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May 26, 2020

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Economic recovery needs us to spend, spend, spend

Shopping sites are once again bustling after Shanghai loosened restrictions on large crowds and indoor stores, and people cooped up for months by the novel coronavirus epidemic are showing they are keen to get out and about again.

Governments at all levels are eager to promote consumer spending because economic recovery relies on it. But can the current shopping binge be sustained going forward? Retailers are making every effort to ensure that it does.

“Although many restaurants and shopping malls still require temperature tests for customers, I feel safer wandering around in open spaces and going into smaller stores,” said Elaine Wang, a Shanghai marketing consultant.

Others have fewer reservations and are eager to grab discounts on offer at major department stores.

“It’s a good chance to buy Lego building blocks and new outfits for my family,” said Shanghai shopper Janis Tao.

But nothing is quite like it was before coronavirus hit, triggering a steep slump in retail sales. Businesses are moving quickly to recoup losses as much as possible.

Data Quest China, a local commercial property consultancy, said retailers need to think more in terms of outdoor spaces after the pandemic and to increase use of digital sales channels.

Zino Helmlinger, head of retail, advisory and transaction services at CBRE Eastern China, predicted a quick rebound in health and wellness facilities and in self-indulgent spending after the outbreak.

Out-of-home spending rose 27 percent in April from a month earlier, with the fastest sales in items such as ice cream, beer and beverages, according to Kantar Worldpanel.

At Shanghai’s retail conglomerate Bailian, livestreaming of brands such as Anta and Nike is aired at least once every month.

The K11 mall on Huaihai Road said foot traffic during the Labor Day holiday in early May, coupled with the Double Five Shopping Festival, rose to pre-outbreak levels.

One of the earliest shopping malls to add art installations and themed exhibitions to give consumers added incentive to stop, K11 said those practices will continue. The mall has also taken to social media sites like Xiaohongshu, Tmall, Douyin and Mafengwo with virtual exhibitions and livestreaming to promote sales and events.

“I sometimes check social media posts for promotional activities, but they can never become real replacements for getting out and going shopping,” said Agnes Chen, a college teacher and scientific researcher. “I enjoy finding interesting merchandise unexpectedly.”

Sales at the Shanghai New World Daimaru Department Store’s annual promotion event on May 16 grew 23 percent from a year earlier to 171 million yuan (US$24.1 million) and attracted over 95,000 customers.

Makeup, gold accessories and jewelry, and home electronics were the strongest selling segments.

Beauty and skincare products are also bringing out consumers.

According to the China Commerce Association for General Merchandise, beauty products were a bright spot as major department stores reported double-digit sales during the Labor Day holiday.

Many shoppers who used to buy from foreign countries or duty-free shops are now returning to local merchants for cosmetic purchases.

Various pop-up fairs and street bazaars have become frequent sites as the shopping-promotion season extends into the next few months.

A rough count shows more than 30 indoor and outdoor bazaars have been staged in the city since early May, featuring varying themes such as handicrafts, food, plants and flowers.

The Place, a mall in Changing District, plans to combine seasonal outdoor markets and discounts for indoor retailers. Restaurants and apparel retailers in the mall are showing almost a 90 percent return to normal sales and foot traffic. More than 70 percent of merchants who took part in discount events during the Labor Day holiday reported year-on-year sales growth.

But at nighttime and on weekdays, diners have not completely returned to their favorite haunts, preferring to cook at home or order takeaways. Wariness among the public over a possible resurgence of coronavirus still persists.

A recent nine-day outdoor bazaar featured dozens of fresh flower vendors, which attracted many shoppers.

Kathy Wang, who works in a nearby office building, said she prefers to pick up flowers on her lunch break rather than ordering them at a cheaper cost online.

“The delivery of fresh flower is still troublesome, and sometimes they’re not in good shape when they arrive,” she explained.

“The vicinity of office buildings and residential neighborhoods has brought us additional customers,” said a staffer surnamed Jiang, who works at plant and flower vendor Aura Plus. She added, however, that many customers may return to online orders after they’ve visited its stall at the street bazaar.

Street markets for local snacks and late-night leisure activities, especially during summertime, could be a boon for businesses.

An outdoor fair hosted by the Shanghai No. 1 Shopping Center will become a regular event in the coming months, the mall announced.

But will these trends prevail in the long run?

Kantar Worldpanel China General Manager Jason Yu said street bazaars do attract consumers, especially those who want to avoid large indoor crowds, but bazaar organizers might need to devise longer-term strategies to keep that attention alive.

“It requires deep understanding and long-term thinking to build well-recognized and attractive street bazaars that shoppers are willing to return to,” he said.

Most outdoor bazaars are staged on a seasonal basis, and vendors come and go, making it hard for bazaars to develop individual identities.

“Physical retailers will face more competition, and those that don’t have much new to offer will be phased out very soon,” Yu said. “The majority of shoppers nowadays tend to spend more time at home.”



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