Shanghai retail market bounces back as foreign firms reaffirm confidence
Shanghai is seeing its consumer market bounce back to peak levels, boosted by a string of festivals and holidays from August through November. The city is getting back on track as an international shopping center, quickly recovering from the two-month lockdown brought on by the most recent wave of the COVID-19 pandemic.
In recent days, the city's residents have been grabbing digital consumption vouchers worth 1 billion yuan (US$147.5 million), which can be used at online and offline stores participating in the campaign held by the Shanghai Commission of Commerce to spur consumption.
In the first draw late last month, two million people carved up 200-million-yuan e-vouchers, which can be redeemed in more than 100,000 restaurants, department stores, shopping malls and e-commerce platforms. Now the second batch of vouchers worth 500 million yuan has been distributed while the third round of 300 million yuan starts in late October.
"The business environment in Shanghai enables companies to run their business more smoothly. The market-oriented, law-based, international business environment it fosters has given us great support," said Jacopo De Vena, managing director of Florentia Village and RDM Asia.
RDM Asia opened the first Florentia Village luxury outlet in Tianjin in 2011. At present, it owns and operates seven Florentia Village shopping malls in major Chinese cities which also include Shanghai, Guangzhou, Wuhan, Chengdu, Chongqing and Hong Kong.
The Shanghai outlet resumed operations in June as soon as the city-wide lockdown ended, with a series of special offers and discounts to get consumers back into offline retail. It also joined the e-voucher campaign, and continues to offer activities and experiences for consumers during the major festivals and holidays such as the Double Five Shopping Festival, the Mid-Autumn Festival, and the National Day holiday. It also prepares activities such as the Luxury Pavilion Super Weekend from September to December.
"We believe that these initiatives will help boost consumer confidence, and unleash consuming potential, thereby stimulating consumer dynamism," the managing director said.
It's been seven years since the official opening of Florentia Village Shanghai, and the Phase II project was officially unveiled last year, adding the total floor area of the Shanghai outlet to 70,000 square meters, with more than 300 branded shops and 3,000 parking spaces.
"Shanghai is a modern and cosmopolitan city that also has the advantage of a mega market, and we attach great importance to the development of the Florentia Village Shanghai," De Vena said.
Sales from Florentia Village's seven outlets in China exceeded 11 billion yuan last year, an increase of 15 percent over 2020. Traffic to the outlets also reached 23 million, up 20 percent over the same period.
Among them, Florentia Village Shanghai saw a 19 percent growth in sales (accounting for 28 percent of the national total sales) and a 13 percent rise in traffic over last year, a steady improvement, with sales and footfall among the top in the industry.
Like the "retail+entertainment" industry that relies much on physical experience, the world's leading toy company The LEGO Group was also impacted in the first half of this year by the COVID-19 lockdown in Shanghai, where its China headquarters hub office is located.
But since the city reopened in June, the LEGO branded stores have received considerable attendance with customers enjoying the onsite brand experience, showing a strong business resilience and customer loyalty.
Shanghai is still one of the toy firm's biggest markets in China, with over 30 branded retail stores in the city. In 2016, the company opened its first China flagship store at the Shanghai Disney Resort and the first certified store in the Pudong New Area in 2017.
For a foreign company that pays great attention to creativity, a friendly business environment that shows continuous effort in protecting the intellectual property rights matters the most. In the past few years, local authorities have adopted a hard-line stance against piracy, including a particular copycat case in 2020 with its haul estimated to be worth over 30 million yuan, where the Shanghai court fully supported The LEGO Group's claim for compensation.
The crackdown on IPR infringement is a big boost for the Danish company to continue to invest in the city and the country. This January, the group announced plans to expand its factory in Jiaxing, neighboring Zhejiang Province, creating additional capacity to meet long-term growth in China and Asia.
While many industries are still in the throes of the post-COVID era, the 136-year-old Coca-Cola stepped out of lockdown with at-home consumption rising as home-bound consumers continue to stock up on sodas and other beverages.
According to the Coca-Cola company's second-quarter 2022 earnings results, the global unit case volume grew 8 percent, trademark Coca-Cola gained 7 percent, and Coca-Cola Zero Sugar rose 12 percent.
The Chinese market is Coca-Cola's third largest and one of the most important in the company's development strategy. The Coca-Cola China System has so far invested over US$13 billion in the Chinese market and established a total of 46 plants in the country since 1979.
The brand probably means more for Shanghai locals who went through the citywide lockdown in April and May. The soda drink was jokingly referred to as a "hard currency" which could be bartered for life necessities during the two-month period.
In the face of a challenging market environment, Coca-Cola China told Shanghai Daily that it will continue to increase investment in the Chinese market in line with its long-term development strategy.
Earlier this year, Coca-Cola launched its innovation platform "Coca-Cola Creations," which takes the iconic Coca-Cola trademark and lends it to new expressions through limited-edition releases, immersive interactive experiences, and cultural creations that appeal to the younger generation.
The platform has already launched two limited-edition products, Coca-Cola Starlight and Coca-Cola Byte, which were inspired by space and the metaverse, respectively.