November 16, 2011
With the number of shopping centres per capita set to double in several Chinese cities, the retail offer is changing too.
That was one of the key findings of a special conference session at Mipim Asia chaired by Cushman & Wakefield executive director – retail China James Hawkey and featuring contributions from representatives from Treasury China Trust, Godiva Chocolatier and Costa Coffee.
Retail sales in China are roughly half that of the US’ but at current growth rates, China should overtake the US in the next four to five years, said Hawkey. But beyond important factors such as demographics – with over 200 cities having a population of over 1 million – there are other issues shaping the retail product on the ground.
‘Emotions are becoming much more important in China’, said Costa’s general manager Bernard Chiew. ‘It’s not just purely brand, it’s about an emotional attachment to a brand’. In Costa’s case, explained Chiew, this extends to his preference for avoiding square or rectangular stores if possible and favouring unusual shapes to develop identity and encourage people inside.
Emotions are also part of the chocolatier Godiva’s clientele, and its director for international business development Meagan Dietz said a programme of education – including chefs exploring chocolate in its cafe ‘schools’ – is helping spread the message about the brand.
Treasury China Trust CEO Richard David said China was moving away from the department store model to a westernised international style shopping mall model. ‘It’s taken 15 years for Shanghai to do that but I don’t see it taking another 15 years for that to happen to the second and third tier cities’, he said. Stores are concentrating on building tall on smaller footprints, rather than horizontally as in Europe. But the ‘phenomenal’ growth in disposable income levels in China – even in rural areas, where it has risen by some 10-15% – will also have a beneficial effect on the retail scene in China. ‘That money has got to go somewhere‘, said David.