Savvy, eco-conscious and single customers are among an emerging breed of cashed-up shoppers leading the rapid growth in China’s consumer market, according to a report released by the Boston Consulting Group (BCG) and AliResearch on Wednesday.
The report, released on the sidelines of the annual meeting of the New Champions 2017, also known as Summer Davos, in Dalian, Liaoning province, identifies a range of new consumer profiles springing up in China’s consumer market labeling them as “fashionable city boy”, “vibrant seniors” and “singles”.
Boston Consulting Group China President Carol Liao said the emerging consumer power of the upper-middle-class and affluent households combined with a younger population that is eager to spend and e-commerce, is boosting the healthy development of China’s consumer market.
“As changes have happened to consumer demand, consumer behavior and lifestyle, the consumer profiles in China are becoming personalized, precise and fragmented,” Liao said.
While the traditional consumption boundaries such as age and gender are disappearing, consumers are increasingly aware of brand, environmental issues and sustainability, the report found.
For example, the report said Chinese men living in first-tier cities now spend more time and money on dress, hairstyle and fitness. They spend 24 minutes a day on average on grooming while 88 percent access grooming and fashion information online and 83 percent of 18 to 35 year olds think skincare is necessary.
The report categorizes emerging consumers in China into five types of spenders – the “savvy shopper”, “single person”, “eco-conscious consumer”, “experience consumer” and “anime or virtual social network consumer”.
Sixty-six million customers, or 16.2 percent of the consumers on Alibaba’s China retail marketplaces, bought five or more green products in 2015 and were willing to pay an average of 33 percent more for sustainable products, AliResearch found.
“Chinese consumers are trading up to higher-quality products,” Jeff Walters, BCG managing director and co-author of the report said. “Digital technology is one of the underlying drivers that will continue to spur purchases.”
Walters said consumer companies in China should acknowledge that the idea of the average consumer is disappearing as consumers are becoming more diverse with distinct needs and preferences.
Gao Hongbing, dean of AliResearch and vice-president of Alibaba Group, said that amid the growth of anti-globalization sentiments, consumption has become a key force to promote globalization and economic growth.
“The rapid growth of cross-border e-commerce shows Chinese customers’ appetite for foreign products are increasing. The seamless convergence between the online and offline retail is boosting the growth of consumption, which benefits both China and the world,” Gao said.
Walters predicted 90 percent of all purchases in China will involve digital at some point in the process, including browsing, comparing prices, or making the purchase, by 2021.
The report said China will add $1.8 trillion in new consumption by 2021, which is roughly the size of Germany’s consumption economy at present and more than one-fourth of all consumption growth in major economies. (Source: China Daily)