This isn’t indicative of a looming decline in China, nor is it representative of the entire country. However, it does signal the beginning of a paradigm shift in China's retail sector that is worth noting.
Japan TOO, evolved in early 90’s from “luxury boom” to current steady-state “rational consumption”.
China going through similar but at “Chinese speed & form”. Occasionally, Japanese consumers today still splurge for dose of “petite luxury”, so for sure “petite luxury” will start showing up in China TOO.
Very nice article. Thank you. Just one question: Is this really something new? When I moved to Beijing in 2016, and even before that when I was occasionally visiting China, I always had one question. These beautiful, shiny malls with all the stores—why are the stores always empty, while the restaurants are packed most of the time? I always wondered how they could make money renting such expensive, shiny spaces. But then friends told me these stores are essentially showrooms, almost like storage spaces, and they are actually running their online businesses out of these malls. So I feel like this has been happening in China for at least almost 10 years.
The notion of showrooms for brands isn't new. What seems new to me is the backlash caused by society's endless pursuit of online traffic, which hasn't yet become a consensus.
The new thing about these showy spaces is that some unprofitable VC-backed brands are taking a hard look on whether they can afford them, whereas self-sufficient brands are re-orienting based on experiences and economic indicators. In the meantime, they need to decide: are we keeping our spots at the traditional malls (perhaps the "shiny malls" you refer to), or going to the 'non-standard' malls and retail spaces?
I suppose we have different perceptions on China retail based on what we see, and since everyone has cognitive biases, it’s always good to discuss more specific examples. :)
LOVE your analysis and writing👍.
Japan TOO, evolved in early 90’s from “luxury boom” to current steady-state “rational consumption”.
China going through similar but at “Chinese speed & form”. Occasionally, Japanese consumers today still splurge for dose of “petite luxury”, so for sure “petite luxury” will start showing up in China TOO.
Thank you Shank! Yes, I think there are parallels here, if we take the politics (and any lifestyle changes because of it) out of the equation.
Very nice article. Thank you. Just one question: Is this really something new? When I moved to Beijing in 2016, and even before that when I was occasionally visiting China, I always had one question. These beautiful, shiny malls with all the stores—why are the stores always empty, while the restaurants are packed most of the time? I always wondered how they could make money renting such expensive, shiny spaces. But then friends told me these stores are essentially showrooms, almost like storage spaces, and they are actually running their online businesses out of these malls. So I feel like this has been happening in China for at least almost 10 years.
The notion of showrooms for brands isn't new. What seems new to me is the backlash caused by society's endless pursuit of online traffic, which hasn't yet become a consensus.
The new thing about these showy spaces is that some unprofitable VC-backed brands are taking a hard look on whether they can afford them, whereas self-sufficient brands are re-orienting based on experiences and economic indicators. In the meantime, they need to decide: are we keeping our spots at the traditional malls (perhaps the "shiny malls" you refer to), or going to the 'non-standard' malls and retail spaces?
I suppose we have different perceptions on China retail based on what we see, and since everyone has cognitive biases, it’s always good to discuss more specific examples. :)
Yaling, as always you have provided a perceptive and nuanced exposition on the direction and dynamics of Chinese consumerism. Thank you.