Posted February 15

China Retail: Shopping Centres Shine as Department Stores Fade

By James Hawkey

An interesting ranking of top shopping centres and department stores in China recently published on Wechat (http://wechat.kanfb.com/archives/19150) shows that while key shopping centres are generally improving in performance, department stores are continuing to struggle. An astonishing 72 of 93 department stores (77%) listed saw a fall in sales revenue, while just 17 of 71 shopping centres (24%) saw negative growth. None of the department stores listed saw strong growth in sales, while 20 of the shopping centres (28%) saw double digit sales growth.

I believe these figures show that consumers still want to interact with brands in a physical environment, and they are often choosing the shopping centre over the department store. While department stores are evolving quickly, shopping centres are at present more likely to offer retailers the space they need to really show their brand at its best, and offer consumers a tempting range of food and leisure activities.

20160208_163529 (2)Café Society at the newly opened Chengdu Joy City (Image Credit: James Hawkey)

While department stores on the whole are showing declining performance, they still play an important role in the China market, and in some cases still outperform shopping centres on metrics such as sales per square metre. Having said this, the trends here appear to underline our predictions for an omnichannel world: consumers are increasingly looking for a shopping experience, not simply a good range of brands.

The annual publication of this kind of ranking poses another key question: when can we look forward to greater transparency in the China retail market? As one of the largest retail markets in the world, China still suffers from a paucity of reliable publicly available data on retail sales performance. This data is important for city planners, investors and retailers.

Note: The data presented in the link only represents some major centres, and not the market as a whole. Some of this data comes from sources thought to be reliable, such as annual reports, some may be of questionable accuracy. It is worth noting that a fall in performance in some cases may be caused by the impact of refurbishment, which will have a long term positive effect.

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