4 Oct 2021
The global pandemic has taken its toll on service industries and accelerated changes in consumer habits, particularly in China, the world’s second largest consumer market. During my travels, it emerged that China’s shopping malls are evolving rapidly to replace the retail and restaurant concepts that did not survive the disruption of the past two years. In addition, internet giants that benefitted so much from the growth of online shopping and gaming are also evolving under the increasingly watchful eye of the regulators. They are developing new concepts, such as community group buying, which will provide them with routes into new markets. With such rapid changes, we felt it was important to gain first-hand insight into emerging trends to help evaluate new concepts and opportunities.
In recent weeks, I have spent much of my leisure time in mostly newly-built shopping malls in cities across eastern China, including Nanjing, Shanghai and Hangzhou. Instead of finding the old familiar shops, movie theatres or full-service restaurants, I noticed different brands springing up in prime spots, such as Muji and Xiaomi. Emerging domestic brands taking more shelf space and attracting customers include Perfect Diary, Manner Coffee, HeyTea, Genki Forest, Relx, and Super Monkey. I had to look harder to find the familiar consumer brands, such as Yili, Moutai* or Haidilao. COVID has clearly presented a serious challenge for traditional leisure businesses – cinemas and restaurants – but I was surprised by the speed with which these new brands have moved in to fill the gaps left by the old.
* This stock is held in 4Factor portfolios.
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