Gen Z ignites new retail trends in China

BEIJING -- China's dynamic retail sector is undergoing profound changes catalyzed by the rising influence of Generation Z, which has emerged as a formidable force in sparking a new wave of consumption trends, according to business insiders and analysts.

Chinese Gen Z, a cohort born between 1995 and 2009, numbered around 260 million, constituting 19 percent of the country's total population, data from the National Bureau of Statistics showed.

A recent study conducted by RISE, a global strategic positioning and consulting firm, uncovered that the average disposable income of Gen Zers surpasses the national average by nearly 50 percent.

Compared to previous generations, Gen Zers exhibit distinctive purchasing patterns, prompting businesses across the spectrum to vie for a slice of their evolving preferences.

Zhu Yuan, Deputy General Manager of Beijing's THE BOX Youth Energy Center, attests to this seismic shift in consumer behavior.

"Unlike their parents, who prioritized utility and functionality in products, Gen Zers are more focused on immersive shopping experiences and consumption scenarios that allow them to showcase their individuality and personality," explains Zhu.

The burgeoning consumer group has transitioned from materialistic consumption, such as luxury goods, to a more multifaceted pursuit of tastes, spanning art, culture, sports, and personalization, as outlined in a report by Zheshang Securities.

THE BOX Youth Energy Center is a living testament to cater to the change in Gen Zers' new consumption needs. Through innovative creation of new consumption scenarios -- such as expansive art exhibition spaces, skateboarding and basketball parks, and open-air theaters -- the recently established shopping plaza has swiftly gained traction on the life-sharing platform Xiaohongshu among young Chinese.

"Even with only 30 percent of our vendors operational, we've witnessed peak customer flows of up to 55,000 in a single day, and our sales revenue hit 60 million yuan ($8.36 million) since our trial run began on May 20," Zhu said.

A white paper published by the global consultancy firm Roland Berger also showed the same trend, as post-1995 consumers are willing to pay for quality, experiences, aesthetics, and products in line with their values.

Dubbed digital natives, Gen Z grew up inextricably linked to the digital landscape, leading them to gravitate towards building communities through social media platforms. This social connection is instrumental in shaping their interests and hobbies, which, in turn, influence their consumption choices.

Ma Yan, founder of the skateboarding training club URIDE, underscores the pivotal role of social media in cultivating Gen Zers' engagement with skateboarding and the broader skateboarding industry.

"Skateboarding is becoming one of the preferred leisure pursuits among young Chinese. They seek like-minded peers on social media and gather offline to exchange and practice skills," said Ma.

He adds that Gen Zers are increasingly willing to invest in their hobbies and buy services and products closely aligned with their health, whether in sports, beverages, or food.

The RISE report underscores that an impressive 77.5 percent of Gen Z respondents prioritized ingredient health when buying food and beverages. "This younger generation exhibits heightened awareness of health and wellness, gravitating towards cleaner and healthier raw materials and components," the report notes.

As consumption is becoming a primary force driving the country's economic growth, promoting consumption is the key to the current recovery and expansion of domestic demand.

In the first half of 2023, China's retail sales of consumer goods hit around 22.8 trillion yuan, and consumption's contribution to economic growth reached 77.2 percent, according to the National Development and Reform Commission.

Roland Berger's white paper also revealed that 61 percent of consumers born after 1995 hold a positive attitude toward future consumption of trendy products, and 33 percent said their spending will increase by more than 20 percent over the next two years.

The remarkable spending power of Gen Z, coupled with their optimistic outlook on future consumption, is driving a fresh wave of domestic demand, thereby amplifying China's consumer capacity, as highlighted by Zhang Yina, director of the Consumer Market Big Data Laboratory of Fudan University.

"We hold a bullish view on Gen Zers' spending power and future consumption," said Zhu, adding that Gen Z will pump great vitality and changes into China's consumption landscape.