upgrade, the question becomes how brands can redefine their brick-and-mortar agenda. <\/p>\n

\n\t\u201cConsumers remain willing to spend, but they are more discerning and expect more than simply access to products. Brands therefore have to work harder to earn each purchase by delivering memorable experiences and strengthening emotional connections with customers, while also responding to growing competition from digital channels,\u201d explained McDonald.<\/p>\n

\n\tSavills has identified \u201csmall and micro luxuries,\u201d represented by gold accessories, fragrances and limited-edition designer toys, as a rising force in physical retail, as consumers seek affordable indulgences amid heightened macroeconomic uncertainty. <\/p>\n

\t\t\t\t\t\t\"Popmart<\/p>\n

\t\t\t\t\tPopmart FIFA co-branded products for sale in the flagship store of Pop Mart in Nanjing Road Walkway in Shanghai.<\/p>\n

\t\t\t\t\t\t\t\t\tCFOTO\/Future Publishing via Getty Images<\/p>\n

\n\tAs small goods become big business, Savills has observed that retail space dedicated to the segments grew by an average of 18 percent in 2025, becoming \u201ca key pillar of consumption resilience,\u201d according to the firm\u2019s report, titled \u201c2026 Retail Trends.\u201d<\/p>\n

\n\tThe often overlooked trend was also highlighted in a piece published by the National Bureau of Statistics, which noted that \u201cretail sales of trendy toys, including blind boxes and collectibles, continue to maintain rapid growth.\u201d<\/p>\n

\n\tShanghai\u2019s Joy City shopping mall offers a glimpse into the commercial viability of this retail vibe shift. Often dubbed the \u201cAkihabara of China,\u201d the mall has hosted an astounding 42 anime-themed pop-ups in July alone, tapping into the country\u2019s Gen Z subculture. During the February Chinese New Year<\/a>, anime-themed pop-ups generated between 4 million renminbi, or over $590,000, and 10 million renminbi, or $1.4 million, in sales per event, according to local media reports.<\/p>\n

\n\tThe ripple effect is extending into beauty, as local brands and retailers \u2014 including Judydoll, Into You, Wow Colour, The Colorist and Beauty Choice \u2014 compete for consumer attention across the mall\u2019s busiest retail floors, which are especially crowded with wig-donning cosplayers on weekends.<\/p>\n

\n\tNow entering the mainstream, China\u2019s manga, anime and games community is expected to surpass 300 billion renminbi, or $44.2 billion, in scale by 2027.<\/p>\n","protected":false},"excerpt":{"rendered":"Against the backdrop of flat retail sales growth in the first half of 2026, China has set a…\n","protected":false},"author":2,"featured_media":816302,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,512,164,5216,374996],"class_list":["post-816301","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-china","tag-economy","tag-retail","tag-sourcing-journal"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/816301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=816301"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/816301\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/816302"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=816301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=816301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=816301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}