Its amazing to see how once one of the most poorest nations in the world in terms of consumers are now able to surpass the richest in as little as 15 years. According to business week, Chinese department store, PCD attracted so much traffic customers that Beijing police had to step in to control traffic.
"The love affair of the Chinese consumer with luxury products is growing," says PCD Chairman Alfred Chan.
For this reason opportunities in terms of consumers goods are still plenty. On top of that, their growth is still astounding and have yet to implement many of the western countries’ techniques in term of how they sell their goods. For example, E-Commerce has yet to develop and brokerage firm CLSA estimates the Chinese retail market will expand by about 24% in 2010.
Retailers such as PCD have yet to benefit from the growing interest in luxury and high end goods.
"With the emergence of the middle class, people are going for better brands," says Yuval Atsmon, an associate principal for McKinsey in Shanghai.
Now high margin goods such as cosmetics, designer clothes and shoes account for more than 70% of sales at the top department stores. Plus, in contrast to U.S. custom, large Chinese retailers sign deals directly with brand owners, charging them rent and letting them manage their sales in the store.
Today, the top five department store operators together have just 8% of the market, vs. 70% in the U.S., BCG estimates. That will soon change, Cheng predicts.
"There will be only 10 to 15 groups remaining 10 years down the road." – Alfred Cheng (CEO of Parkson)
Source: Business Week
