China’s leading source of real estate intelligence today launched its first in-depth exploration into the future of China’s retail industry at a press conference in downtown Shanghai.
The 52-page white paper by Mingtiandi, China Mall 2020, examines the potential growth of consumption in China over the next five years, and focuses on the impact that the country’s rapid adoption of mobile Internet technology will have on its shopping culture and retail development.
The report was unveiled to the media at a special event held jointly by Mingtiandi and Taubman Asia, a subsidiary of U.S. mall REIT, Taubman Centers, Inc. (NYSE: TCO), which sponsored the report.
Preparing for China Retail’s Mobile Age
While China’s overall economy is transitioning from a manufacturing-led model to rely more on the development of services as a source of productivity, there are also major new forces shaping its retail sector. Chief among these is a surge in of new malls that is seeing the country develop more than 32 million square metres of retail space between 2013 and 2016, as well as one of the world’s fastest rates of adoption for mobile Internet use.
“Because of the rapid growth of new malls and the wide proliferation of smart-phone use, China is uniquely positioned to build a cutting-edge retail sector by 2020,” said Michael Cole, executive editor of Mingtiandi, and managing researcher for China Mall 2020. “The retailers and shopping destinations that succeed over the next five years will be those that embrace new digital marketing technologies and keep pace with consumer needs by incorporating smart design elements into their projects.”
Specifically, the report discusses several key drivers that will inform the future development and success of Chinese malls, including:
- Shopping center designs will need to be rethought to accommodate shoppers looking for cultural and social experiences as much as for visitors looking to tick items off their shopping lists;
- Integration of digitally-enabled strategies, such as online-to-offline (O2O) and big-data level resources will be needed to bring management of offline retail on par with online competitors;
- Adoption of mobile technologies, to meet consumer demand for on-the-go research in stores, will be needed to keep in tune with a market of mobile-connected shoppers; and
- Mall development, including innovative leading strategies that bring together the right mix of retailers at a pace that matches the increasing urbanization of China and is able to anticipate the evolving needs and expectations of the Chinese consumer.
René Tremblay, president of Taubman Asia, said, “At Taubman Asia, we’ve always been optimistic about the growth and untapped potential of the China market, and we were encouraged to see the results of Mingtiandi’s independent research affirm this view. We believe the industry is undergoing its first stage of evolution, and we are well placed to lead the development of this next generation of malls in China – leveraging our 65 years of international development and design experience, as well as our robust local team.”
Retail Projected to Continue to Grow in China
The study documents how China’s retail sector, while slowing from the breakneck growth rates experienced in earlier years, is still demonstrating potential for continued expansion.
China Mall 2020 forecast sustainable growth for Chinese consumption as the country’s middle class expands over the next five years.
To take advantage of this growth, however, the study recommends that retailers position themselves to take advantage of new technology, in the face of rising level of competition, both from ecommerce providers and from other traditional retailers.
Mr. Guohua Zhang, China Managing Director of Taubman Asia said, “The retail scene in China is becoming increasingly sophisticated. Instead of viewing external forces as threats, many malls in China are utilizing a powerful mix of digitally enabled strategies that leverage mobile, social platforms and big data together with traditional marketing approaches. These kinds of innovations are critical to our approach for the market.”
Attending today’s event were representatives of more than 20 local and national media outlets, including Xinhua, China Daily, the Xinmin Evening News, the 21st Century Business Herald, and China Business Journal.
More information on the report can be found here.
Taubman Asia, the sponsor of the project, has developed several retail complexes in the region. The company’s portfolio in China includes two CityOn lifestyle projects underway in Xi’an and Zhengzhou and The Boulevard at Studio City in Macau, which will open in October 2015. The company also owns Hanam Union Square in Greater Seoul, which is due to open in late 2016, and manages operations for the IFC Mall in Seoul which opened in August 2012.