**|Tech Planet
text|Zhai Yuanyuan
The wind of consumption downgrade is inevitably blowing towards the middle class. Whether it is consumption concept, consumption psychology, or consumption decision-making cycle, urban middle-class families have changed to varying degrees.
In the past, the rise of middle-class consumption has matured countless consumer formats, such as medical beauty, piano, equestrian, ice hockey, second-hand luxury goods, ......500-1000 yuan an hour of courses, middle-class parents rush to it, there is not much decision-making pressure; Hundreds of thousands to millions of yuan of luxury watches, second-hand dealers are crazy hoarding and reselling. A watch dealer revealed to Tech Planet that in the craziest time, as long as it is a Rolex, it can earn 20% as long as it is taken back, and it can earn 20% in 2 months.
Now, however, overall consumption tends to be conservative. For non-essential consumption, the middle class can cut it, and save it if it can. The consumption decision-making cycle began to be passively lengthened, and the consumption mode of spending lavishly was gradually abandoned.
In the past, "school district housing, international schools, and full-time wives", which represented the identity symbols of the middle class, have now become a three-piece set of middle-class bankruptcy, and "it is not that big brands can't afford it, but that it is more cost-effective" has become a new consumer consensus. Cost-effective e-commerce platforms such as Pinduoduo and 1688 have become one of the important lifestyles of the middle class.
In 2021, data from the National Bureau of Statistics estimated that there are about 400 million middle-income groups in China, that is, families with an annual household income between 100,000 yuan and 500,000 yuan. If calculated from a base of 1.4 billion people, the proportion of China's middle-income population is about 30%.
The enthusiasm of middle-class consumption has dissipated, and some industries have suddenly found themselves in the moment of naked swimming, the piano industry is thundering, and the Rolex equestrian institutions are running away.
Equestrian and ice hockey, known as "aristocratic sports", have become the standard for more and more middle-class families in China in recent years.
The first hurdle to learn equestrianism is to burn money. Equestrian lessons in different cities charge different fees, and a parent of a student in Beijing who learns equestrian lessons told TechStar that he is interested in equestrianism, and he has to invest a lot of time and money. Her children's equestrian lessons** are more than 600 yuan per saddle hour (one lesson), 40 minutes, and generally one lesson a week. At present, I have completed more than 20 classes, and I can neither ride nor dare to let go. Some horse farms in Shanghai are accumulated according to the horse fee + coach fee, according to a netizen, a lesson is as high as 1,200 yuan.
The more money-burning part is buying horses. The equestrian circle is very rolling, the above-mentioned parents said that the children who have studied in the same horse farm for several years are buying their own horses, please better coaches, 4 lessons a week, 3 years of learning, you can pass a few obstacles, and a lap down is half a minute. Another Shandong parent revealed that her child takes the professional route, and the school has a special horse farm equestrian class, 2 classes a day, because the child loves it, they specially bought two horses, one for 600,000 yuan and the other for 1.05 million.
However, the high course fee and the cost of buying a horse do not mean that the equestrian industry is easy to do business. There are very few people who take the equestrian professional route, and it is difficult to make money in the horse business, both at home and abroad. An industry insider said that the operating costs of equestrian clubs are usually relatively high, involving the breeding and care of horses, as well as the purchase and maintenance of venues and equipment. The maintenance cost of a single horse is nearly 10,000 yuan, so the instability of market supply and demand will lead to losses.
People who take equestrian as their hobby have no motivation to upgrade, compete, and add points, and they can't see the return on investment, and their needs are even more unstable. The imbalance between supply and demand has led to a thunderstorm on the supply and demand side.
In 2023, many horse farms will have a wave of closures, and equestrian clubs will run away. Chen Chen, an equestrian enthusiast in Shanghai, told Tech Planet that in February last year, the equestrian club she recharged suddenly ran away, and the venue leasing party issued a notice saying that the equestrian club had been insolvent due to poor management and long-term arrears of local water, electricity and rental venue fees, and had stopped all membership services.
Chen Chen recharged 20,000 yuan for the equestrian course at that time, 50 lessons, and did not spend once after recharging and becoming a member. Others lost more, with 3-50,000 yuan. The equestrian club was closed and ran away, and Chen Chen could only sue the club in court, and later won the lawsuit and asked for enforcement, but until now, Chen Chen has not been able to get the refund back.
Riding a horse is very happy, so Chen Chen has not given up learning equestrianism, and has been learning from another horse farm. But now she is more cautious about recharging annual card members, not very confident about recharging a large amount of money at one time, worried that the club will run away again, and the number of people around her who learn equestrianism is also significantly reduced.
Another money-burning sport that was once popular among the middle class is ice hockey, which is also in less demand. Tan Ran, a parent of a student who learns ice hockey, told Tech Planet that the number of people learning ice hockey is decreasing. For some families who do not follow the major, they will choose to reduce the class, reduce the class less and less, and then maybe reduce it to a certain extent and forget it, and may not study.
"Children's education" is usually the main expenditure item of middle-class families. According to the survey data, the new middle class's monthly childcare expenditure is highly concentrated in three places: education and learning (734%), daily diet (463%) and interest cultivation (45.).3%）。
The cost of learning ice hockey usually ranges from 100,000 to 1 million yuan a year. Tan Ran said that her son Xiao Xiaoxin's spending on ice hockey in the previous year in 2022 was 15-200,000 yuan. But now I don't have time to take so many classes, I only take classes three times a week, plus competitions, almost more than 100,000 yuan a year.
Ice hockey can't be relegated, and lessons are getting more expensive. Tan Ran said that when Xiao Xiaoxin was four years old, it was more than 300 yuan an hour, and now the cheapest one is about 600 yuan an hour, and there are 800-1,000 yuan an hour.
The consumption psychology of middle-class parents is also changing. Tan Ran said frankly that an obvious change in her mentality is that she used to arrange classes for her children and would not calculate **, but now after arranging classes for him, she will calculate how much money has been spent on education, how much is the weekly make-up class fee, how much will it cost this month, and she has to have a number in her heart, "It turns out that I don't calculate, so I try to arrange classes, but now I will think about this matter when I schedule classes, and I will start to have a concept." ”
Not all parents can insist like Tan Ran, and some parents finally give up ice hockey either out of financial pressure or out of consideration for their children's study time.
Also abandoned by the middle class are high-end watches.
Bain & Company's 2022 China Luxury Market Report pointed out that China's watch market shrank by 20%-25% in 2022 compared to 2021. According to data from the Federation of the Swiss Watch Industry, the export value of Swiss watches to Chinese mainland increased from 29 in 2021CHF 6.7 billion decreased to 25 in 2022CHF 6.9 billion. In 2023, the monthly data of Swiss watch exports to Chinese mainland also recorded a year-on-year decline several times.
Demand for first-hand watches has declined, and demand for second-hand watches has been even more miserable. The decline in domestic second-hand watch market brand watches** was particularly significant. Watchcharts data shows that the overall **index** of pre-owned watches in 2023 is 138%。Rolex, Patek Philippe, and Audemars Piguet fell in the three major high-end watches during the year, respectively6% and 185%。
Second-hand luxury watches fell out of favor, and some watchmakers lost more than 1 million yuan for a watch. Another luxury businessman lamented that last year was not good and almost went bankrupt.
A second-hand watch dealer told Tech Planet that the current watch ** is really bad, that is, the price reduction is the most powerful, such as the Rolex Daytona, the popular model is reduced by 50%, and the entire industry is not very good anyway.
As for the reason for the diving of the watch, the second-hand watch dealer said that the most critical thing is that it has risen too hard before, for example, "Green Gold Di" (Daytona with a green dial and gold), at its peak, it was more than 1 million, and the moisture was too large, and now it is the time to squeeze out the water, which fell by 50% to five or six hundred thousand.
Supply and demand determine the market**. Second-hand watch dealers said that the original middle-class consumer demand is strong, and when the watch is the craziest, as long as it is Rolex, it dares to collect, and as long as it is put back, it can earn 20% for two months. Now it's not good, and there are no new investment projects that can earn as much as before, and consumption has shrunk, and second-hand watches have slowly fallen from the peak, because there are fewer people chasing them, especially middle-class consumer groups.
The changes in the consumption pattern of the middle class are more specifically reflected in the consumption expenditure.
Ms. Bai Wei, a middle-class family in Beijing, told Tech Planet that she and her husband earn more than 70,000 yuan a month, and then the other half of the year-end bonus is nearly 2 million. There is a downgrade in consumption, but it is not too much.
Starting from the majority of family expenses, Bai Wei said that the biggest expenditure of the family last year was to repay the mortgage, and they bought a 130-140 square meter school district house a few years ago and repaid the mortgage every month. In the past, the expectation was good, and there was no anxiety about the loan for decades, but now, the general environment is not good, the risk of being laid off at any time is very high, and unemployment may befall you at any time. So they planned to repay the mortgage ahead of schedule and repay the loan of more than 1 million yuan in 2023.
The two children in the family are learning piano, because they are quite talented, so this part of the expenditure has not been downgraded, one person is 400 yuan a lesson, and the two are nearly 40,000 yuan a year. In the past, Bai Wei spent 30,000 to 40,000 yuan a year on medical cosmetology, and did one or two major projects a year, such as Thermage, ultrasound gun, and ultra-picosecond, and the cost of a major project was more than 10,000 yuan, but now, there are no more than these major items.
Cutting off large expenses, Baiwei only retains a little cheaper medical beauty items, such as a hot lift once a month, a water light once every 2-3 months, a wrinkle removal once every 3 months, and occasionally a hot lift is replaced by a photon, 600-700 yuan a time. In a year, it was controlled within 20,000 yuan, which was half of the past reduction.
Bai Wei said that behind the consumption downgrade, the point of anxiety lies in the uncertainty of future expectations and whether it can continue to have a stable income.
Tan Ran's consumption downgrade is reflected in all aspects of life. She said that the consumption downgrade will not reduce spending on children's education, but reduce expenses in other aspects, such as the original I had three assistants, and now I cut two to leave one assistant, because I found that one person can do everything.
Life began to be budget-conscious, it turned out that when I went out to travel, I would definitely choose to take business class, but now although I will also take business class, but "I will feel distressed", I will think about it and think about it. If you take the train, you used to have business class, but now you may all have first-class seats.
It turns out that traveling to a five-star hotel is cheaper than 3,000 a night, and then a little more expensive may be 5,800. Now it depends on the situation when you go out, for example, go to the hotel that is matched by the playground, then there is no way, because the hotel can usually enter the park in advance, but go out normally, and now the children live in the homestay, which is particularly cost-effective and has a lot of space. Consumption has begun to have a standard for consideration, depending on whether the cost performance is high.
Tan Ran said that there has been a downgrade in household consumption, but the quality of life has not changed much, "because we have figured out one thing, that is, living in the present, what will happen in the future, it may not be clear, but I think that since we have carried so many things, we should live well, in fact, this matter is very important." ”
Rational consumption and the pursuit of cost performance are becoming the new consumption habits and minds of the middle class. And those industries that rely on middle-class consumer groups to contribute revenue, or even cut leeks, will become more and more difficult to do business.