2024 is the "Year of Consumption Promotion" positioned by the Ministry of Commerce of the People's Republic of China. From the "Year of Consumption Boost" in 2023 to the "Year of Consumption Promotion" that has just been set, escorting consumption to heat up has always been the focus of economic work.
Jones Lang LaSalle continues to track China's consumption and its impact and implications for retail and commercial real estate, based on years of observation and data accumulation, we have sorted out the phenomena and trends that have been revealed and may continue to be seen by Chinese consumers, retailers, investors and related real estate operators in 2024, and analyzed the potential and long-term value of China's consumer and retail real estateGain insight into business routes from consumer behavior, study and judge business opportunities from investment trends, and reinterpret urban value from business innovation.
The new era is enlightened, and the prophet comes first
Foresee China's retail consumption opportunities in 2024 now
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In the long run, residents' pursuit of a better life remains unchanged, so consumer demand can continue to develop through the cycle and show a development trend of upgrading; However, the cyclical fluctuations of the short-term economy will inevitably affect the income and expectations of residents, which will lead to the possibility of short-term consumption downgrade in demand. Economic growth and stable employment income are the foundation of "promoting consumption". Chinese consumers are becoming more and more "rational", seeking "good quality and low price" and returning to the essence of the consumption logic to allow the general public to achieve a new balance of "rationality".
In 2024, China's consumption will continue to recover structurally, and service consumption will play a more important role. The Maslow demand curve of young consumer groups is smoother, and their spiritual consumption demand is more rigid. "Moving consumers' lives into shopping malls", the future investment of retail real estate should focus on the expansion of more service consumer formats and brands, and high-quality brands with their own traffic are also the key to attracting traffic in shopping malls.
Chinese consumers are constantly awakening to brand awareness and have an increasingly strong ability to distinguish international brands. China's luxury market is accelerating its differentiation, and top luxury brands are constantly positioning themselves in the customer base, and it is difficult to find high-end and limited goods; Lower-tier brands have entered the vortex of parity and discounts, and brand premiums have weakened. Top luxury brands with the halo of "famous store economy" and niche designer brands under the "first store economy" will continue to be the focus of the market in 2024.
The rise of live broadcast e-commerce has begun to subvert the traditional channel of commodity flow, and the anchor brings goods to make consumers' selection of goods based on "brand" trust change to "anchor" trust, forming a new product flow model: starting from live broadcast, then to the factory, and finally directly to consumers. Anchors have become a bridge between manufacturers and consumers to form information and commodity flows, and the value of brands to traditional retail business has been continuously weakened in the evolution of consumer information exchange.
It's not that consumers can't accept "prefabricated dishes", but that the equivalent goods that can't accept the consumption amount are the "assembly operations" of the kitchen. The popularization of knowledge and objective disclosure in the field of prefabricated dishes will help consumers establish scientific cognition and effectively screen products in the subdivided track. In the catering industry, where open flames are limited and taste is difficult to control, prefabricated dishes have become the standard configuration of chain restaurants. According to Jones Lang LaSalle, the demand for high-standard factories and cold chain warehousing from upstream and downstream enterprises related to prefabricated food in China will increase significantly in 2023. Returning to the essence of the service industry, the "premium" of catering stores should originate from the ingenuity of practitioners in catering cooking and ingredients, rather than blindly pursuing to crack the traffic code in the era of big data.
Improving the holiday system, implementing the paid leave system, and expanding holiday consumption" have been written into the "14th Five-Year Plan", and the holiday economy has become an important starting point for China's "consumption promotion". The new consumption concept of the younger generation is completely different from the "shopping" model of big buys, spending on "road" tourism allows more young tourists to use low-cost "poor travel", urban roaming, rural pastoral tours to the diversion of traditional ticketed scenic spots, is structurally reducing individual tourism expenditure.
The "generosity" of Chinese consumers in the event and the "constraint" of daily consumption may seem contradictory, but it highlights the new consumption concept of the new generation: the event and performance are getting closer to the "basic" consumer demand. The value of the performing arts economy to urban consumption has been confirmed in major cities in 2023, and it is very common for performances to be hard to find. The "community" and social attributes of culture, sports and entertainment are increasing simultaneously, and the deepening of the popularization of the whole campaign has driven the related consumer spending to increase year by year. During the 2024 New Year's Day holiday, the number of ice and snow tourism bookings increased by 126% year-on-year, and Harbin is even more popular. The consumption of ice and snow sports equipment has risen with the boom in ice and snow sports fever and northern scenery city tourism. In recent years, many new brands focusing on ice and snow sports have been introduced in the retail business, which has become a bright spot in the current business demand.
"Urban consumption" focuses on the product market side of consumption, from the gathering of commercial resources to the attraction of consumer groups, and from both sides of supply and demand, to create a consumer destination with international influence; By extending the consumer product market to the upstream factor market, opening up the consumption industry chain, and promoting the high-quality development of the economy through the creation of the consumer industry, the city's vision will be transformed from the front-end consumption of C-end to the B-end investment, which will create a "consumer city". Cultivating local brands, creating an entrepreneurial community atmosphere for managers, forming a "double gathering" of international consumption resources and local industrial chains, and achieving the advanced goal of moving from "urban consumption" to "consumer city" are also the "two carriages" to promote the construction of an international consumption center city.
According to Jones Lang LaSalle, in 2023, the stock of high-quality retail real estate in 21 major cities in China has exceeded 1400 million square meters, box business (i.e., traditional shopping malls) accounts for more than ninety percent; Developers continue to explore innovative techniques, such as creating a multi-space scene for shopping malls, but the situation is difficult: the average vacancy rate reached 10 at the end of last year5%, still up from 75%。
In 2023, a large number of "non-standard" businesses that are different from traditional box businesses, such as Shanghai Panlong Tiandi, Shanghai Hongshoufang, Hangzhou Jade Bird Collection, and Chengdu Ancestral Street, will emerge. "Non-standard" is more in line with the people-oriented needs of consumers, demand-oriented to achieve commercial carrier design and scene creation, diversified, innovative and interesting consumer themes and IP are the vitality of "non-standard" business. In 2024, in the context of continuous urban renewal and a large amount of commercial land to be developed, we expect that "non-standard" commercial development will still be in the ascendant.
At this stage, there are very few commercial management projects that "turn things around" through asset-light output, and many commercial projects under pressure are still difficult to get rid of the dilemma of operation in the end, which can be described as "the death of asset-light output"; The success of asset-light output is often inseparable from a certain degree of heavy investment under the cooperation framework. Benign win-win cooperation reflects the sharing and consistency of the goals and interests of both parties, which is the premise of successful cooperation. Although the pressure still exists, the business management industry is maturing, and the product output is moving towards a subdivision track. We expect that in the future, high-tier cities and core location projects will have more potential for cooperation in asset-light commercial management output.
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