(Source: Inside Retail Asia | June 1, 2017)
While their economic lead has narrowed, Shanghai and Beijing are still way ahead of other cities in terms of retailer penetration, says the latest Savills retail cities report, China 20.
Started in 2014, the report compiles 16 key economic, demographic and financial indicators as well as more than 50 retailer store counts to determine leaders in both retail and economic indices.
Shanghai and Beijing maintained the top two spots in both categories. No other city was able to achieve commensurate rankings in either index.
Mass-market and coffee shops retain momentum while the luxury sector is cautious despite improving sales figures, says the report.
It studied the store openings of 50 international brands for the 12 months to the middle of last year, finding that mass-market fashion and coffee brands kept up a healthy rate of expansion with average stores per retailer increasing 18 and 16 per cent respectively for the two main cities.
“The luxury sector has remained sluggish during the past few years, though some retailers have started to record a recovery of sales in Mainland China since the second half of last year,” says Savills Central China MD Wing Chu, who is also head of China retail.
Savills Shanghai retail director Joey Chio says demand from international brands looking to enter the China market remains strong. “With an expanding middle class and affluent younger generation, we believe the trend will continue with both mainstream brands such as Lululemon and Victoria’s Secret, and F&B start-ups such as Wheelys looking to gain a foothold.”
Cities in central China are moving up the rankings, while those in the north continue to fall because of slower economic growth.
Tech cities such as Hangzhou and Shenzhen continue to narrow the economic gap with Beijing and Shanghai, where average fashion store counts per retailer are more than triple those of Shenzhen, which is third-ranked in the retailer index.
A further study of fashion retailers and leisure/entertainment companies shows the two gateway cities still have significant scope for further development.