Our website uses cookies

Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing Retail Design World, you agree to our use of cookies.

Okay, I understand Learn more

Opinion: how design can shape the retail opportunities in China by João Barbosa of Shopworks

China is the worlds second largest retail market, after the US, but is predicted to take the top spot within the next three years.  Despite its current economic uncertainty - China's GDP forecast by its Government is at its lowest level for 25 years - China has been experiencing rapid evolution in a new economy, providing both challenges and opportunities for retailers.

According to a recent report by Jones Lang LaSalle, over the coming three years, nearly 40m sqm of shopping mall development is predicted across China.  Some 55 new malls are earmarked for Shanghai alone and a new Metro system there is seeing underground retailing space become highly desirable, especially for fast-fashion brands.

Until recently the most prominent spaces in any Chinese mall were reserved for the luxury brands. But this market has become saturated and, with a recent Government ban on corporate luxury 'gifting', has influenced a shift in the shopping habits of the nation.

People now demand more choice at lower prices. As a result International brands such as Zara, H&M and Forever 21 are taking business from top tier luxury names.  There is an increasing appetite for premium supermarkets, personal care stores and cash and carry formats.

This growth and change in shopper behaviour presents opportunities for retail design agencies, as the emphasis moves to experience and concept stores, with retailers looking internationally to create better shopping environments.

A boom in international travel means Chinese consumers are increasingly savvy about what’s on offer worldwide. There has been a move away from the traditional model of displaying products on simple shelving, in favour of more immersive 'experiences', reinforcing quality and trust in products through the design of the retail space. Quality and trust have historically been lacking in Chinese products, so the consumer seeks reassurance from the 'premiumness' of the environment.

The franchise model is expanding fast, with new brands reaching into hundreds of stores very quickly, often within one or two years. Intuitive retail designers therefore need to ensure that store furniture and unitary design are modular and flexible to cater for cost effective fast rollouts.

However, stores need to be appropriate to their locale and adjustments may be required if retailers plan to open stores in all the different 'Tier' cities. A high quality designed store can be successful in a Tier 1 city, but if the same format opens in a Tier 3 City, it's likely to be off-putting to consumers by looking too expensive.  Many International retail brands with a presence in China subscribe to a philosophy of “Look pretty in Tier 1; make money in Tier 2 and 3”. 

(For an explanaiton of tier cities by Nexus Pacific click here).

With mobile penetration in China amongst the highest in the world - online now accounts for 11% of total retail sales in China - “Internet plus” has become a popular business topic.

The Chinese love for smartphones presents an obvious commercial opportunity.  Simple scanning of QR codes or location based marketing backed by beacon technology - via a smartphone - enables quick and convenient mobile payment, seamlessly connecting the online to offline retail offer.

And with Wechat as the essential Chinese daily social media tool, increasingly this channel is optimised to recruit, engage and convert shoppers by offering free product sampling, digital coupons and food ordering. This provides retailers and brands with a new way to market and sell products and entice shoppers in-store.

Competition is growing and consumers are becoming more demanding. For Chinese retail brands to succeed against both domestic retailers and an influx of international players, they must place a focus on developing a strong brand DNA architecture, as opposed to moving straight to store design. 

This is where those experienced retail design consultancies can help ready retailers for the significant level of approaching competition, gearing them up to survive and thrive in the future.

João Barbosa is founding partner and director of Shopworks     

What’s Hot on Retail Design World?