Fung Business Intelligence and China Commerce Association for General Merchandise are pleased to present the China's Department Stores Report 2022-2023.
In 2022, China's economic development was affected by various domestic and international issues such as repeated outbreaks of COVID-19. Facing new economic pressures, China has optimized its anti-epidemic measures alongside decisive actions to stabilize the economy in a timely manner. It implemented a full range of policy measures to support economic growth, employment, and price stability. Local governments were encouraged to make full use of these policies, while economically prosperous provinces were called upon to lead the way. In 2022, China's GDP reached 121,020.7 billion yuan, representing a year-on-year increase of 3.0%.
The department store industry had a turbulent year, marked by several key trends. First, both operating revenue and net profit experienced an overall decline. Second, there was some progress made in the development of the self-operated buyer-model. Third, department store operators worked to optimize their cost structures by reducing expenses and improving efficiency. Fourth, most operators strengthened their online capabilities, particularly through mini programs and livestreaming platforms. Fifth, there was a continued focus on membership programmes, with members' contribution becoming increasingly important. Finally, there was a significant divergence in performance, with high-end department stores continuing to grow while others struggling.
The industry also needs to overcome various development barriers. First of all, insufficient consumption and sluggish growth is the top challenge faced by the industry. There is also a mismatch between product appeal and consumer demand, and while progress has been made in exploring direct sales business, more work must be done from an industry perspective. Additionally, although digitalization is essential to business growth, there are still many obstacles to overcome, and online platforms continue to disrupt offline retailers. The implementation of data security laws and regulations also poses new challenges to department store operators in terms of data security.
However, despite these challenges, the retail industry is expected to reach a turning point in 2023 due to the optimization and adjustment of the anti-epidemic measures. As set out in the 2022 Central Economic Work Conference, China will centre on boosting domestic demand by prioritizing consumption recovery and expansion. Government policies will focus on enhancing spending power, improving consumption conditions, and developing innovative consumption scenarios. These will set the tone for the development of the retail industry in 2023.
According to our survey, 85.7% of respondents expect sales growth in 2023. Quality consumption is expected to continue its growth trend. Department stores will continue to carry out in-store renovations and upgrades to improve the shopping experience. They will focus on improving the value of products and services, in order to meet consumers' increasing lifestyle demands. Moreover, department stores are turning to digitalization to enhance operational efficiency, with a focus on refining customer traffic management and enhancing their core competitiveness.
China's Department Stores Report 2022-2023 collects and analyses data from 104 department store operators. The report analyses development trends in the industry in the past year, discusses major issues and challenges facing the industry, and puts forward policy recommendations from retail enterprises to promote the healthy development of the industry.
For Department Stores Report of the previous years, please visit here.