According to our research, experiential brands in Beijing accounted for 35% of the newly opened retail stores in the first half of this year, up 17% compared with the same period last year.
Figure 1: Percentage of New Leasing Demand from Experiential Retails in the First Half of 2022-23 (by leasing area)
Source: JLL Research
Experiential brands are widely distributed and have a diverse presence in shopping centres. We studied and categorised experiential retailers in approximately 150 shopping centres in Beijing. Currently, quality-oriented education ranks first in the market share among all categories.
Figure 2: 2023 Market Share of Subcategories in the Experiential Retail Sector in Beijing*
Source: JLL Research
Experiential stores are frequently characterised as having large store areas and emphasize in-store consumption. The recovery of foot traffic since the end of 2022 has been one of the main driving forces for the increasing demand for experiential retail. In addition, a few retail landlords continued to face vacancy pressure. Thus, they tended to welcome experiential retailers to fill large empty spaces and also extend the length of customers’ stay.
Despite the impact of the pandemic, experiential retail continued to attract investors’ attention while at the same time expanding its scope of business to meet the increasing needs of consumers. In the past four years, pet services, sports and skin care were the subcategories most popular to investors, due to their attractiveness to offline customers and high growth potential. In the first half of 2023, 33% of the invested brands have opened offline stores, and another 11% are planning to open offline stores, driving growth in leasing demand in shopping malls.
Figure 3: Overall Investment and Financing in Sampled Experiential Subcategories in 2019-1H23 (By number of deals)
Source: JLL Research, Qichacha
Aside from those funded by investment organisations and chain-retail brands, the number of stores opened by individual funders and non-chained brands has increased. In 1H23, the recovery of foot traffic remarkably rebuilt market confidence. Emerging independent brands seized the market opportunities to actively open new stores. The proportion of non-chained brands in the newly opened experiential stores rose to 17% in 1H23, an increase of 7% compared with the same period last year, exceeding the non-chain brands’ average annual growth level.
Figure 4: Percentage of Non-chain Brands in Newly Opened Stores in the Experience Retail
Source: JLL Research
Over the past decade, the role of shopping malls in large metropolitan cities has continued to evolve to serve as “urban oasis”. The functions of a shopping mall have been constantly expanding to integrate leisure, entertainment, experience and social aspects along with shopping.
It is highly expected that the shopping scenarios will continue to evolve and emphasise the shopping experiences as most of the under-construction retail projects in Beijing have already been integrating experiential retail into their early-stage design.
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