The Chinese consumer market is facing more challenges than ever before but is also showing signs of recovery and resilience as the coronavirus situation improves, according to a new report from Mintel.
In mid-July, China’s National Bureau of Statistics (NBS) released preliminary accounting results for China’s GDP in Q2 2020 which showed the economy is on track to recovery. This recovery will be quicker than many other major global economies which have gone into lockdown at different stages in Q1/Q2 2020.
Ruyi Xu, Head of Mintel Reports, North Asia said that priorities on consumer goods categories represent key areas of consumer spending, and the coronavirus pandemic has made consumers more focused on their family and health.
Nearly six out of ten Chinese urban consumers (56%) want to have a happy family life and 46% seek a healthy lifestyle; meanwhile, 39% of Chinese urban consumers say that they want to travel after the outbreak, according to the research.
“The consumer habit of spending within their means and a more cautious attitude towards spending as a result of the coronavirus outbreak will push brands to consider new strategies to cope with the ‘new normal’. This will be mainly reflected in helping people find a balance in life and enjoy the quality and pleasure of life through small indulgence and embracing simple moments,” she added.
Key findings from Mintel’s Chinese Consumer 2020 report include:
Beauty and personal care sector stands out despite slowed growth in consumer spending
China’s top five sectors with the highest growth rates remained unchanged 2010-2019, including holidays at CAGR of 18%, transport at CAGR of 16.4%, OTC and pharmaceuticals at CAGR of 13.6%, foodservice at CAGR of 13.1%, and personal finance and housing at CAGR of 12.9%.
However, while growth in most categories has tapered off due to slowed growth in overall consumer spending, since 2017, the beauty and personal care sector has seen similar compound annual growth rates (CARG) 2010-19, including a 9.2% increase in 2019.
Path to recovery varies by sector
Sectors like holidays and foodservice, which require consumers to leave the home and potentially gather in small or large groups, saw reduced spending in Q1. Mintel predicts that under the current circumstances (that the outbreak is largely under control despite reported new cases), total consumer expenditure will experience a contraction of 5.6% in 2020.
Mintel research indicates that most consumer goods categories are gradually recovering, including some discretionary categories such as dining out, clothing, beauty and personal care, and leisure and entertainment.
In the long term, the firm predicts that total consumer expenditure will recover to pre-COVID-19 levels in 2021 and continue to rise at CARG of 7.3% 2021-24.
Sourced from Mintel