Department Stores in China—Consumer Shift Toward E-Commerce Squeezes Sales

Market Scale and Opportunity

• We estimate that sales of department stores in China declined by 7.9% in 2022 for $126.5 billion in total sales. Chinese consumers’ continued shift toward e-commerce, increased competition from domestic and international retailers, and challenging macroeconomic factors contributed to the decline. In 2023 and beyond, we expect sales of department stores in China to grow at low-single-digit rates annually, resulting in a CAGR of 0.6% for 2022 through 2027 for the sector.

Coresight Research Analysis

• Cultural traditions and festivals, government policies to support the development and transformation of the retail sector, and consumers’ urbanization are positive factors that will drive department store sales in China in the coming years. However, department stores in the country also face various hurdles, such as lower consumer traffic, sluggish economic growth and a high youth unemployment rate.
• The department store sector in China is fragmented. Shanghai Bailian Group is the leading department store group in the sector, with a total revenue of $4.6 billion and department-store-specific revenue of $0.2 billion in 2022. Shanghai Bailian Group is followed by Chongqing Department Store and Easyhome New Retail Group. Of China’s top 20 department store groups, 15 experienced declining sales in 2022.
• Department stores in China are using various technologies to innovate and enhance their offline shopping experiences. As of March 2023, the top three offline technologies department stores currently use are self-service payment systems, member recognition systems and interactive screens, per a survey conducted by Fung Business Intelligence, a think tank, and the China Commerce Association for General Merchandise.

What We Think

We expect that China’s department stores will continue to grow their online sales in the coming years as consumers’ retained online shopping habits present opportunities to gain data-driven insights and increase their online reach and shopper engagement. However, Chinese department stores also face various challenges, namely competition, operational requirements, and the need to seamlessly integrate their offline and online channels. Moving forward, we believe that department stores that embrace digital transformations, leverage emerging technologies and meet evolving consumer demand will be best positioned for success.

Please feel free to check our full report: https://coresight.com/research/department-stores-in-china-consumer-shift-toward-e-commerce-squeezes-sales/