Following the jump in January and February, year-over-year growth of China’s total retail sales (ex. food service, incl. automobiles and gasoline) remained strong in March 2021. Total retail sales grew by 29.9% year over year, reaching ¥3.2 trillion ($489.0 billion). The strong growth was against undemanding comparatives from one year earlier, when the country was suffering heavily from the outbreak of Covid-19 and sales declined by 12.0%. However, even comparing against pre-pandemic values, total sales in March 2021 saw solid growth: Two-year growth from March 2019 totaled 12.9%. Figure 1 shows the recovery trajectory of total retail sales in China. We expect retail sales to continue to see impressive year-over-year growth in the coming months against weak 2020 comparatives.

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Figure 1. Total China Retail Sales (ex. Food Service; incl. Automobiles and Gasoline): YoY % Change [caption id="attachment_126049" align="aligncenter" width="725"] January and February figures reported together
Source: National Bureau of Statistics/Coresight Research [/caption]   Retail Sales Growth by Sector All sectors saw positive year-over-year sales growth in March:

• As was the case in January and February, gold, silver and jewelry retailers saw the largest year-over-year sales growth in March, of 83.2%. This means that these retailers have had the best performance in the first quarter of 2021, with a 93.4% year-over-year increase. On a two-year basis, these retailers saw growth of 18.8%.
• The apparel and footwear sector grew 69.1% year over year in March, the second-strongest growth rate. The sector saw the largest year-over-year decline in the same period of last year, of 34.8%. The two-year growth rate of this sector was only 4.4%.
• Sales by automobile retailers grew 48.7% year over year, indicating the continued impact of new policies from the Chinese government (imposed in late 2020) regarding the development of the automobile industry. Overall, in the first quarter of 2021, automobile retailers saw impressive year-over-year growth of 65.6%. From the supply side, the output of new energy vehicles saw year-over-year growth of 60% in the first quarter. Sales climbed by 23.6% on a two-year basis.
• The alcohol and tobacco sector grew 47.4% year over year in March and 20.9% from 2019. With the development of vertical e-commerce platforms selling alcohol, the online channel is taking an increasing proportion of the sector’s total sales. According to Liquor and Tobacco Made in China Association, the New Retail market size of the alcohol sector is set to reach ¥136.3 billion ($20.8 billion) in 2021, at a year-over-year growth rate of 16.8%.
• The construction and decoration material sector saw strong growth of 43.9% in March. However, if we compare the absolute value with pre-pandemic numbers, the sector saw only a low-single-digit increase from March 2019.
• Beauty retailers experienced 42.5% year-over-year growth in March. Compared to the same period of 2019, sales by beauty retailers saw a 31.0%increase. In the first quarter of 2021, the number of registered cosmetics-related companies in China totaled 859,197, a year-over-year increase of 126% and a 54% increase from 2019, according to data firm Tungee, indicating strong momentum in the development of the beauty sector.
• Food retailers saw steady year-over-year growth of 8.3% in March, following 10.9% growth in January and February, as shown in Figure 2. The food sector has performed steadily overall, with little fluctuation related to the Covid-19 crisis. Food saw 19.2% year-over-year growth in March 2020 (the highest growth rate among all sectors), and 11.8% growth in the same period of 2019.

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Figure 2. China Retail Sales (ex. Food Service; incl. Gasoline and Automobiles), by Sector: YoY % Change and Two-Year % Change [wpdatatable id=882 table_view=regular]

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The sector breakdown is based on surveys from enterprises above a designated size, which refers to those with annual sales of ¥5 million (around $730,000) and above. Source: National Bureau of Statistics Online Retail Sales Account for 24.4% of Total Retail Sales In March, online retail sales growth in China reached 18.5% year over year. The channel accounted for 24.4% of total retail sales in the period, a rebound from 20.7% in January and February. Online retail sales include food service as the National Bureau of Statistics does not provide online data that excludes food service. In Figure 3, online sales are benchmarked to total retail sales.

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Figure 3. Online Retail Sales as % of Total Retail Sales (incl. Automobiles, Gas and Food Service) [caption id="attachment_126047" align="aligncenter" width="725"] Online retail sales include food service
Source: National Bureau of Statistics [/caption]