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REAL ESTATE: Interesting Retail Changes and How They Will Affect the Retail Market in Tianjin
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Interesting Retail Changes and

How They Will Affect the Retail Market in Tianjin

 

By Lesley Chai, senior analyst, JLL Research

BT 201707 REAL 02
      作为中国最大的一线城市之一,天津一直在时尚和品牌入驻方面走在中国前沿。无论是国际快消品牌H&M、Zara的涌入,还是本土时尚品牌或生活品牌MjStyle、Miniso名创优品的出现,天津的现代零售市场一直发展迅速,且多样精彩。

      天津的零售市场其实已经发展了十多年,自第一家典型的商场津汇广场在天津开业以来,天津迎来了几波零售业发展高峰。2011年至2012年间,大悦城、银河国际购物中心、新业广场、水游城等相继涌现,天津的零售业格局从此进入“商场时代”。第二次发展高峰主要集中在各城区或周边地区,2015年之后,已有的商场竞争加上线上电商的冲击使零售业开发速度放缓。

     我们在了解市场情况时,也发现了几个有趣的现象。首先是国际品牌的迅速扩张。国际品牌如H&M、优衣库、Gap等以其时尚的设计和相较合理的价格受到了广大年轻消费者的喜爱,这些项目的入驻也有助于改变整个商场定位,在12年至14年间营业的商场中,几乎每家都有一两个国际快消品牌店。当商家发现新项目无法再吸引国际品牌时,本土时尚品牌得到了发展机会,MjStyle、Mo&Co、太平鸟等得到迅速发展。便宜的生活用品类小店如名创优品也备受年轻人欢迎。

      此外,围绕都市生活而出现的一系列连锁店也挤占了大片“江山”,7-11、星巴克、屈臣氏等为消费者提供便利服务、餐饮休闲以及卫生用品的连锁店也在各个商场入驻。另一个你可能会忽视但是却潜力巨大的市场,是小型售货亭,这些占地不大的小机器可以贩售饮料零食、提供娱乐游戏或者为你榨出一杯新鲜橙汁,其中最受女孩子们欢迎的大概要数抓娃娃机了。零售业的业态越来越多样化与年轻化,还有巨大的市场等待挖掘。

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The modern retail market has been developing in Tianjin for more than 16 years, since the first typical shopping mall, The Exchange Mall, opened on Nanjing Road. The first supply peak appeared during 2011-2012, when Joy City, Galaxy International Shopping Centre, iShine City and Aqua City were completed in different submarkets in central Tianjin and increased the retail landscape in the city. For the first time, total stock of shopping malls surpassed the stock of department stores and Tianjin has been dominated by the shopping mall format ever since.
 

The second supply peak occurred in 2015 but this time major new malls were located in emerging submarkets, such as Riverview Place Tianjin and Aegean Shopping Mall, both of which were located in Hedong District. In addition, the coverage of these shopping malls was limited to the surrounding neighbourhood instead of the whole city. After the entry of this large supply pipeline, new openings are occurring at a slower pace. Regional competition and growing online shopping are two main reasons for this slowdown in pace.
 

During our site visit to track market updates among some 50 retail projects, we found several interesting market trends.
 

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• The fast fashion pattern changed

International brands, such as H&M, slowed their strategy of expansion while domestic fast fashion brands started to grow rapidly.
 

The main international fast fashion retailers came to Tianjin in 2008 and chose the hottest retail areas (Nanjing Road and Binjiang Avenue). Their trendy designs and acceptable prices helped them become the most popular brands, especially for young people. Retail developers introduced such brands as a main way to attract foot traffic and improve the positioning of their entire project. Almost all shopping malls which opened during 2012-2014 have at least one international fast fashion store.
 

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During about an eight-year development period, most international fast fashion retailers performed well while others, such as Gap and C&A, closed stores and even left Tianjin. The designs did not fit local tastes well and this may be the reason why they did not perform well. However, the relatively low spending power and fewer white-collar workers were also facts that stopped the retailers’ development.


BT 201707 REAL 06Tianjin main fast fashion brands, retailers’ official website, JLL Research


However, new projects continued to enter the market and when developers found that they could not attract international fast fashion brands, they started to consider substituting domestic fast fashion, especially for large-sized malls. Domestic brands took the chance and started to expand. For example, Gap closed one store in Riverside 66 in late 2016 that will be replaced by Chinese fast fashion brand MjStyle soon. Therefore, if you walk around the malls that opened after 2015, you will probably find several local fast fashion brands instead of H&M or Zara.
 

For shoppers, the expansion of Chinese fast fashion may be a good thing because there could be more choice of trendy clothes with even lower prices.

hl real• Convenience stores have started booming recently

Since 2015, Tianjin’s GDP has been dominated by the service industry; more companies have appeared, pushing up the population of white-collar workers. Strong customer demand supported rapid expansion of convenience stores. The 7-11 chain is the first and the only international convenience store chain to have entered Tianjin.
 

Convenience stores are being widely welcomed by students and office workers but not by some retailers. Considering the products that convenience stores provide, they may hurt their competitors from different categories, such as cafés (Starbucks, Costa), fast food chains (KFC, McDonald’s), cigarette stores, Watson’s and other mom and pop convenience stores.
 

In addition to the wide range of products they provide, some other features that make them even more competitive are -
 

1. Handy locations: locations for convenience stores are chosen cautiously and they can usually be found at the entrance of shopping malls and near schools or hospitals.

2. They only provide items with high purchase rates which help them to achieve high conversion rates.

3. Better services: they are not checkout-free stores such as Amazon Go, but a customer does not need to talk during the entire shopping process. There are no promotions or advertisements from cashiers, unlike at similar stores such as Watsons.
 

At present, Tianjin has 83 7-11 outlets in total and it seems to have a large expansion space compared with the 198 stores and several other chains in Beijing. However, under pressure from convenience stores, several hypermarket retailers are trying to compete by opening smaller grocery stores near communities. For example, Tesco Express is a new grocery chain with a standard space of about 300 sqm. The grocery stores provide daily necessities, ready to eat packages, cigarettes as well as fruit and vegetables. Older people may find it easier to adapt to Tesco Express and it may become the new competitor to convenience stores, especially when convenience stores tend to expand to communities.
 

• Kiosk retail is welcomed by shopping mall operators

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Many game machines, mini KTVs and vending machines have started to appear in most shopping malls this year. These small, open-fronted cubicles are defined as kiosk stores.
 

The emerging kiosk retailers are mostly franchisee operated and this sector is likely to expand as a wide range of investors could afford to enter this market. In addition, kiosk retailers enjoy flexibility in terms of location selection because only a small area (less than 5 sqm for each machine) is needed. And lastly, shopping mall landlords welcome them because they can be put in the corner of malls or near elevator banks, which means landlords can get extra rental income and foot traffic from these public spaces.
 

The game machines and mini KTVs are located near cinemas or restaurants. When shoppers are waiting for the movie to begin in half an hour or when they are waiting for table in a restaurant, they could probably go to a kiosk store, spend RMB 30 and have fun. From our observation, families with kids and young students welcome crane machines, while mini KTVs mostly attract young couples or young ladies.
 

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Future

The retail market is always challenging. Retailers’ strategy and customers’ needs and preferences are changing frequently and new projects keep entering the market, which continuously increases competition. However, shoppers will benefit from new creative retail concepts and new retail stores catering to their needs and providing more options.
 

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