Slowdown not a concern for top mall in Beijing as consumers splurge on experiences
Although retail sales growth in the mainland has slowed down in recent months, malls such as Taikoo Li Sanlitun reported a 10pc jump in first-half revenue
If consumer spending is slowing down in China, you definitely will not see any signs of it in Taikoo Li Sanlitun.
The upmarket mall in Beijing’s Chaoyan district is packed to the gills with shoppers eager to get their hands on the latest fashion item or waiting patiently to taste the popular cheese-topped tea drink at Heytea.
Market observers say malls that are on top of consumer trends and provide unique retail experiences will be able to beat the downturn and outperform their rivals.
Experienced mall operators will drive the rental growth for the whole market, according to CBRE.
The mall posted a 10 per cent jump in sales in the first half, up from 4 per cent for the whole of 2017, according to the owner Swire Properties, which declined to disclose details.
That belies a broader picture of slowing consumer spending across the country.
China’s retail sales rose 8.8 per cent in July from a year earlier, down from 9 per cent growth in June, according to figures released by the National Bureau of Statistics on August 14.
In the capital, retail sales in the first seven months rose by just 4.2 per cent, the slowest pace since February 2017, according to data from the Beijing Bureau of Statistics.
Separately, a recent study by the China National Commercial Information Centre, a state-backed consultancy, suggested that the drop in consumer spending was gathering steam.
Sales at 50 major Chinese retailers fell by 3.9 per cent in July from a year earlier, accelerating from drops of 3.4 per cent in May and 0.6 per cent in April.
Annie He, a 30-year-old office worker in Beijing, said she was worried about her future financial outlook as surging rents and stagnating income forces her to cut back on discretionary spending. “When I graduated in 2012, I earned 5,000 yuan a month and I wouldn’t hesitate to buy a dress for 500 yuan,” she said. “Even though my salary has tripled I would now think twice about spending 500 yuan on a dress.”
Ten years since its launch, Taikoo Li Sanlitun has become a fashion and shopping landmark. Since 2016 more than 60 retail brands have chosen the mall for their China or Beijing debut and more than 50 new shops have opened so far this year.
According to Max Yu, general manager of Taikoo Li Sanlitun, about 60 per cent of the mall’s clientele are women in the 18-35 age bracket. “Today’s youths are incredibly familiar with fashion brands. Malls that give consumers experiences that they can’t get elsewhere will win.”
He said that Adidas, which has one of the world’s largest stores in the mall, offers tailor-made shoes.
Zino Helmlinger, head of retail, advisory and transaction services at CBRE for Northern China, agreed that Taikoo Li is definitely one of the leaders in setting trends, especially for millennials. “Their emphasis on pop-up stores with hip brands generates a lot of buzz with fashionistas, which draws lots of young adults waiting to latch on to the next trend.”
Alan Jin, a property analyst with Mizuho Securities Asia, said that mall operators are also not as worried about online shopping as they were a few years ago, adding that shopping centres developed by CR Land and Sun Hung Kai Properties in Shanghai and Xian have impressed him.
“Malls, at least the good ones, have got used to the competition,” he said.