As the second-largest apparel market in the world, China continues to offer considerable opportunity for sales growth. While spending on discretionary items such as education and recreation is projected to grow faster in China than spending on semi-necessities, like clothing, through 2020*, more than seven out of 10 Chinese consumers (74%) say they love or enjoy shopping for clothing, up significantly from 65% in 2008. Most Chinese consumers (31%) consider clothing their favorite item to shop for compared to electronics (20%), groceries (14%), shoes (11%), and cosmetics (10%). While consumers in China are not homogenous geographically in what drives their apparel purchases or in how they use online resources to buy clothing, they are pragmatic shoppers who enjoy quality clothing and brands that match their ideals about value.
While Chinese consumers are conservative spenders, who save a great deal of their wealth, research shows that the capacity for spending has not yet reached an apex. The rapid economic growth in South Korea and Taiwan, in the 1980s, indicates that the largest increases in apparel spending occur once per capita GDP reaches levels near $5,000. Although significant growth in the Chinese economy and clothing expenditures has occurred over the past two decades, Chinese per capita GDP remains well below $5,000. Current GDP figures reveal that the upward movement in apparel spending still has momentum. Most consumers say they have more or the same amount to spend on clothing compared to last year (40% and 45%, respectively), and only 15% say they have less. Nearly one-quarter (23%) say they plan to purchase more clothing, while 62% plan to purchase the same amount as they did last year, which bodes well for retailers and brands.
Chinese consumers demonstrate a perceptible level of self-control in their apparel shopping habits. Most Chinese say they buy new clothing for need-based reasons such as replacement (56%) or seasonal change (55%), while a smaller share buy based on desire, 32% buy just to add new items to their wardrobes and only 18% buy new clothing to be trendy. Research shows that impulse and desire-based shopping tends to stimulate apparel sales. Notably, even with rapid modernization in apparel retailing, impulsive buying behaviors among Chinese consumers have not risen in the last decade. Cultivating more spontaneous shoppers may be a large undertaking for even the most dynamic brands and retailers. Therefore, marketing efforts that appeal to consumers' pragmatism and help create a need for new apparel purchases may be a critical component necessary for sales growth.
The clothing needs of Chinese consumers have remained relatively consistent over the past several years, but differ in regards to demographics. Among the most important purchase drivers, fit (84%) and style (80%) have the highest significance for Chinese consumers—similar to consumers in other countries. Additional key attributes consumers assess before buying include fiber content (77%), price (76%), and finishing (75%), which allows shoppers to determine the quality and value of the apparel they plan to purchase. While the top purchase drivers are similar across city tiers and regions, there are differences in apparel shopping habits and drivers depending on where consumers live. For example, northern consumers are the most scrutinizing apparel shoppers and place a great deal of importance on environmental friendliness. Eastern shoppers are greatly influenced by promotions and are the most brand-conscious. Those living in the south are more apathetic towards clothing and prefer to shop for other products, and western consumers are extremely aspirational shoppers who are becoming more influenced by promotions. In order to be successful in the Chinese apparel market, retailers and brands must recognize that apparel shopping habits differ considerably by demographics, and treating the Chinese market as homogenous could prove unsuccessful.
While fiber content is already one of the primary factors Chinese shoppers consider before buying apparel, its importance has increased significantly over the past year (77%, up from 73%). The amplified importance of fiber could stem from consumers noticing changes at retail. According to the Global Lifestyle Monitor survey, more than half of Chinese respondents (56%) say clothing previously made from cotton seems to be made of other fibers now, which concerns many consumers. Most consumers say they are bothered by cotton being replaced by other fibers in key product categories like T-shirts (60%), denim jeans (56%), and dress shirts (54%). Consumers' awareness of a shift in cotton's presence in apparel at retail is not surprising, as cotton is the most recognized, preferred, and purchased fiber among Chinese shoppers.
Knowledge of fiber content gives consumers evidence of quality when they evaluate clothing. A total of nine out of 10 consumers say they check fiber content labels before buying and more than half (52%) believe that better quality clothing is made from natural fibers such as cotton. While more than eight out of 10 (81%) say that clothing prices have increased compared to last year, the majority of consumers say they are willing to pay even more, if necessary, to keep cotton in their clothing; 80% for T-shirts, 73% for dress shirts, 68% for denim jeans, and 62% for dresses indicate a willingness to pay more to maintain cotton in their clothing.
Brand name, a major factor that Chinese consumers consider before purchasing new clothes, has increased significantly in importance compared to last year (60%, up from 54%). Chinese shoppers tend to prefer branded items, which they believe be of better quality, over non-branded products*. Overall, the top brands purchased are domestic, yet many of the favored brands are international. Among the dominant menswear and womenswear brands purchased by Chinese consumers in 2011, most were domestic, with Meters/Bonwe (3%), Li Ning (3%), Semir (2%), and Yishion (2%) topping the list. However, many Chinese consumers are more likely to say they prefer international brands, ranking Jeans West, Levi's, Nike, and Adidas as some of their favorite denim and athleticwear brands. These results indicate receptiveness in consumers to purchase international brands available in the Chinese market, based on the reputation and quality of merchandise.
Regardless of demographics, the brand allocation of menswear and womenswear purchases are exceptionally fragmented, with the top 10 brands only accounting for 21% of purchases. The extreme brand fragmentation represents fierce competition in the apparel markets and significant opportunities for both domestic and international brands to increase their market share. While top brands purchased for most apparel product categories were also segmented, the top 10 athleticwear brands were significantly more concentrated, accounting for 69% of total athleticwear brands purchased. In 2011, Li Ning accounted for 20% of men's and women's athleticwear purchases, followed by Anta (9%), Nike (8%), 361° (8%), and Adidas (7%). Athleticwear brands garner consumer loyalty and purchases based on their promises of performance and a healthy lifestyle, while also diversifying their product lines to meet the needs of their active and casual clientele.
Although the retail channels where Chinese shop for clothing have remained relatively consistent over the past few years, shopping preferences and influences vary by demographics. Overall, a plurality of Chinese (41%) shop for clothes at department stores (e.g., The Pacific or Parkson), followed by 36% at specialty stores (e.g., Giordano, C&A, or Li Ning), 30% at independent stores, 24% at chain stores (e.g., Shanshijiudu), 23% at hypermarkets/ warehouse clubs (e.g., Carrefour or Trustmart), 8% at off-price stores, and 7% at street markets. In 2011, there were 513 million Internet users in China (Internet World Status), and with average prices paid for clothing increasing (up 5% in 2011 compared to 2010), Chinese shoppers are turning to the Internet to find the best deals. According to the Global Lifestyle Monitor survey, more than three-fourths (77%) of consumers shop for clothing online; outranking other product categories like electronics (69%) and cosmetics (50%). This shopping trend presents domestic and international brands with a lucrative opportunity to build their online customer base.
What sets Chinese apparel e-commerce apart from other countries is how they shop for clothes online. More than seven out of 10 (72%) start shopping for clothing through e-commerce sites like Taobao, significantly higher than in Japan (24%) or Europe (18%). These web sites, similar to Amazon.com, allow users to shop for multiple brands of clothing. The popularity of e-commerce sites may be due to the reality that Chinese shoppers, like consumers around the world, are using the Internet to buy clothes as well as read customer reviews (59%), compare prices (59%), and browse the latest styles (58%). The percentage of Chinese consumers who use the Internet as a source for clothing ideas has risen steadily (71% in 2012, up from 16% in 2003). According to iResearch, China is expected to overtake the U.S. as the largest online retail market in the world by 2013. However, for retailers and brands to achieve success in China's e-commerce market, they must be able to go beyond being "a source for clothing ideas" and use e-commerce and social media sites to build loyalty with their customers.
In general, Chinese consumers are more willing to pay premium prices for products other consumers can see and skimp on items more hidden from view, such as home appliances or intimate apparel (Wall Street Journal). Chinese consumers indicate that outerwear, representing 13% of apparel purchases, is one of the top four most purchased items on their shopping lists. In comparison to the U.S., outerwear represents a much larger share of apparel purchases. Outerwear commands a price-premium as consumers pay more on average for outerwear (¥333) than other apparel items (¥174). Recent focus groups conducted among women in Shanghai, Xi'an, and Chengdu, China found that participants had a higher price tolerance and willingness to pay more for outerwear than other apparel products because these items meet a need to keep their external appearance well-groomed and satisfy their aspirations for a prosperous lifestyle.
Appealing to the practicality of Chinese consumers is essential to the future growth of apparel shopping within China. Quality is extremely important to consumers, as well as their sense of value and appearance. Consumers identify quality clothing by considering key attributes such as fiber content and brand, with many consumers willing to pay a premium to keep the quality they desire. As the Chinese apparel market continues to grow, retailers and brands have an opportunity to benefit from consumers' propensity for online shopping and receptivity to international brands.
ABOUT THE RESEARCH
Cotton Council International & Cotton Incorporated's Chinese Consumer Survey is an on-going, quarterly consumer survey that began in the third quarter of 2009. Each year, approximately 4,000 Chinese consumers are interviewed in over 100 cities throughout all four city-tiers and regions in China. Respondents are male and female, between the ages of 15 and 54, and purchase their own clothing. Results are weighted to be representative of the urban Chinese clothing shopping population.
Cotton Council International & Cotton Incorporated's Global Lifestyle Monitor Survey is a biennial consumer research study. In the 2012 survey, 5,000 consumers (approximately 500 in each of the 10 countries surveyed) were surveyed via telephone, face-to-face interviews, and online. Respondents were male and female, aged 15 to 54. The ten countries included in the 2012 survey were Brazil, China, Colombia, Germany, India, Italy, Japan, Thailand, Turkey, and the United Kingdom. In China, respondents were interviewed in three major cities: Beijing, Shanghai, and Guangzhou.