For the retail market, the gap between the head city and other cities is narrowing.
Editor’s note: This article is from Daily Economic News, author Bao Jingjing.
As the second largest retail market in the world after the United States, although the growth rate of China’s total retail sales of consumer goods in 2018 has dropped to 9%, its performance on a global scale is still very good.
So, what is the retail appeal of cities in China in 2019? What areas are international brands more happy to expand? What is the gap between the new first-tier cities and the head cities? Recently, the report “China Retail 20 City” released by Savills Davis pointed out that the mainstream international brands are closer to the stores and coverage in major cities in China, and 18 cities are narrowing the gap with Shanghai and Beijing.
Zhang Lin, Director of China Market Research Department of Savills Davis, told reporters that the overall expansion of mature international brands in China is more focused on the second-tier cities in the tail. This trend makes the head cities face more opportunities to attract foreign passengers. The challenge also forced the owners to make more efforts in tapping international emerging brands.
20 City Retailer Index Rankings and Scores Source: Savills Research Department
Shanghai Beijing retail market is far ahead
Since 2014, Savills has tracked 20 major retail cities in mainland China, and has 16 data sets, including 8 luxury, luxury, fast food, coffee, and public apparel. The number of categories of 50 international retail brands in each city was summarized, and the final result was “20 City Retailer Index Ranking”.
From the ranking of points, Shanghai is ranked first with absolute advantage, which can be regarded as the “extreme” in the development of China’s urban retail market; the second place in Beijing ranks the first echelon with 87 high scores, and The second echelon city opened a big gap.
Zhang Lin told reporters, “Shanghai is the largest zero in the country in terms of the scale of retail sales of consumer goods in a single city.Selling the market. In recent years, Shanghai’s share of the total retail sales of consumer goods in the country has been stable at around 3.3%. In the first-tier cities, Shanghai’s retail market is generally considered to be rich in brands, mature and savvy, and willing to accept new things, thus becoming a must for all types of brands at home and abroad.
The first-ranked Shanghai is an example, which has more distinctive features than other cities. Shanghai’s leading position in non-luxury categories is the most obvious. The three categories of mass clothing, large retail stores and coffee chains are leading the second place in Beijing by about 7%, 45% and 80%
The catering is the highest proportion of Shanghai shopping malls, and currently accounts for 30% of the overall market. More market categories and higher consumer acceptance have made Shanghai the most concentrated city for international catering brands.
Chengdu Hongxing Road Pedestrian Street Commercial Circle Image Source: Each data picture
Chengdu won the “Retail 4th City” for 6 consecutive years
It is worth noting that for the retail market, the gap between the head city and other cities is narrowing. According to the report, the average number of stores of 50 international brands in 18 cities was 20% of the average of Shanghai and Beijing five years ago, and this proportion rose to 26% in 2019.
Especially in Chengdu and Nanjing, the coverage of the brand has been similar to that of Shanghai and Beijing, while the coverage of Xiamen, Zhengzhou and Ningbo is less than that of Chengdu and Nanjing, only 60%, and there is still potential for expansion in the later period.
“The overall expansion trend of mature international brands in China is more focused on the second-tier cities in the tail, making the mainstream international brands more close to the stores and coverage in major cities in China.” Zhang Lin analyzed.
In the “20 City Retailer Index Ranking”, the top four cities have not changed in the rankings in recent years, and Chengdu has always ranked fourth. That is, since the release of the retail report by Savills in 2014, Chengdu has won the “China Retail Fourth City” for six consecutive years.
At the same time, the leading edge of Chengdu and the fifth city has remained stable, but the gap with Shenzhen in the past year has increased slightly. Part of the reason is that Shenzhen has a higher level of market entry in recent years, and many new projects in Chengdu are located in non-central areas with limited radiation range.
In the new first-tier cities, Chengdu has always been favored by brand owners. Zhang Lin told the reporter of “Daily Economic News”, “For brands with expanding demand, Chengdu is always the first choice for the first store in the southwest and second-tier cities.. Among the 50 mature brands we monitor, Chengdu’s brand coverage is second only to Shanghai, which is the same as Beijing. Whether it is clothing or catering, all brands have the willingness to settle in Chengdu.
The first Savill analysis believes that on the one hand, the consumption power of the Chengdu market has always been recognized by the brand, and its core position in the province and even the western region cannot be shaken; on the other hand, the open urban atmosphere and diverse consumer culture To make Chengdu consumers highly accept new things.
The city in the Yangtze River Delta region is performing steadily
In this year’s 20-city retailer index ranking, except for Suzhou and Shenyang, the rest of the cities ranked unchanged, which is the smallest change in the past five years.
A closer look at the reasons, the international brand’s leap forward in the second-tier cities of the Midwest has stopped in the past year, which is the main reason why the 20-city ranking has almost stopped changing.
From the perspective of urban areas, the average category expansion rate of the 50 categories of the 8 categories in the second-tier cities in the central and western regions was 5.8%, which was lower than the 9.8% in the second-tier cities in the eastern Yangtze River Delta.
Savills believes that this trend is in line with the macro data trend. In 2017, the growth rate of second-tier cities in the central and western regions was 0.9 percentage points higher than that in the eastern cities, and this gap narrowed to 0.6 in 2018. Percentage points.
It is worth noting that the Yangtze River Delta city has performed steadily in the past 12 months, and its important core city, Suzhou, is also the only rising city in the retailer index. The data shows that the average category expansion of brands in Hangzhou and Suzhou is more than 10%, and all categories are showing positive growth. Although the fragmentation of the Suzhou commercial market poses certain challenges for retailers and developers, Suzhou’s economic strength is undoubtedly the seventh, and its regional GDP ranks seventh in the nation’s cities, and it is highly likely to surpass Tianjin in 2019. Rose to sixth place.
The central and western regions have slowed down as a result of the widening of inter-city differences. However, Changsha and Xi’an still maintain high growth rates. It is worth noting that the opening of the landmark project has led to a significant adjustment in the layout of luxury brands in Changsha and Xi’an, and the number of stores has declined, but Xi’an is still the fifth largest luxury goods market in the country. The expansion rate of the remaining category brands has not decreased, making the overall growth rate of the two city stores still exceed 10%. Thanks to the attractive talent policy, Xi’an has added more than 1 million permanent residents in the past two years. First Pacific Davis believes that Xi’an is the city with the largest population in 20 cities, and it will also make Xi’an future development. There is still solid support.
For the urban area, Zhang Lin stressed, “The next year will be the year of the retail market, the Yangtze River Delta and the integration of Guangdong, Hong Kong and Macao will be deepened, or will be the edge of the two metropolitan cities. To develop opportunities.”