The e-commerce transformation of traditional brand sales channels indirectly led to high growth in online retail. In the future, the impact of the demographic dividend stage will diminish, and consumption upgrading will bring greater growth space. Under the background of 'Internet+', online consumption continues to heat up. On January 18, data from the National Bureau of Statistics showed that in 2017, total retail sales of consumer goods reached 36.6262 trillion yuan, up 10.2% year-on-year. Among them, retail sales of consumer goods above designated size were 16.0613 trillion yuan, up 8.1%. National online retail sales reached 7.1751 trillion yuan, up 32.2% year-on-year, with growth accelerating by 6 percentage points compared to the previous year. Among them, online retail sales of physical goods were 5.4806 trillion yuan, up 28.0%, accounting for 15.0% of total retail sales of consumer goods; within online retail sales of physical goods, food, clothing, and daily necessities increased by 28.6%, 20.3%, and 30.8%, respectively. It is worth noting that online retail penetration in daily life is increasing, and its share is rising significantly. Cao Lei, director of the China E-Commerce Research Center, believes that the e-commerce transformation of traditional brand sales channels indirectly led to high growth in online retail. It is foreseeable that this growth rate will continue. Especially under the trend of new retail, some major e-commerce platforms are expanding offline, and shopping channels are becoming diversified. "However, the impact of the demographic dividend stage will diminish, and consumption upgrading will bring greater growth space." New Retail Generates Dividends According to data from the National Bureau of Statistics, in December 2017, total retail sales of consumer goods reached 3.4734 trillion yuan, a nominal year-on-year increase of 9.4% (real growth of 7.8% after deducting price factors; unless otherwise specified, all figures are nominal growth). Among them, retail sales of consumer goods above designated size were 1.7409 trillion yuan, up 6.7%. Analysts believe that the slowdown in December 2017 was partly affected by the e-commerce 'Double 11' promotional shopping, where consumer willingness and demand were significantly stimulated by external factors during this period, directly overdrafting consumption capacity. However, from the full-year data, under the trends of new retail and urbanization, some new consumption characteristics have emerged. In 2017, urban retail sales of consumer goods reached 31.429 trillion yuan, up 10.0% year-on-year; rural retail sales of consumer goods reached 5.1972 trillion yuan, up 11.8%. Rural consumption growth exceeded urban consumption. This may also be the driving force for platforms like Alibaba, JD.com, and Suning.com to expand into rural e-commerce. On one hand, online consumption is heating up; on the other hand, traditional retail channels are clearly facing bottlenecks. In 2017, retail sales of supermarkets, department stores, specialty stores, and franchised stores above designated size increased by 7.3%, 6.7%, 9.1%, and 8.0% year-on-year, respectively. Therefore, traditional supermarkets accelerated their embrace of internet mergers and acquisitions in 2017, attempting to gain new development opportunities through new retail. Alibaba first reached a strategic cooperation with Bailian Group, then acquired Gaoxin Group, becoming the controlling shareholder of Auchan and RT-Mart. Tencent also heavily invested in Yonghui Superstores at the end of 2017 to help JD.com integrate offline scenarios. Meanwhile, companies such as Suning Cloud Commerce, Meituan-Dianping, JD.com, Ele.me, Xingbianli, Guoxiaomei, and Miss Fresh have targeted unmanned retail. Although it is still in its infancy, with unmanned convenience stores or office unmanned shelves not yet widely deployed, venture capital has already sensed opportunities. Public data shows that cumulative financing in the unmanned retail sector exceeded 50 billion yuan in 2017. The Ministry of Commerce believes that in 2017, China's retail industry showed new characteristics of accelerated sales growth, enhanced corporate profitability, and improved performance of major business formats. The innovation and transformation of physical retail are diverse, with developing new formats, building omni-channels, restructuring supply chains, and promoting channel sinking becoming important ways for physical retail transformation. Consumption Upgrading Emerges The rise of online shopping has also begun to force traditional consumption channels to upgrade services and quality. Among total consumer goods for the year, consumption upgrading categories grew rapidly, with communication equipment, sports and entertainment goods, and cosmetics increasing by 11.7%, 15.6%, and 13.5%, respectively. At the Ministry of Commerce's regular press conference on January 11, spokesperson Gao Feng stated that in 2018, the ministry will vigorously develop quality retail, smart retail, cross-border retail, and green retail, focus on improving supply quality and efficiency, and continuously meet people's growing needs for a better life. Offline retailers such as Yonghui Superstores, Hema Fresh, Bailian Supermarkets, and Carrefour are also transforming, launching models that combine traditional supermarkets with home delivery, which not only improves sales per unit area but also enhances user experience and loyalty. In addition, e-commerce platforms such as NetEase Kaola, Amazon Global, Tmall Global, and Ymatou are targeting the middle class, breaking users' previous perception of e-commerce as solely low-price. In 2017, online retail sales grew rapidly, with physical goods up 28% to 5.4806 trillion yuan; non-physical goods up 48.1% to 1.6945 trillion yuan. Non-physical growth exceeding physical growth indicates that more consumption is shifting to services, and the trend of consumption upgrading is evident. Gao Feng believes that tariff reductions have promoted trade. For example, import tariffs on some Swiss cosmetics have been reduced to zero. Import tariffs on some watches have been reduced by 50%, and on Korean consumer electronics by 40%. At the same time, tax reductions on many intermediate products and raw materials have also, to some extent, promoted the structural upgrading of domestic consumer goods. China's consumption structure is currently undergoing positive changes, gradually moving towards diversification, quality, and personalization, while there are still imbalances and inadequacies on the supply side. With the advancement of free trade zone pilot projects, more products will be imported with zero tariffs in the future, providing domestic consumers with more high-quality and affordable choices. Zhang Yi, CEO of iiMedia Consulting, said in an interview that consumption upgrading is definitely a development trend, and whether online or offline, consumer levels are improving. In the future, more consumption will lean towards tourism, leisure, culture, and education. "In the past years, Chinese consumption has basically been price-oriented. The next stage of explosion will depend on changes and upgrades in consumption habits." For consumption platforms, how to better innovate, achieve format changes and upgrades, and thus provide consumers with a better consumption experience remains key. Source: 21st Century Business Herald -END-