With the impact of covid-19 epidemic for two years, consumer habits have also changed.
“On the whole, China’s consumer market has experienced some challenges in 2021; this year is expected to reverse the decline and there are greater opportunities.” Recently, Yin he, head of consumer industry research in Greater China of JPMorgan Chase, looked forward to the overall trend of China’s consumer goods market this year in an interview with 21st Century Business Herald.
According to Yin he, there are three main factors affecting consumption desire: personal income, inflation and macro Outlook (that is, affecting personal career stability).
“Fluctuations in economic growth at the macro level, tightening of industrial policies at the meso level and residents’ concerns about employment opportunities at the micro level will affect the release of the area polarity of the social consumption layer.” Yin he told the 21st Century Business Herald reporter. In 2021, factors such as the “double reduction” policy of the education and training industry and the shock of the Internet and real estate industry reduced the consumption desire of some groups with purchasing power, and the enthusiasm of social consumption was restrained, especially some young consumers.
However, it should be noted that the covid-19 epidemic has not subsided in 2021, and the epidemic changes in many places have also hindered daily travel and consumption. According to the data of the National Bureau of statistics, the annual low of the monthly growth rate of China’s total retail sales of social consumer goods occurred in August, which is mainly due to the repeated epidemic situation in some Chinese cities in July. The more active anti epidemic before the Spring Festival has not only protected everyone’s health, but also brought challenges to businesses.
“It can not be ignored that in the past two years, community group buying and e-commerce live broadcasting have caused a great blow to the traditional business model in the sales channel; with the impact of covid-19 epidemic for two years, consumer habits have also changed.” Yin he said.
online marketing should pay attention to customer loyalty and repurchase rate
Since the emergence of the epidemic, offline retail is facing a large-scale reshuffle, and the transformation of offline physical retail stores in marketing channels needs to be verified.
Taking the physical supermarket as an example, Li SONGFENG, CEO of Yonghui, admitted in an interview with the 21st Century Business Herald, “since 2021, the whole offline retail has been under great pressure. Not only Yonghui, but the whole traditional retail has indeed encountered great challenges.” In order to cope with the adjustment, Yonghui realized the transformation by actively arranging warehouse stores and making business changes on the force line.
Yonghui’s reform is a typical case of the change of China’s consumption channels in recent years. At present, the advantages of online retail are released, the growth rate is increased and the proportion is increased.
According to the data released by the National Bureau of statistics, in 2021, the total retail sales of social consumer goods exceeded 44 trillion yuan, an increase of 12.5% over the previous year, and the average growth rate in the two years was 3.9%. Among them, the national online retail sales reached 13.09 trillion yuan, an increase of 14.1% over the previous year. Specifically, among the national online retail sales, the online retail sales of physical goods exceeded 10 trillion yuan, a year-on-year increase of 12%, accounting for 24.5% of the total retail sales of social consumer goods.
The data during the e-commerce Festival is more optimistic. According to institutional statistics, the total sales of mainstream live e-commerce platforms during the “double 11” in 2021 reached 73.756 billion yuan. Due to the convenience of e-commerce live broadcasting and the detail of product display, live broadcasting marketing has become a huge cheese in the online marketing model in 2021. Among them, the sales of live broadcasting on November 1 and November 11 were higher, which were 11.197 billion yuan and 8.23 billion yuan respectively.
In addition, the new retail platform and community group purchase are also the main positions for online consumption. The sales of the mainstream new retail platform during the “double 11” period reached 19.721 billion yuan, and the sales of the community group purchase platform during the “double 11” period reached 13.375 billion yuan.
The low price of e-commerce live promotion not only brings real benefits to consumers, but also reaps the dividend of channel traffic in the short term, but it still faces the challenge of growth sustainability.
“It may not be sustainable to obtain traffic only at a low price.” Yin he pointed out, “Chinese consumers are growing rapidly. In addition to competitive prices, they also need high-quality products and shopping experience to maintain and improve the repurchase rate.”
It is worth mentioning that most brands have to pay expensive channel fees for online marketing. Despite the rapid growth in the short term, in the long run, when the whole industry pattern may face a reshuffle, the advantages of online channels are facing the test of whether they can maintain the heat.
“The final question we have to face is, who will pay for the high cost of obtaining passenger flow? How to maintain and improve the repurchase rate?” Yin he pointed out.
continuous innovation and diversification are the top priority
In the field of catering, Haidilao taught a lesson to itself and the catering industry in the fourth quarter of 2021.
In the face of the offline operation pressure brought by the epidemic, the hot pot giant threw out the “woodpecker plan”, and the most concerned thing is that it plans to close about 300 Haidilao stores with relatively low passenger flow and lower operating performance than expected by the end of 2021. Among them, some stores will temporarily rest and reopen at an opportunity, with a rest cycle of no more than two years.
The transformation revolution of online channels is in full swing, but the products provided by the service industry still need to realize value offline. Brands are growing and consumers are also growing. For young people who have gradually become the main force of consumption, diversified consumption content is more worthy of expectation.
“From the development history of the global consumer goods industry, every leading enterprise with Evergreen Foundation has its own enduring fist products, but at the same time, it must also have the innovation ability to advance with the times, including category expansion, highlighting the beauty of diversification strategy.” Yin he believes that “innovation ability is becoming more and more important in the field of consumption. Innovation ability not only refers to new products, new formulas and new materials, but also involves the innovation of advertising and marketing means. These innovations not only create new terminal needs and accurately touch the target consumer groups to improve the repurchase rate, but also build a moat, which does not bring space for enterprises to reduce costs.”
It is worth mentioning that in the past two or three years, many brands in subdivided fields have emerged in China’s consumer goods market. There are a wide range of online popular and popular products. Some have achieved explosive growth. After a little flash in the pan, they have also suffered a cliff fall.
“It’s not easy to maintain consumer loyalty. Chinese consumers’ pursuit of product taste, packaging and function is showing more frequent and diversified changes.” Yin he analyzed that some young small companies are full of creativity and aggressiveness; However, relying too much on a single product and channel, with the shortening of the product cycle, they are easy to run aground in the popular money, resulting in the phenomenon that it is difficult to continue after the popularity.
At the cosmetics track, Yin he and his team compared the different rhythms of China, Japan, South Korea and India in the direction of innovation and found that the innovation of Chinese brands is more innovation in manufacturing, formula and channels (such as efficient integration of manufacturing industry chain, product evaluation, consumer education of planting grass and pulling grass, etc.), and the innovation of South Korea emphasizes product formula and packaging, Japan’s innovation starts with the development of new raw materials. These development experiences have provided some enlightenment and thinking for the process of collectivization and internationalization of Chinese enterprises.
“Innovation and diversification are developing dynamically with the growth of economy, the maturity of market and the evolution of consumer values.” Yin he believes that innovation not only can solve the pain points of consumers and guide their needs in product design, but also involves multi-channel marketing of Wuxi Online Offline Communication Information Technology Co.Ltd(300959) social platform. At the same time, it has price competitiveness, so it can stand out among competitive products.
“Continuous innovation and diversification are the top priority.” Yin he concluded.
