Chinese Shopping Fundamentals:
10 Things You Should Know
Although U.S. apparel expenditures far surpass
those of the Chinese, the apparel market in China
has great potential. In 2005, Chinese consumers
spent an estimated $17 billion on apparel (according
to EcoWin), slightly less than 6% of the $275 billion
U.S. consumers spent during the same period (according
to the U.S. Bureau of Economic Analysis).
However, growth in Chinese expenditures was up
19.6% over 2004 (as estimated by China’s National
Bureau of Statistics), which was nearly 4 times the
growth in U.S. expenditures (up 5%).
In any industry, a great potential for growth brings
competition for market share. In order to compete
in the Chinese apparel market, it is important to
understand the fundamentals of Chinese consumers’
shopping habits and China’s existing apparel
market.
Research Methodology
Understanding how the Chinese consumer shops
is key to effectively competing in this important
market. Therefore, Cotton Incorporated and Cotton
Council International collaborated with distinguished
market researchers ACNielsen to conduct
in-home observational research and N-Dynamic to
conduct the largest consumer behavioral study of
its kind, to date, in China.
The two major studies produced insights into the
behaviors and attitudes of over 7,000 men and
women aged 15 to 54 in seven cities across the
Chinese mainland: Beijing, Shanghai, Guangzhou,
Chengdu, Dalian, Wuhan, and Changsha.
Analysis of these intensive market research studies
indicates that while consumers may differ across
China, certain fundamental shopping conditions and habits are common across the entire
population— many of which resemble “global
consumer” behaviors. For brands, retailers, and
others in the apparel industry considering entering
the Chinese apparel market, here are ten things
important to know.
Reaching the Chinese Consumer in a
Competitive Market: 10 Key Points
1. China’s apparel retail structure is
sophisticated
The Chinese have a highly developed retail infrastructure
consisting of formal and informal shopping
venues, from malls and underground shopping
centers to free-standing mass merchants and openair
markets. Like the U.S., China has a developed
structure of department stores, chain and specialty
retailers, and hypermarkets (or mass merchants)
that have varying price points, from mass retailers
like Wal-Mart and Carrefour to luxury specialty stores such as Gucci. At the same time, China has a well-developed
informal shopping infrastructure consisting of indoor and outdoor
clothing markets and small shops, which are literally tiny and tend
to specialize in only a few products, such as jeans or bras and
underwear.
The in-home observational research was conducted in September 2005 by ACNielsen among 45 middle-to upper-income men and women aged
15 to 54 in Beijing, Shanghai, and Guangzhou (15 participants in each city). The consumer behavioral research was conducted in September
2005 by N-Dynamic. A total of 7,000 middle- to upper-income men and women aged 15 to 54 were interviewed in their homes. Equal numbers
were interviewed in seven cities across China: Beijing, Dalian, Shanghai, Wuhan, Changsha, Chengdu, and Guangzhou. |
The majority of consumers tend to shop for apparel at three primary
channels—department stores (76%), chain or specialty stores (55%),
and hypermarkets (53%). However, loyalty to one store type is
relatively low, as only 37% buy most of their apparel at department
stores, 19% at chain or specialty stores, 17% at small clothing shops,
and 14% at hypermarkets. Younger consumers and men are more
likely to shop at specialty and sporting-goods stores, while women
pay closer attention to price and shop more often at small shops
and clothing markets.
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Department Stores |
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Chain or Specialty Stores |
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Hypermarkets (Mass Merchants) |
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Small Clothing Shops
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2. Chinese consumers enjoy shopping for clothing
The majority of Chinese consumers (74%) say they “like” or
“somewhat like” shopping for apparel, as do consumers around
the world (68% in the 2003 Global Lifestyle Monitor), except in the
United States, where only 42% agree. Chinese shoppers also
resemble the global consumer in that women, younger consumers,
and single consumers are much more likely to say they enjoy
shopping for apparel than are male, older, or married shoppers.
When Chinese consumers were asked what items they most liked
to shop for, apparel (37%) and food (34%) topped the list. However,
other industries are vying for the same disposable dollars from
this emerging market. Areas such as electronics and home hard
goods (like dishwashers and air conditioners) provide constant
competition, as many Chinese consumers are now in a position to
purchase these types of goods to enhance their lifestyles.
3. Chinese shop together
The Chinese tend to value spending time with friends and family,
and shopping is an activity that naturally allows consumers to
spend time together. The largest percentage of respondents (44%)
say they prefer to shop with family members; 34% prefer to shop
with friends, and only 22% say they would rather shop alone,
compared with 42% of U.S. consumers who say they shop solo.
Because consumers from multiple market segments shop together,
retailers need to attract and serve diverse demographics. Shopping
in groups thus may also influence where consumers shop—most
(54%) say they prefer large shopping centers to individual stores
(25%), perhaps because large retailers offer more shopping opportunities
for a range of consumers.
4. Peers are the primary source for clothing ideas
The role in Chinese consumers’ lives of family, friends, and people
in general has a major impact on apparel decisions. Overall, other
people serve as the primary source for
apparel ideas among the Chinese,
whereas Americans are much more likely
to rely on either themselves (72%) or
store displays (56%).
Retail serves as a secondary source for
ideas, with store or window displays
influencing 41% of shoppers. However,
only 13% consult store salespeople—a
wasted resource for many retailers, especially
because salespeople abound in
Chinese stores and could be used to influence
consumers’ apparel purchases.
5. The Internet is the least-used
apparel shopping channel
Internet shopping is not a threat to traditional
apparel outlets in China at this time. Fewer than
half (43%) of consumers say they use the Internet;
only 19% have searched for apparel, and fewer than
2% have actually purchased apparel on line. Currently,
the Internet serves primarily as a source for
music (66%), news (55%), and books (39%).
6. Credit-card ownership is low
One obstacle to shopping on line is the low rate of
credit-card ownership in
China. Fewer than 20% of
Chinese shoppers own a credit
card, and of the large majority
who don’t, only 7% say they
plan to apply for one. Most
likely to have a credit card are
shoppers in Beijing (31%) and
those aged 25 to 34 (30%), and
the group most likely to say
they plan to apply for a card
are consumers aged 20 to 34
(10%).
7. Purchases are driven by
style, quality, and color
The top factors Chinese
shoppers consider before
purchasing apparel are style
(91%), quality (90%), color
(87%), fiber content (80%), and
price (73%). Although brand does not top the list, 60% of men and 51% of women
say it does play a role in their purchase decisions.
However, brand origin is not of great concern, as
only 38% of consumers agreed that it was important
to buy Chinese brands, and 22% that it was important
to buy Western brands.
8. Piracy is prevalent
Pirated products are common in the Chinese market,
and piracy can dilute the authenticity and importance
of brands in consumers’ minds. Six of ten Chinese consumers say they sometimes or frequently
knowingly purchase pirated apparel products.
Though attitudes do not differ significantly
by gender, the consumers more likely to approve
of the marketing of pirated products are those under
35 and those from Wuhan, Chengdu, Changsha,
and Beijing.
Chinese consumers are more likely to accept piracy
in apparel (50%) than in electronics such as DVDs
and CDs (41%) or other consumer product categories
(36%). In discussing this topic, consumers say that
in general, “fake brands” are of lower quality than
the authentic brand, but that the tradeoff between
quality and price is acceptable if the garment and
fabric look similar to the authentic brand. Piracy is
a true concern for any brand in the Chinese apparel
market.
 9. Apparel ownership is less than in the U.S.
On average, the Chinese tend to own about half as
many clothing items as Americans, with fewer
garments in almost all categories tracked. Several
reasons may explain the discrepancy in wardrobe
size, from the limited storage space in Chinese
apartments to what consumers wear to work.
Work attire could account for the discrepancy between
Chinese and U.S. consumers’ ownership of
suits and dress shirts. Although the majority of
consumers in both countries agree that casual days in the workplace are appropriate (70% in China and
83% in the U.S.), Chinese consumers have an average
of five casual days a week, compared with only two
in the United States.
10. Chinese shoppers keep up with fashion
While most Chinese consumers (58%) say they
rarely change or are slow to change apparel styles,
a large segment (42%) say they either adopt changes
before most or consider themselves to be on the
cutting edge of fashion—significantly more than
the 35% of U.S. consumers who agree. The majority
(52%) of Chinese shoppers prefer to buy clothing
in the latest style, rather than the basics. Women
and shoppers under 34 are significantly more likely
than others to focus on the latest styles and to change
clothing styles often, and Shanghai has the largest
proportion of consumers (55%) who say they are
among the first to adopt new styles. |
