China’s retailers gear up for Chinese New Year

As Chinese New Year rolls around, retailers in Hong Kong and Mainland China are getting ready to experience crowds of shoppers. For this busiest shopping season of the year, malls and retailers hope to be humming with activity, yet economic troubles may dampen the mood – and the spending, reported WWD.

While official sales figures have yet to be released, it appears that Christmas sales for many retailers in Hong Kong were weaker than anticipated. What this means for Chinese New Year is uncertain, as the holiday follows so closely on the heels of Christmas this season, and shoppers may choose to spurge for just one holiday.

Experts expect sales in Mainland China will be robust, although analysts have warned that inflation and increasing property prices in metropolises such as Beijing and Shanghai may influence consumer confidence. Concern over economic difficulties in the West, which have damaged Chinese export-based businesses, could also cause lower spending.

“We are a little bit cautious this year,” James Roy, a senior analyst with the Shanghai-based China Market Research Group, said to WWD. “There is obviously still going to be growth, but I think there will be a bit of a slowdown compared to previous years. Each year, when there is growth, you can still say it is a record year, but the pace is slowing.”

Roy said that shoppers generally “are still very confident and optimistic” and intend to continue laying out cash.

“We’re projecting 16 to 18 percent overall retail sales growth in 2012 and expect spending over the Chinese New Year season to grow in line with that trend,” he said.

Twenty-nine-year-old Li Jie is in the fortunate position of having cash to spare. As one of China’s increasingly wealthy consumers, he purchased as a gift a new orange Renault SUV this Chinese New Year. For himself.

“I still have the confidence I can earn more money, so that is the reason I want to buy a car,” he said, while still noting concern over China’s future economic outlook.

“We are living in maybe a golden time. We feel good because maybe we have not experienced the winter times,” he added. “I am worried about when the power of the central government can’t fight back the market power.”

Isabel Cavill, a senior retail analyst with Planet Retail who specializes in the international clothing and luxe retail markets, predicts that between 30 and 50 percent of high-end items bought by Chinese shoppers this year will be purchased during the Spring Festival period, making it a critical time for luxury labels.

“I think it’s going to be a big year; there is a lot of money around in China,” she said.

Winnie Cheng, project director at Ipsos, a Hong Kong-based market research company, has a less positive view of the approaching Chinese New Year in Hong Kong.

“Christmas sales performance was not as good as expected even though many retailers offered promotions or discounts during that time. The outlook for the upcoming [Chinese New Year] is that we anticipate sales to be weaker than last year. The proximity of the two holiday seasons is one contributing factor, but also the current economic climate is affecting consumers’ purchasing intention,” she said.

However, Roy claims a growing number of Chinese shoppers are deciding to buying high-end goods for their homes, including furniture, bedding and décor items.

“There is a shift to spending on things more for homes, for personal comfort,” he said. “It is definitely the case that people are spending more and more.”

Jiang Qiong Er, a designer for Hermès’ Chinese luxe brand Shang Xia, reports witnessing a slow yet obvious shift in Chinese consumers’ interest purchasing items for Chinese New Year. Many shoppers are considering options beyond well-known Western high-end labels.

“The world will not change immediately from black to white,” Jiang said. “I think the majority of people, they are still like a few years before. It is just a small part of the people who are looking for something more than the Western brands can offer, but that does not mean they will give up what the Western brands offer.”

How Western retailers, especially luxury brands, performed prior to the holiday is undetermined. A study from consultancy Bain & Co. in December revealed that luxury spending in Mainland China was strong at the beginning of 2011 while slowing down somewhat in the fourth quarter.

According to Giuseppe Oliveri, head of Asia-Pacific operations for Versace, Chinese New Year purchasing has thus far been “very, very strong.”

“If I had to describe 2011, the second semester of the year in Asia-Pacific, in China, has been much stronger than the first [half of the year],” he said, revealing that the company is hoping for a second round of sales growth from Chinese shoppers traveling oversees for the holiday.

Internet purchasing has also experienced sales growth for the holiday, especially during the end of last year.

Thibault Villet – the head of China operations for Glamour Sales, a website specializing in luxury items – reported December spending was 30 percent greater than the same period the previous year. Sales on, which also sells high-end fashion items, grew 70 percent, reported the site.

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