By Mark Tanner*<\/p>\n
China\u2019s retail goods sales grew 4.5% in the first nine months of the year<\/a>. While solid by most countries\u2019 standards, it trails the 5.1% rise in incomes. Consumers are saving a slightly larger share of their pay packets, despite \u00a5300 billion ($42 billion) in consumption subsidies this year<\/a>.<\/p>\n This hasn\u2019t been helped by real estate, which had long been the psychological backbone of households feeling wealthier<\/a>, but still haven\u2019t managed to shake falling prices<\/a>. But not all sectors are slowing: online retail rose 9.8%<\/a>, up on 7.9% growth for the same period last year<\/a>.<\/p>\n Reading deeper into the \u201cslower\u201d growth story<\/p>\n A headline slowdown glosses over the brands that have evolved with shifting habits, and are flying as a result. Those giving consumers both the products and marketing that hit the right emotional notes<\/a> are seeing growth far beyond the average.<\/p>\n Food finds its appetite<\/p>\n It\u2019s not just the Labubus<\/a> and Laopus<\/a> lighting up Chinese social feeds. Sales of \u2018green organic food\u2019 surged 27.9%<\/a> during Golden Week, while overall spending on food climbed 10.4%<\/a> in the first three quarters.<\/p>\n China\u2019s appetite is still there, it\u2019s just getting more selective and, in many cases, more premium.<\/p>\n From owning to experiencing<\/p>\n The service sector grew 5.2% in the first 9-months of the year, 16% faster than goods, as Chinese consumers continue to trade \u201cstuff\u201d for experiences. Across the spectrum, from Hilton Group opening high-end hotels in another 30 cities<\/a>, to Mixue<\/a> scooping up more cheap ice cream, milk tea<\/a>\u00a0and now beer<\/a>, experiences are becoming an increasing driver of consumption growth.<\/p>\n Products that tap into this growing quest for experiences are riding high in China, like the five foreign outdoor brands that climbed past $500 million in annual sales<\/a> within a few years. Sports and recreation retail itself has grown 19.6% this year.<\/p>\n Luxury showing green shoots \u2026 for brands that cater to new needs<\/p>\n Desire for experiences is reflective of a McKinsey survey showing that more than 70% of affluent Chinese travellers prioritised cultural and personal enrichment over displays of luxury<\/a>. Despite this, even brands that sell branded goods are rewarded if they provide rich experiences in their customer journey.<\/p>\n An example of this is Louis Vuitton\u2019s The Louis\u00a0<\/a>Cruise Ship<\/a>\u00a0in downtown Shanghai. At a time when many luxury brands are pulling back, the brand\u2019s ginormous investment drew an explosion of social media posts, with 100,000 daily passers-by and around 2,500 making an appointment and queuing up to visit it each day<\/a>. The experience contributed to LVMH swinging back to modest growth last quarter<\/a>.<\/p>\n Coach, meanwhile, didn\u2019t spend large on a ship, but leaned into big-data insights and in-home ethnographic research to deeply understand its customers and service their needs<\/a>. This saw their parent company\u2019s revenue in China grow 5% over the past year<\/a>, as many of their peers struggled.<\/p>\n Me, Myself, and My Laopu<\/p>\n Growing sales in China isn\u2019t just about knowing what people buy, but why. Gifting was once the lifeblood of luxury but has been curbed by the anti-corruption drive<\/a> and a new wave of self-indulgent consumption.<\/p>\n Laopu Gold has read the room perfectly: 37% of jewellery purchases this year were \u201cself-indulgent,\u201d<\/a> up from 27% last year as more consumers focus on spoiling themselves.<\/p>\n What\u2019s next: a nudge from Beijing<\/p>\n China\u2019s retail categories will continue to face challenges. However the 15th Five Year Plan released next March will almost certainly outline further plans to build a \u201crobust domestic market\u201d<\/a> to goose consumption. Brands with the deepest understanding of Chinese consumer needs and behaviours, and act upon them, are most likely to tap into the opportunity from this.<\/p>\n *Mark Tanner<\/a> is the CEO of China Skinny, a marketing consultancy in Shanghai. This article was first published here<\/a>,<\/a> and is re-posted with permission.<\/p>\n","protected":false},"excerpt":{"rendered":"By Mark Tanner* China\u2019s retail goods sales grew 4.5% in the first nine months of the year. 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