Shanghai’s consumer market bouncing back

SHINE | 15-Apr-2021 | By Huang Yixuan

Shanghai’s consumer market has bounced back after a long cold winter amid the pandemic with revitalized consumer confidence, ready for the coming Double Five Shopping Festival in May. According to the Shanghai Statistics Bureau, February data shows the city’s total retail sales of consumer goods up 91.5 percent from a year earlier to around 138 billion yuan (US$21.12 billion).

The figure for the January-February period, meanwhile, also surged 48.3 percent year on year. A report reveals that during the Qingming Festival holiday from April 2 to 4, the city’s consumption, especially offline, showed strong momentum, with steady growth in both total consumption and customer flow at major shopping malls. According to data from the city’s consumer market big data lab, a total of 25.73 billion yuan (US$3.94 billion) was spent on products during the holiday, an increase of 36.3 percent compared with the same period last year and 5.6 percent higher than that in 2019. In terms of customer flow, 48 department stores or shopping centers in 13 key commercial areas, including east and west Nanjing Road, Lujiazui, Xujiahui, Wujiaochang and the Hongqiao Business District, recorded around 1.66 million visitors during the holiday, 1.5 times year on year.

Catering and accommodation both showed rapid growth, up by 54.7 percent and 97.5 percent, respectively, from last year. Catering has recovered to the same level as during the 2019 holiday, while accommodation has outstripping the same period by nearly 30 percent. The consumption of electronic products, stationery and sporting goods, as well as that in convenience stores and department stores, all soared by over 260 percent from a year earlier, while some sectors shot up nearly 350 percent. “With the economic activities further normalizing, growth in the service sector will also accelerate, further propping up the consumer market,” said analysts at Dongxing Securities.

Improved corporate earnings and more investment in sole traders is expected to drive the overall recovery in household incomes and then boost consumption, they said. The city’s consumer confidence also turned out to be stronger in the first quarter, according to a survey released on Tuesday.

The Shanghai University of Finance and Economics’ quarterly Consumer Confidence in Shanghai Index jumped by 6.9 points from the fourth quarter of 2020 to 120.9 points for this year’s January-March period. Compared with the same period last year, the index also posted a 3.7 percent growth. A reading above 100 signifies optimism while below indicates pessimism. The increasing consumer confidence can be partly attributed to the “two sessions” held this quarter, which set the tone for China’s high-quality economic development, said Xu Guoxiang, director of the university’s Applied Statistics Research Center. The targets of achieving structural optimization and improvements in quality and efficiency also enhanced consumer confidence in steady economic growth, Xu said. “Meanwhile, domestic economic growth accelerated in the quarter, foreign trade surged, and investment and consumption both exceeded expectations, partly due to a low base last year, but also because it sent a signal that the economy was in good shape,” said Xu and Wu Chunjie, a professor at the university’s school of statistics and management.

They also mentioned that the global economy could be on the road to recovery as vaccines become more widely available, which would also boost consumer confidence. A sub-index of purchase intentions soared 7.2 points from the previous quarter to 94.4 points, and was 0.6 points higher than the same period last year, at a relatively high level in the results of previous surveys. The index of home-buying intentions advanced 0.9 points quarter to quarter, while posting a year-on-year rise of 4.7 points, as real estate market transactions have warmed up recently.

The intention to buy cars, meanwhile, jumped 13.2 points compared with the previous quarter and flat from a year earlier, while that for bulky durable goods also rose 7.5 points compared with October-December 2020 and down 3.3 points from a year earlier. But Xu cautioned that although the long-term positive trend will not be easily shaken, the short-term Shanghai economy still faces many challenges in financial stability, innovative development and structural transformation. He suggested expediting integrated development of the Yangtze River Delta, fostering the layout of industries related to the online economy, and keeping a check on low-income earners and improve their employability. As a warm-up for the second Double Five Shopping Festival, the 2021 Shanghai Fashion Week and a series of related activities will extend the gala to late April. Fashion shows of designer brands and boutiques from home and abroad are luring more visitors to major commercial areas as well as fashion and art landmarks in the city. A range of digital initiatives and offline activities will help Shanghai Fashion Week reach more consumer-based communities via a “See Now, Buy Now” campaign. The Shanghai Fashion and Lifestyle Carnival, an online campaign platform, enables fashion brands to sell their latest products directly to consumers, also an impetus to consumption.