China’s retail market has experienced unprecedented growth in recent years – and as the retail landscape continues to evolve, the importance of retail market research in China has become increasingly evident. 

As a result, businesses need a comprehensive understanding of this dynamic market to identify opportunities, navigate challenges, and make informed decisions that will drive their success.

What is retail market research in China?

Retail market research in China consists of gathering, analyzing, and drawing conclusions related to the retail environment, consumer behavior, and market trends in the country. 

It aims to provide businesses with valuable insights and actionable information to make informed decisions about market entry, expansion strategies, and marketing initiatives tailored to the unique Chinese retail landscape.

This also includes assessing the overall size, growth, and potential of the Chinese retail market, as well as identifying and understanding the key market segments, trends, and opportunities. The ultimate goal is to uncover the preferences, needs, and purchasing habits of Chinese consumers.

Retail in China

Large shopping malls have emerged across China to accommodate the rising demand for premium and luxury goods.  These malls are places to buy products, but increasingly are places for consumers to “window shop” with friends and family.  However, a major shift has occurred in China.  Consumers increasingly prefer to purchase products online.  Retail environments increasingly serve as product showcases and locations to bond with brands.

China’s Luxury Market

Retail Market Research in ChinaChina is undergoing rapid social change. A rising Middle Class fueled by a growing GDP per capita growth has caused many people to have disposable income.  With one of the largest transformations to a Middle-Class society, luxury goods are an important way to communicate value and social status.  This “conspicuous consumption” occupies an important part of Chinese society today.

China’s Advanced Payment Technology

China has extraordinarily leapfrogged the development of a consumer credit card system, transitioning at lightning speed to a cashless, mobile payment system.  The payment system avoids the four-party system of issuers, cardholders, acquirers and merchants in the United States.

Popular social media include WeChat, Weibo and Tencent allowing customers to rapidly share information and payments with others.  Chinese consumers have embraced cashless mobile payments in almost all purchases and share with friends their purchases.   

With this increase in disposable income and China’s past reputation as a maker of inferior goods, China has a high demand for Luxury Goods Market. 

E-Commerce in China

Taobao, JD and T-Mall are major players in China’s booming e-Commerce market.  Other e-Commerce leaders include Yihaodian, Jumei, WeiPinHui and XiaoHongShu.

Retail Market Entry in China

Not all developments have been rosy, however. For example, a number of global retailers that have spent millions to establish their physical presence in China have folded local operations or are in the process of doing so. Two such players are mega brands Best Buy and Mattel. This apparent contradiction, however, does not diminish the growth trend in global retail but only highlights the different aspects and potential pitfalls that retailers can consider when engaging specific economies or markets.

Importance of retail market research in China for businesses 

Retail market research in China helps businesses identify the most suitable market segments, regions, and channels for entry or expansion. It enables them to assess the potential demand for their products or services, ensuring they make strategic and data-driven decisions to optimize their market presence and grow their customer base.

Additionally, Chinese consumers have unique preferences and behaviors that can differ significantly from those in other markets – and retail market research allows businesses to gain an in-depth understanding of their target audience, enabling them to tailor their products, services, and marketing strategies to better resonate with Chinese consumers.

Retail market research can also provide valuable insights into the most effective supply chain and distribution strategies for businesses operating in China, helping them reduce costs, streamline operations, and ensure their products reach the right customers at the right time.

About Retail Market Research in China

Retail Market Research in China uncovers data, insights and strategies to uncover strategic advantages.  Companies use findings for tactical decision-making and new product launches.  Different methods achieve different strategic priorities:

Qualitative Research uncovers into what’s important to customers and reasons behind certain phenomena.  Methods include Focus Groups, Online Communities, Customer Interviews, Ethnography and Mobile Video Interviews.

Quantitative Research measures the extent to which customers behave.  It can uncover pricing, product and loyalty insights.

Strategy Research uncovers insights and strategies to create an advantage in competitive industries.  Solutions include Competitive Analysis, Market Opportunity Research, Go-To-Market Strategy and Channel Intelligence.

Opportunities and benefits for retail market research in China

  • Growing consumer base: China has the world’s largest population, which offers a massive consumer base for retailers. With a burgeoning middle class and increasing disposable incomes, the purchasing power of Chinese consumers is growing rapidly, creating significant opportunities for both local and international retailers. 
  • Diverse market: The diversity of consumer preferences and regional differences in China presents opportunities for niche and specialized retailers to meet the unique needs and tastes of different customer segments. This dynamic market offers the potential for innovation and growth for businesses that can identify and address these niches effectively. 
  • Rapidly evolving digital landscape: China’s unique digital ecosystem, with domestic giants like Alibaba and Baidu dominating the market, offers a wealth of data and innovative technologies for retail market research. The integration of e-commerce, social media, and mobile payments enables researchers to gather real-time insights and tap into emerging trends, providing a competitive advantage in the market. 
  • Market expansion potential: Retail market research in China can help businesses identify potential opportunities for market expansion, both within the country and globally. Understanding Chinese consumer preferences can inform product development, marketing strategies, and distribution channels, facilitating successful expansion efforts. 
  • Risk mitigation: Conducting retail market research in China can help businesses identify potential risks and challenges in the market, enabling them to develop strategies to mitigate these risks and ensure long-term success.
  • Local partnerships: Engaging in retail market research in China can facilitate partnerships and collaborations with local businesses, suppliers, and research agencies. These partnerships can provide valuable market insights, access to resources, and connections in the Chinese market, further enhancing a company’s competitive advantage.

Challenges and considerations for retail market research in China

  • Cultural differences: Understanding Chinese culture is essential for conducting effective market research. Chinese consumers’ decision-making process, communication preferences, and values are often different from Western consumers. Researchers should familiarize themselves with these cultural nuances and design their research methodologies accordingly. 
  • Language barriers: Mandarin is the primary language spoken in China, and many people may not be proficient in English. This language barrier can make it difficult for foreign researchers to communicate with local consumers, suppliers and other stakeholders. Hiring local talent or partnering with local research agencies can help bridge this gap. 
  • Counterfeit products: The prevalence of counterfeit goods in China can make it challenging to assess the actual market size and consumer preferences for genuine products. Researchers need to be vigilant and develop strategies to filter out counterfeit products from their data collection efforts. 
  • Market saturation: The retail market in China is highly competitive with numerous companies working hard to gain a bigger market share. Researchers must be aware of this dynamic and factor in competition when evaluating market potential and assessing the effectiveness of marketing strategies.

Prospects of retail market research in China

The retail market in China has experienced significant growth and transformation in recent years, with the emergence of e-commerce, digital payments, and a rapidly growing middle class. As a result, the prospects for retail market research in China is positive. Here are some key factors to consider:

  • China’s growing middle class has more disposable income and is increasingly interested in higher-quality products and services. This creates a need for market researchers to study this demographic and understand its consumption patterns and preferences. 
  • The integration of online and offline retail channels is a growing trend in China. Market researchers can study the effectiveness of these omnichannel strategies, consumer preferences for various channels, and opportunities for further innovation in retail experiences. 
  • China is becoming a hub for retail innovation with technologies like AI, AR/VR, and robotics being used to enhance the shopping experience. Market researchers can analyze the adoption and effectiveness of these technologies and their potential impact on the retail landscape. 
  • The increasing availability of data from various sources such as e-commerce platforms and social media will enable market researchers to gain deeper insights into consumer behavior and preferences. Harnessing big data and advanced analytics tools will be crucial for developing actionable insights and guiding retail strategies.

About SIS International

SIS International offers Quantitative, Qualitative, and Strategy Research. We provide data, tools, strategies, reports and insights for decision-making. We conduct interviews, surveys, focus groups and many other Market Research methods and approaches. Contact us for your next Market Research project.