“Spending less, but quality of life upgraded”
“It's been a long time since I ordered takeout, had Starbucks coffee, or ate Häagen-Dazs ice cream,” lamented Wang Feng, born in 1989.
“Previously, I never understood my parents' consumption philosophy; I felt they were too conservative and habitually rebelled against them and everything from the older generation. But when I started facing life's pressures and responsibilities, I truly appreciated the wisdom of my parents' way of life.”
Wang Feng used to work at a central state-owned enterprise and bought a small two-bedroom apartment in Beijing with a loan in 2017. The following year, persuaded by a friend, he quit to start a business together.
“In the early days of the startup, income fluctuated and was unstable. After the pandemic, it became even harder. With a monthly mortgage of about 20,000 yuan, the financial pressure was significant. But since my parents came to live with me in Beijing the year before last, my consumption habits have changed considerably,” Wang Feng said.
He noted that before 2019, he dined at high-end restaurants, ordered takeout as the norm, always had the latest phone, filled his cardholder with various membership cards, and traveled abroad once or twice a year. But after the macro environment changed, his consumption philosophy shifted dramatically.
Previously, he drove everywhere or took taxis on license-plate-restricted days; now he takes the subway or rides shared bikes to work. He no longer chases brands when buying clothes, opting for affordable brands like Uniqlo and Decathlon.
“I used to think money was meant to be spent, but now I realize it's not easy to earn, and only savings give me peace of mind,” Wang Feng said.
He recalled that besides the macro environment, his parents' arrival in Beijing also influenced him.
“They came in early 2022. Within no time, they became familiar with the neighborhood, knowing which supermarket or market had the freshest and cheapest fruits, which vegetables offered the best value, and which stores sold more authentic and affordable goods,” Wang Feng said.
He said he gained new insights from his parents' lifestyle: buy fresh vegetables and fruits in small quantities, buy vegetables on the day you eat them because waste adds up; get haircuts at community barbershops for at most 30 yuan, which is better than chain salons that require prepaid discounts; make fresh juice at home; and repurpose old clothes into household items.
“Now I cook at home. The money for a Starbucks coffee can make a simple but healthy meal of four dishes and a soup, and the cost of a Häagen-Dazs ice cream can buy a pound of beef, enough for several dishes,” Wang Feng said. Although his parents seem frugal, their quality of life hasn't declined.
“Now I usually bring lunch to work. Compared to takeout, home-cooked meals are tastier and healthier.”
Wang Feng, now 35, said that after experiencing the macro changes, he can finally appreciate his parents' wisdom. His monthly food expenses with his parents are about 2,000 yuan, but he feels he eats healthily and lives securely.
“My goal now is to earn more and save more. Looking back, I paid too much 'IQ tax,'” Wang Feng said with a smile. “Rather than downgrading consumption, it's more like upgrading intelligence.”
“Stop getting various cards”
Li Lei (pseudonym) ultimately couldn't escape a salary cut.
“Early last year, the company optimized; nearly half of the department left. I was lucky not to be laid off, but my salary was cut by nearly 30%,” Li Lei said.
Unlike before, Li Lei now has “forced” changes in daily spending—no consumption unless necessary.
Born in 1984, Li Lei is from Ma'anshan, Anhui Province. After completing his master's at a 985 university, he worked at an innovative IoT company in Beijing, earning about 25,000 yuan after tax before the cut. His girlfriend Xiao Nan is a yoga teacher earning about 11,000 yuan per month. In 2018, they bought a two-bedroom apartment in Yizhuang with a monthly mortgage of 15,000 yuan.
“After the salary cut early last year, I felt immediate pressure, mainly because our elementary school child's expenses are high. After mortgage and child expenses, little remains from our salaries,” Li Lei said.
With the poor economy, companies are struggling, and Li Lei doesn't complain much about the cut. He just re-planned the family budget, stopped extravagant spending, and focused more on value for money.
“The key is being more pragmatic,” Li Lei said. Now they cook at home more often. During holidays, his wife no longer buys shoes, new clothes, or cosmetics as before, but only adds some value-preserving gold jewelry.
“I used to habitually recharge membership cards, like at Mubei Styling, Chlitina, and SISYPHE Books. That added up to nearly 20,000 yuan a year,” Xiao Nan said.
She said that recharging for discounts seemed cost-effective, but on closer inspection, it wasn't. For example, at Mubei Styling, a 3,000 yuan recharge gives a 50% discount on services. The store manager's haircut was 300 yuan, discounted to 149.5 yuan, allowing 20 haircuts.
“But after recharging, you find the barber can raise prices anytime. My manager's haircut was 299 yuan, but soon it went up to 399 yuan, and with the 50% discount, it was 199.5 yuan. I didn't mind before, but now I think it's really a rip-off.”
Xiao Nan said her situation isn't unique; Xia An, also in Daxing District, had a similar experience.
“Compared to the community barbershop that charges 30 yuan for a decent haircut, these high-priced salons that lure you into recharging for discounts are indeed expensive,” Xiao Nan said, shaking her head.
“I used to regularly recharge at Chlitina and SISYPHE Books, but now I've stopped those expenses.”
Xiao Nan said she used to buy limited-edition books from SISYPHE for collection and annual calendars for gifts or personal use. A collector's calendar cost over 100 yuan; now she feels such spending is wasteful.
“Now it's different. Fewer people take private lessons, and my income keeps shrinking. Only by cutting expenses and saving diligently can we be secure. Spending on more valuable things and thinking holistically is wise, giving us more confidence to face future uncertainties,” Xiao Nan said.
Consumers cautious, high-end boutique stores struggle
The changing macro environment has quietly altered people's consumption views.
At the root is unstable income. The so-called consumption downgrade, low-desire consumption, and the economic “lipstick effect” have become reality—all economic phenomena. The logic is that economic downturn and weak investment lead to lack of confidence and uncertainty about the future, prompting defensive behavior, rational consumption, and saving, resulting in insufficient spending power.
Since last year, bank deposit rates have been cut multiple times, but the trend of time deposits has become more pronounced.
As of April 2, among 42 A-share listed banks, 21 that disclosed 2023 results had total deposits of 167.74 trillion yuan, up 15.77 trillion yuan from the previous year, an increase of 10.37%. Among them, personal time deposits totaled 56.96 trillion yuan, up 22.11% year-on-year, with some banks seeing over 40% growth in personal time deposits.
The six major state-owned banks had combined deposits of 133.61 trillion yuan, accounting for nearly 80% of the 21 banks. Compared to 2022, they grew by 14.34 trillion yuan, an increase of 12.03%. Based on China's 1.4 billion population, that's an average increase of 10,000 yuan per person.
Since 2019, external uncertainties have deeply affected everyone's life. Some have downgraded consumption and cut spending; others strive to improve their wealth-creating ability while raising consumption levels.
In the modern economic system, a consumption bill isn't just about your contribution to GDP; more importantly, it embodies a basic driver of the commercial society.
When consumers “upgrade their intelligence,” high-end boutique supermarkets and specialty stores that once emptied wallets are facing their toughest times.
Recently, Shanghai CityShop, one of Shanghai's most famous high-end imported supermarkets, known for global foods with over 80% imported goods, announced the closure of all stores due to sustained losses.
Last year, Bestore, the first high-end snack stock, also cut prices across the board, explicitly stating that over 300 premium and best-selling products saw an average price cut of 22%, with a maximum reduction of 45%—the largest price cut since Bestore's founding.
At the beginning of this year, Pagoda, listed for a full year, saw its stock price fall from highs to lows, with market value shrinking significantly. Also, “disappeared” Tiger Head Bureau and troubled Chicecream...
Moreover, since 2022, Chinese consumers' enthusiasm for luxury goods seems to have plummeted. The domestic personal luxury market saw its first 10% decline, ending a five-year growth period.
Industry insiders say that high-end supermarkets generally have higher prices. However, as consumption views change, more consumers prioritize value for money, preferring good-quality, low-priced goods over merely high-priced, high-quality items.
People no longer blindly chase expensive goods but focus on practicality. This shift in consumption philosophy has greatly reduced the appeal of high-end supermarkets.
In a poor economic environment, reduced income is worrying enough, and asset shrinkage adds insult to injury. People are forced to resist risk by downgrading consumption, but in this process, rather than downgrading consumption, it's more like consumers upgrading their intelligence when facing many high-priced goods.
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