Turnover in the Chinese retail industry will eclipse that of the US later this year, according to analyses. “Nothing is going to stop them,” said one commentator as new data emerged showing a fast-narrowing gap between the two markets. The fact China would overtake the US was never in doubt – China’s population of 1.4 billion is vastly more than the US population of 325 million.
According to data from eMarketer, total Chinese retail sales will grow 7.5 per cent this year to reach US$5.636 trillion. But growth in the US is likely to be significantly slower at just 3.3 per cent, reaching $5.529 trillion.
Not even the slowdown in China’s economic growth is likely to affect the figures – a rebound may even hasten the milestone.
GlobalData Retail MD Neil Saunders says a big factor in the speed of China’s retail growth is the way the industry has evolved. In the US, retailers were established well before the advent of the internet meaning adapting to the new online environment has meant managing their brick-and-mortar stores while pursuing growth online.
But in the US, the market began to mature in an online world, and online spending there will account for more than 30 per cent of total retail sales this year. In the US, online is predicted to account for less than 11 per cent.
“The US retail environment grew up in a very different era,” says Saunders. “It grew up before the internet. There is a historical difference and an evolutionary difference, which has created this very different backdrop to retail.”
The rapid rise of the Chinese retail industry has been fuelled by rising incomes across the country, the urbanisation of the population and a burgeoning middle class.