Consolidate the "ballast stone" of endogenous economic power, grasp the three new consumption trends of economy | consumption | endogeneity

On July 17th, the National Bureau of Statistics released the semi annual report on the Chinese economy. Data shows that in terms of consumption, the total retail sales of consumer goods in the first half of the year were 22758.8 billion yuan, a year-on-year increase of 8.2%. Among them, the retail sales of consumer goods other than automobiles reached 20517.8 billion yuan, an increase of 8.3%. In June, the total retail sales of consumer goods reached 3995.1 billion yuan, a year-on-year increase of 3.1%. Since the beginning of this year, the consumption potential has gradually been released, and the contribution rate of the final consumption expenditure growth to economic growth in the first half of the year has reached 77.2%, which is significantly higher than the contribution rate of the entire year last year.

The recovery and expansion of demand is the key to the sustained recovery and improvement of the current economy, especially in the absence of a fundamental change in the weak external demand situation. It is necessary to further consolidate the momentum of domestic demand recovery, vigorously implement the strategy of expanding domestic demand, and provide a "ballast stone" for consolidating the endogenous driving force of the economy. It is particularly crucial to grasp new consumption trends and tap into consumption potential. In recent years, China's consumption sector has shown the characteristics of upgrading from survival oriented to development oriented consumption, from material oriented to service-oriented consumption, and from traditional consumption to new consumption. From the demand side, changes in population structure have driven the rise of new consumer groups and the prevalence of new consumption concepts. Young consumer groups represented by the millennial and Z generations have become the main force in the Chinese consumer market. From the supply side perspective, with the rapid development of modern information technologies such as 5G, artificial intelligence, cloud computing, VR/AR, and the Internet of Things, technological progress is reshaping the consumer industry chain, bringing about accelerated product innovation iteration, decentralized marketing of the entire consumer market, channel sinking, and customized production, which has had a disruptive impact on traditional consumer forms.

Looking ahead, the consumption trend will further shift towards three aspects:

1. new consumption concept leads new consumption demand.

In 2022, China's total economic output has exceeded 120 trillion yuan, and the per capita GDP has remained above 12000 US dollars for two consecutive years. From the demand side, the country has entered an era of material abundance, and consumer concepts have undergone significant changes. Consumers' attention to factors such as brand, quality, and practicality has continued to increase, and their demand for individualization has risen while pursuing high cost performance. From the supply side, China's manufacturing and supply chain has been very mature and efficient, giving domestic products the ability to create more high-quality and inexpensive goods, and even better than overseas first-line brands in terms of after-sales service. From the retail side, new media such as Douyin, Little Red Riding Book and Taobao Live have brought innovations in retail channels and marketing methods, grabbing consumers' attention while creating sales results comparable to international big names. With the cooperation of both supply and demand, it has become a significant trend to meet the people's pursuit of a high quality life with high quality quality of products and services.

——The rise of cultural consumption. On May 7, 2023, the special exhibition "From Botticelli to Van Gogh: National Gallery of Fine Arts Collection Exhibition" at the Shanghai Museum closed. During the exhibition, it attracted over 420000 visitors and generated over 23 million yuan in offline consumption. On the closing day of the special exhibition, Shangbo held the "Sleepless Tonight - Shangbo Twelve Hour Art Carnival" event, which was open 24 hours a day for the first time since its establishment, pushing the exhibition to its climax. In the future, cultural and tourism businesses will further integrate, transforming classic, modern, and future scenarios. The deep experience of offline and online virtual reality will further serve cultural experiences and meet consumer needs.

——Green consumption is prevalent. Climate change will affect consumer demand and change consumer behavior, consumption demand and preference. The outbreak of the COVID-19 has also upgraded consumers' health concept in an all-round way. Seeking a healthy lifestyle and lifestyle has become an important demand of Chinese consumers. Data shows that 67% of Chinese consumers attempted to bring positive impacts to the environment through daily activities in 2021, such as adopting the concept of "second-hand", and the business model of "second-hand" circulation is deepening.

2. new generation Z groups bring new ways of consumption.

From the perspective of age structure, the main consumption force in China is changing from the "millennial generation" to the "Z generation" born after 1995. According to statistics, the number of "Generation Z" in China is about 0.27 billion, accounting for 19% of the country's population, propping up the 4 trillion yuan consumer market, which accounts for 13% of the country's total household expenditure, and the consumption growth rate far exceeds that of other age groups. In contrast to the propensity and habits of their parents and grandparents to consume, Generation Z has a higher marginal propensity to consume and personalized consumption needs.

One is to drive interest and identify with community economy. As an Internet aborigine, "Generation Z" is keen on social networking and self-expression through social media. Through the Internet, it quickly and widely attracts people with the same goals and common language to gather and resonate, thus spontaneously forming a more vertical and diverse circle, such as the anime circle, the e-sports circle, the national style circle, and the hand-operated circle, and actively seeking identity and sense of belonging within the circle.

The second is to focus on content, both as consumers and marketers. "Generation Z" is both a content consumer and a content producer. Relying on the public space provided by the Internet to create, it has become an important way for them to realize their self-worth and expand their social circle. This enabled platforms supported by UGC such as Tiktok, Station B and Little Red Book to quickly occupy the market and drive related consumption. With the increasing number of self presentation and expression platforms provided by online media to the public, the culture of "internet celebrities" is also increasingly being praised by the "Generation Z" group.

Third, loving the national style has become an important force to promote the rise of China-Chic. "Generation Z" is devoted to local culture, showing strong patriotic enthusiasm, cultural self-confidence and recognition of mainstream ideology, and loving China-Chic, Guofeng, Guopai and Guomao. The intrinsic value reflected by domestic products and China-Chic products also gives young consumers a stronger emotional belonging. According to a report from Alibaba Research Institute, more than half of consumers who purchase cutting-edge domestic brands are born in the 1990s.

Fourthly, they are accustomed to virtual consumption and are hardcore players of new technologies. At present, "Generation Z" has greater demand for new forms of Internet products, and the "virtual fashion" brought by digital products has become the embodiment of freshness and trend, especially the combination of digital people and virtual space to incubate new play methods and bring new experiences.

Fifth, pay attention to preference for appearance and be willing to pay for Yueji. Generation Z pays more attention to appearance when consuming, and has become the mainstream audience of domestic beauty brands. In addition, Generation Z is willing to pay for experiencing fun. For example, blind box design makes the purchasing process an interesting experience, and the doll IP image is loved by more female "Generation Z" users.

The sixth is to pursue an immersive and relaxed consumer experience. Generation Z values atmosphere and advocates immersive entertainment, pursuing physical and mental stimulation. They enjoy immersive experiences, such as stress relief centers, health centers, trampoline centers, cat massage centers, sweat steaming centers, and "cat cafes" and "dog cafes", which are highly sought after by the Generation Z group.

3. new technologies expand to create new consumer markets.

Driven by digital technology, digital virtual reality is deeply integrated with the real economy, creating multiple composite spaces for production, consumption and circulation, forming a new consumer market and stimulating economic growth.

One is the continuous emergence of new consumer formats driven by digital technology. With the rapid development and application of technologies such as 5G, it provides the possibility of high-throughput, low latency, and Internet of Things, further accelerating the innovation of new digital consumption scenarios and models. This not only drives the accelerated development of live streaming sales, community group buying, cloud shopping, cloud tourism, etc., but also accelerates the development of digital learning, digital healthcare, digital culture, digital media, as well as intelligent home living, intelligent personal wear, intelligent transportation and other fields. In addition, driven by digital technology, new formats such as "unmanned stores" have emerged.

The second is to optimize and restructure the consumer supply chain through digital technology. Currently, digital technology enterprises are increasingly becoming "routers" in the digital economy era, providing deeper services and empowering industrial transformation and upgrading, increasing market circulation efficiency, and enhancing supply chain resilience. On the one hand, online retail and digital technology enterprises are strengthening their investment in technology research and development in areas such as cloud computing, artificial intelligence, and the Internet of Things, deeply exploring the value of consumer big data, using reverse customization models such as C2M, deeply participating in product research and design, helping factories significantly shorten the new product development cycle, and promoting the two-way gain of high-quality consumption and high-quality brand growth. On the other hand, digital and intelligent supply chains are also accelerating innovative development, unleashing the potential of data elements to facilitate economic circulation through the integration of data and reality, and playing a positive role in reducing the costs of various links in the supply chain such as warehousing, logistics, and payment.

Thirdly, digital technology connects domestic and foreign trade and cross-border consumption. In the era of digital economy, digital platforms and their driven cross-border trade innovation have become a new way for the integrated development of global consumer markets, as well as a new competitive advantage for China's foreign trade. Especially based on digital technologies such as blockchain, new models such as cross-border product traceability system and return center warehouse have been established to continuously enhance the experience of cross-border consumption. "Xiaohongshu" is a cross-border e-commerce platform that has transformed from a user sharing content community. After purchasing, users will share their usage experience in their community, and this word-of-mouth communication is easy to create explosive products and popular products.

Fourthly, virtual reality technology enhances the immersive consumer experience. With the advancement of technology, consumption has entered a new era of "experiential" consumption through the integration of technology, culture, and creativity. Through interaction, storytelling, and other means, the audience is immersed in a specific atmosphere. The highly acclaimed Disney theme park lighting show, the "skiing experience" at the CIIE, and the "cloud" exhibitions at major museums during the pandemic present this immersive experience.

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