BEIJING: As China’s biggest cities grow, becoming megacities, shopping centres are adopting the out of town US model, and are finding a diverse, affluent and eager market.
Malls located on the outskirts of big cities such as Beijing and Shanghai originally found a very different clientele from what they are seeing today. For instance, one Beijing Capital Outlets mall, which opened four years ago, sits almost 40 km from the centre of the Chinese capital.
Yang Xinwei, head of marketing for the outlets told the South China Morning Post that the mall used to see 70% of its clientele come from local Fangshan, when it first opened. Now, he said, “they make up just 30%”.
The shift is indicative of a new kind of consumer, one that will drive a significant distance in order to spend. Higher traffic is seen at weekends, similar to the US trend.
“People drive a long way to get here and find many brands are offering 30 to 70 per cent discounts, so their shopping appetite greatly increases,” Yang said.
Despite significant discounts, average spending per visitor is up to 800 yuan (around USD$121). In tandem, Beijing Capital said sales have grown 30% year on year.
The trend is indicative of any growing city’s lack of residential and commercial supplies in the inner cities, alongside high prices for a spot in the centre. According to a 2015 census, over half of Beijing’s population now live outside the city’s fifth ring road, otherwise known as the S50.
Increased space and a concentrated experience for visitors have been an advantage for both malls and the brands that occupy them. With ample space for branded pop-ups and installations, the higher footfall has brought one Shanghai mall 50% revenue growth in H1 2017, according to Nikkei Asian Review.
However, the threat of ecommerce across Asia more broadly does still worry retailers. Research from JLL and the Singaporean authorities suggested that by 2020, online shopping may make up to 6.3m square feet of retail space redundant in the city-state.
Data sourced from South China Morning Post, Nikkei Asian Review; additional content by WARC staff