2023 China Consumer Insight and Market Outlook
Publish date: 3 March 2023
In the past two decades, China's economy has thrived, people's living standards have steadily improved, and the consumer market is full of dynamism. Consumption has become the biggest contributor to
China's economic growth today. On the one hand, China’s consumer market in 2023 will face growth challenges given the impact of pandemic fluctuations and the arrival of the post-pandemic era. On the other hand, the government has continuously introduced policies aimed to expand domestic demand, encourage new forms of consumption, and drive high-quality growth. This reflects how China’s consumer market is undergoing rapid upgrades and innovation in consumption patterns and business models, and is welcoming a new phase of development.
In this circumstance, we conducted a nationwide consumer survey on the consumer goods and retail industry. The survey aims to provide an analysis on the predictable future development trends of the consumer goods and retail industry based on changes in consumer behavior and attitudes in the face of the post-pandemic era and new technological advancements. We hope to help consumer goods and retail companies deepen their understanding of consumers and the market, explore new consumer trends, and grasp the keys to winning the market.
This study was conducted in November 2022, using an online questionnaire form, with respondents ranging in ages from 18 to 73. The questionnaire covers consumer background information, consumer attitudes, shopping behaviors, lifestyles, interests and values, and more. This online survey sample set quota is based on the demographic structure data from the Seventh National Population Census, with a sample size of 2000, covering 301 cities/autonomous regions from first to fifth-tier cities in China.
Source: Deloitte consulting
Based on the survey data, we summarized five major trends of the Chinese consumer insights for the consumer goods and retail industry in 2023.
1. Return to Rational Consumption
In the aftermath of the pandemic, consumers have become more pragmatic and rational in their purchasing decisions, based on reduced consumption needs as well as increased economic pressures and life uncertainties. People have reduced impulse purchases, prioritizing product quality and value, taking advantage of promotions, and comparing prices across multiple sellers before making a purchase. With much more information available, consumers are taking recommendations with a pinch of salt, making their own choices after careful research and comparison instead of blindly following trends. This shift in consumer behavior has favored domestic brands, which are seen as more cost-effective and have a better understanding of Chinese consumer habits.
2. Pursuit of Experience that Pleases Oneself
As the public has become more affluent and product and channel options have increased, consumers not only seek to satisfy material needs, but also hope to achieve physical and spiritual satisfaction and pleasure, and seek experiences that are pleasing. Social attributes are now deeply embedded in the entire shopping journey, where consumers enjoy social interactions at various stages such as information research, decision-making, experience sharing, etc. Meanwhile, consumers value brick-andmortar retail for its more transparent information, more intuitive and hands-on experience, and immediate access. Consumers are increasingly concerned about the security of their personal information and express frustration with the current state of privacy protection. They are increasingly taking active steps to protect their privacy and interests.
3. Embrace Diverse Innovation
The rise of technology, changes in the social environment, and policy incentives have created a fertile ground for business model innovation. In this decade, a variety of new retail channels and scenarios have emerged, ushering in the era of the "Now Consumer". "Now consumers" are pursuing new lifestyles and consumption habits. They embrace innovation, enjoy trying new things, and are highly energetic and receptive. This study explores the popular trends in new retail channels and buying scenarios, including live streaming, instant retail, and home leisure consumption. Our research found that live streaming and instant retail are increasingly becoming the norm for consumers. The pandemic has led consumers to passively adopt "home mode," unlocking various opportunities for leisure consumption at home. Consumers have discovered the joy of these at-home activities and are now actively pursuing them. The rise of the "home economy" could become a long-term consumption focus.
4. Be Green and Sustainable
China's promotion of green and sustainable development, including its efforts towards advancing carbon peaking and neutrality, its participation in global climate change governance, and its pursuit of a harmonious relationship between man and nature, has led to widespread public acceptance and recognition of the concept of green and sustainability. This concept is also reflected in consumption patterns, as consumers are aware of the social responsibility associated with their consumption behavior. Following the proposal of "promoting green consumption and establishing a green, low-carbon production and lifestyle" by the 20th National Congress, consumers have increasingly incorporated the idea of green and sustainability into their consumption. Some consumers are also willing to pay a premium for green consumption. In the future, green consumption is expected to remain a lasting trend for consumers, as awareness and adoption of sustainable practices in their consumption behavior continues to grow.
5. Pursuit of Technological Advancements
The past decade has been a period of rapid internet development, with continuous innovation in Internet technology, service forms, and business models. With the advent of the "new infrastructure," the retail ecosystem is becoming more digitalized, intelligent, and efficient. The widespread adoption of the latest innovations in underlying technologies, such as 5G, cloud computing, IoT, big data, and artificial intelligence, is propelling the advancement of retail technology. Chinese consumers exhibit strong curiosity and acceptance of new technologies, and are eager to experience the conveniences and innovations they bring, driving the continuous advancement of technology. For example, around 2015, the sharing economy began to boom, with shared bikes, power banks, and massage chairs, and more entering the market. This highlighted the strong ability of the Internet to allocate physical resources to meet consumer needs. Around 2016, visual media such as live streaming and short videos further enriched the form of Internet services, satisfying consumers’ entertainment needs while providing new business models for traffic monetization. Currently, mobile Internet has become widely popular, and the proportion of elderly Internet users is rapidly increasing. Consumers remain enthusiastic about new technologies and look forward to the maturation and application of the metaverse.
Based on the trends of the Chinese consumer insights above, we present the following recommendations for consumer goods and retail companies:
- Focus on product value for money
- Lead with a strong value proposition and build brand trust to win brand recognition
- Build a brand's private domain, lay out Omni-channel consumer operations, and create unique brand experiences
- Prioritize Omni-channel integration to meet diverse consumer needs
- Create an open business ecosystem that can adapt to changing consumer needs