China’s retail and consumer sector undergoing disruption

Slowing economic growth, the rise of millennial shoppers and a growing online ecosystem are three disruptive factors that are shaping the retail and consumer sector in China.

PwC’s latest The Disruptive Face of the Retail and Consumer Products Sector in China and Hong Kong report indicates how retailers to turn disruption into opportunity.

1. The rise of coopetition
Coopetition is the collaboration between business competitors to achieve a ‘win-win’ solution. Unique partnerships such as Macy’s with Fung Global Retail on Tmall Global, Suning and Alibaba, to leverage new synergies and win business.

2. Let’s make a deal: Transformative M&A
Companies are moving up the value chain, entering new markets and acquiring new competitive capabilities. M&A is one strategic tool increasingly being utilised. Recent transformational acquisitions include Haier of GE; Midea of Toshiba; Samsonite of Tumi.

3. Creating trust online
Customers increasingly interact across wide range of social media channels and branded websites, and make decisions based upon those interactions. Trust is fostered throughout this experience and it is essential for consumers in the luxury and personal beauty space.

4. How to win with data
With data analytics, companies can personalise customer experience, particularly for millennial shoppers, so as to increase retention and customer lifetime value.

PwC forecasts a compound annual growth rate of 7.5% in China’s retail and consumer products sector from 2016-2020. China is expected to continue its momentum in 2016, posting roughly 9% growth, gradually decelerating to approximately 7% growth over the rest of the forecast period.

“China’s R&C sector went through a series of violent ‘thunderstorms’ in 2015, but the skies are clearing,” says Michael Cheng, PwC Asia Pacific and Hong Kong/China retail and consumer leader.

“Key cyclical and structural factors such as improving economy, focus on personal consumption will lead the rebound. The expanding middle class with increased purchasing power is also supporting the market going forward. Growth is forecast to gradually slow as the domestic economy and sector matures over time.”