China’s Department Stores Report: Government Policies Boost Consumer Spending, Businesses Focus on Transformation and Upgrades
Press Release of China’s Department Stores Report 2024-2025
The consumer goods market will continue to grow in 2025 with the proactive government policies to boost consumption and the improvement in consumer confidence, according to the China’s Department Stores Report 2024-2025 jointly released by the HKUST Li & Fung Supply Chain Institute (‘the Institute’) and China Commerce Association for General Merchandise (‘CCAGM’) today. The latest forecasts by the Institute predict that China’s gross domestic product and total retail sales of consumer goods will grow by 4.5% and 5.0%, respectively, in 2025.
A survey jointly conducted by the Institute and the CCAGM shows that 24% of surveyed department store operators expect their sales to grow in 2025, a significant decrease from 66% in last year's survey. This year marks the tenth consecutive year that the series of reports has been released.
To better serve the discerning consumers and cope with intensifying competition, department store operators are driving the industry's transitioning from traditional retail spaces through systematic upgrades in physical spaces, business formats, product categories, and strategic positioning. The survey shows that 63% of surveyed enterprises consider accelerating transformation and upgrades to be the primary development trend for the department store industry in the next three years.
The survey also indicates that 82% of respondents believe that enhancing product competitiveness will be the future operational focus of department stores. As consumer demand becomes increasingly diverse and personalized, transformation and upgrade of department stores require optimizing product structure, strengthening supply chain management, enhancing product innovation, and establishing close partnerships with brands, rather than merely upgrading store appearances and decorations, adjusting brand tiers, or increasing the number of brands.
In 2024, department stores and shopping centers underwent profound scenario-based transformations to fulfil changing consumers’ shopping needs. They are dedicated to offering holistic, immersive shopping experiences through carefully designed spatial layouts and store atmosphere creation.
Furthermore, amid the wave of digital transformation sweeping across different industries, many department store operators have achieved notable progress in digital transformation and AI applications, injecting new vitality into the industry. 82% of surveyed enterprises reported that AI will have a transformative impact on the digital development of the retail industry. Ms. Helen Chin, Head of Research of the Institute, states: " As digitalization continues to evolve and AI applications deepen, the department store industry will see increasingly diverse innovative practices in operational efficiency and cost control. Catalyzed by Deepseek, businesses can utilize AI data analytics tools to monitor and analyze key indicators such as consumer behaviour and preferences and sales data in real-time. AI tools can also help implement refined management strategies and precise marketing strategies to further improve operational efficiency and profitability."
In late 2024, the Ministry of Commerce and six other departments jointly issued the Implementation Plan for Retail Industry Innovation and Upgrade, outlining five main tasks including promoting scenario-based transformation, quality supply, digital empowerment, diversified innovation, and supply chain improvement. The plan aims to establish, by 2029, a modern retail system characterized by abundant supply, balanced distribution, multi-channels, quality service, smart and convenience, and green and low-carbon practices.
The Report recommends that the government should further improve relevant regulations and optimize the business environment. By providing special subsidies and increasing financial support, the government can assist department store operators to develop scenario-based, experiential formats that meet the demands of modern consumers. The Report further suggests that the government should continue to vigorously boost consumption, with local governments expanding the issuance of consumption vouchers, to fully unleash consumption potential and support domestic retail industry.
For more information, please refer to the China’s Department Stores Report 2024-2025.