With waves of express deliveries, the 2017 Singles' Day shopping spree has officially concluded. Data from major e-commerce platforms shows that in its ninth year, consumers remain enthusiastic with increasing purchasing power. Among the 167 brands in the '100 Million Club', Apple, a representative of high quality, topped the sales list, while domestic brands like Midea and Xiaomi each exceeded 2 billion yuan in daily sales. This is a direct reflection of the consumption attitude upgrade, and it is quietly driving the upgrade of consumption patterns and business models in the commercial sector.
- What changes have we experienced in our lives due to the consumption upgrade in 2017? **▶▶ ▶ **** Consumers Pursuing Quality ****** Behind quality consumption is the rising share of mid-to-high-end and above commodity spending in total consumption. Earlier, Ali Research released the first index of Alibaba's New Consumption Index series - the 'Quality Consumption Index Report'. The report shows that in 2016, Alibaba's retail platform saw total mid-to-high-end consumption of 1.2 trillion yuan, equivalent to the total overseas spending of Chinese people in 2015. The report compares the growth rates of total retail sales of consumer goods and Alibaba's Quality Consumption Index over the past five years, revealing an 'X'-shaped intersecting curve. On one hand, due to the expanding overall scale, the growth rate of total retail sales of consumer goods has slowed, dropping by 5.3 percentage points over five years. On the other hand, the growth rate of Alibaba's Quality Consumption Index increased from 26.8% five years ago to 34.4% last year, up 7.2 percentage points. This indicates that 'slower growth, higher quality' is expected to become an important feature of future Chinese consumption. The trend of consumption upgrade is increasingly evident, concentrated in eight aspects: Including consumers' growing pursuit of health; greater attention to quality and enjoyment in life details; increasingly global consumption; more focus on the 'product' itself and higher acceptance of domestic brands; continuous penetration of technology in daily consumption; challenges to standardized products; growing popularity of original and customized products, with category generalization and basic categories moving past the mass consumption stage; and the increasing influence of opinion leaders on consumption, leading to more follow-up purchases. Taking the pursuit of healthy food as an example, data shows that 'free-range, natural, organic' is becoming standard in food, with sales of grain-fed products growing 569%, grass-fed products 187%, and searches for free-range products up 199%. From 2014 to 2016, the growth rate of health-related consumer goods sales in online home scenarios was 3.4 times the overall growth rate of home scenario consumption. ▶▶▶ Shift to Service-Oriented Consumption Along with the upgrade in consumer attitudes, consumption patterns have also undergone a series of changes this year. From a product category perspective, the consumption upgrade involves industries such as tourism, accommodation, daily chemicals, home appliances, home furnishings, and food. The consumption upgrade in tourism and accommodation is particularly evident. With the rise of outbound travel in recent years, enthusiasm for tourism spending and 'buy buy buy' has surged. Comprehensive travel service platforms are innovating. For example, Fliggy has been building global travel vacation IPs over the past two years, with new destinations like the Aurora Line and Antarctic Line being quite 'unconventional'. With economic development, per capita disposable income in first- and second-tier cities has increased. In the next 3-5 years, it is estimated that at least 300 million Chinese will have the financial ability to travel abroad. The upgrade of traditional essential industries cannot be separated from the support of important technologies like artificial intelligence. This has also given rise to new business formats around consumption upgrades, such as the rise of unmanned retail. In the past few months, a batch of unmanned retail formats have emerged rapidly, including BingoBox, Eatbox, 24 Aigou, GOGO, Xiaomai, EasyGo, Function Space, Saohuo Planet, and Bingbianli. Unmanned stores and unattended shelves (cabinets) have become hot search terms. Capital is also favoring new retail formats that incorporate intelligent elements. Bingbianli, an instant convenience consumption platform focusing on unattended convenience shelves, received 380 million yuan in Series A1 funding. Function Space just completed a 5000万元 Series A round. The unmanned retail project 'Jian24' received 3000万元 in angel funding from BlueRun Ventures, Redpoint Ventures, and Dianliang Fund. BingoBox announced the completion of its Series A financing, exceeding 100 million yuan. ▶▶▶ Boundary-less Business Models 'In 2016, market transactions reached approximately 3.452 trillion yuan, a year-on-year increase of 103%; financing scale was about 171 billion yuan, up 130%; participants exceeded 600 million, and service providers were about 60 million.' These figures from the 'China Sharing Economy Development Report 2017' by the Information Research Department of the National Information Center outline the super heat of China's sharing economy: Trillion-yuan market scale, hundred-billion-yuan financing scale, and hundreds of millions of participants. The rise of the sharing economy has indeed brought about changes and upgrades in many service and consumption sectors. CBNData's '2017 China Shared Mobility Big Data Observation' shows that shared mobility is revolutionizing transportation: shared bikes solve short-distance commuting during rush hours; real-time ride-hailing enriches and facilitates urban nightlife; and time-sharing car rental fills the gap in late-night public transport. Homestays and apartments are another accommodation industry brought by consumption upgrades. Platforms like Xiaozhu and Tujia are emerging. Xiaozhu recently announced a new round of financing of 120 million US dollars. The consumption upgrade in the new retail and big data era is not only reflected in material aspects but also in spiritual upgrades, better experiences, and environments. This has inspired more emerging business models. Pop-up stores, which became popular in 2017, are one such example. They use unique experiences to amplify brand selling points, bringing new consumer groups a more novel experience and brand awareness. In April this year, Ele.me and NetEase News jointly launched a 'Sulky Tea' pop-up store. Although it lasted only four days, it was extremely popular, with queues as long as those for Heytea, and the store even posted a 'resting' notice. Additionally, to get closer to consumers, Chanel, Armani, Land Rover, Nestlé, Zhihu, and Yierkang all made attempts, with creative pop-up stores emerging in various aspects of daily life. Hema Fresh, a representative of new retail, is also a standout in new business models. As one of Jack Ma's key experiments in new retail, Hema Fresh uses technology to combine restaurant, supermarket, and delivery services, realizing the concept of shelves as warehouses. It achieved profitability within six months of opening, with annual turnover reaching 250 million yuan and sales per square meter reaching 56,000 yuan. 2017 is called the 'first year of new retail' by the industry; it is also the year when 'consumption upgrade' was mentioned most. Every consumer is a witness to the consumption upgrade, and every brand is a participant and driving force behind it. Source: Yicai -END-