Traditionally stereotyped as shoppers who spend primarily for the purpose of showing wealth, consumers in Beijing nowadays appear to care more about feeling good on the inside, not just looking good on the outside.

Driven by greater consumer sophistication and disposable incomes, consumption upgrades are increasingly driving spending habits in Beijing and steering momentum for F&B and lifestyle-related categories. In particular, strength in demand is coming through for F&B, sportswear, and home accessories segments at malls citywide.

Source: JLL Research
Note: New openings based on quarterly data collections from 4Q17 to 3Q18 at prime shopping malls in Beijing
within the Fifth Ring Road. Data is based on number of store openings, not sizes of store openings.

Eating integral to consumer spending

Perhaps unsurprisingly, F&B tenants accounted for the largest proportion of new openings at 37% as landlords catered to mealtime crowds, adjusting F&B tenants at their projects in a bid to raise footfalls. In the CBD, East Second Ring Road, and Chongwenmen submarkets, F&B retailers comprised the majority of new openings at 56%, 43%, and 43%, respectively.

While restaurant openings remained strong, the café, dessert, and drink segment of the market also continued to be noticeably active and accounted for a significant 21% of new F&B openings. Lady M and Hey Tea proved popular, feeding into demand from consumers wanting to experience new, quality food and drink options in Instagrammable settings targeting the social aspect of retail. Other retailers from non-F&B categories such as Kiehl’s and Moleskin opened hybrid retail store cafés to appeal to more customers.

Sportswear fueled by push to be active

But for all of the dining out, demand trends suggest a growing proportion of consumers are looking to balance their eating habits with a more active lifestyle. A significant 18% of new fashion openings (comprising a substantial 29% of the market) came from sportswear, with Adidas and CK Performance among the latest retailers expanding in sportswear in Beijing.

Tapping into demand from the growing number of customers adopting more active lifestyles, sportswear growth follows the rise in demand for gyms and other fitness tenants such as yoga studios which promote healthy living. And the emergence of online fitness apps entering the physical space is expected to provide another boost for sportswear ahead.

Lifestyle retailers expanding quickly

As more people realise that living well goes beyond just physical health, we see lifestyle retailers increasing their presence in the market as consumers seek products they self-identify with or that reflect their way of life. Lifestyle retailers were increasingly active over the year, more than doubling their new openings from 4% of the market in 4Q17 to 10% in 3Q18. Home accessories retailers were the most widespread in this sector, making up 48% of new lifestyle openings.

In Beijing, the home accessories segment has grown swiftly. Items such as scented candles have lent well to impulse buys and repeat purchases as consumers look to replace or upgrade products. With landlords using home accessories retailers to enrich trade mixes and widen lifestyle offerings at their projects, Muji and Nome have expanded quickly in the market.

Looking ahead, as many aspirational brands continue to be active in the F&B and lifestyle-related categories, we can expect these areas of the market to remain prevalent.

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