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China economy

China’s November retail sales rise as malls hold their own against the onslaught of online retailers

Growth a positive sign for offline retailers after rising competition from big e-commerce players

PUBLISHED : Tuesday, 06 February, 2018, 8:03am
UPDATED : Tuesday, 06 February, 2018, 4:11pm

Major department stores and shopping malls in China reported an increase in sales in November, with the categories expanding by 3.2 per cent and 7.4 per cent, respectively, compared with the same period in 2016.

These sectors grew by 1.1 and 0.3 percentage points, respectively, in November compared with the same period in 2016, according to data provided by China’s Ministry of Commerce. For the whole of 2017, 2,700 major Chinese retailers reported that sales were up by 4.6 per cent, three percentage points more than 2016, said the ministry.

Although sales growth for offline retailers lagged far behind that of e-commerce platforms, which stood at 32.2 per cent in terms of sales volume last year, it was a positive sign for these retailers after rising competition from big e-commerce players in the previous two years.

“Many countries in Europe and the US will be very happy to see such percentage of growth,” said Pascal Martin, partner at OC&C Strategy Consultants. “What that means is online is growing really super fast, but offline is still growing.”

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The Chinese market is young and both online and offline have room to grow, in contrast with the West, where some department stores were established decades ago and face difficulties in their transformation, said Martin.

China’s retail market has surpassed the US as the world’s biggest, and its e-commerce represents 50 per cent of the global total.

In other parts of the world, retailers are more or less struggling. Swedish retailer H&M said recently it would close 170 shops and open a total of 390 new ones in 2018, the biggest number of store closures for the clothing brand since at least 1998. The UK’s Marks and Spencer said it would close up to 14 stores and more than 400 staff were set to be affected along with the shop closures. US toy seller Toys “R” Us has also said it would shut about a fifth, or about 180, of its US stores in the coming months, as the chain tries to emerge from one of the largest ever bankruptcies by a speciality retailer.

Rising competition from e-commerce platforms is an obvious reason for declines at bricks-and-mortar retailers, as well as shifting tastes among consumers, who ask for better and more creative shopping experiences, say analysts.

In China, retailers are ahead of their peers, and are rolling out combined offline and online retailing concepts, corresponding with the idea of “new retail” first raised by Alibaba Group Holding executive chairman, Jack Ma Yun.

Yonghui Superstore’s Super Species, a new supermarket format, combines dining and shopping experiences.

The Beijing-based Wumart, another major Chinese supermarket chain, has also in past year tested its “Free Purchase” platform, a new payment method that allows customers to check out goods using the company’s designated app, which saves them from queuing up at counters.

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