China Retail Sales: March 2022

In March, China’s total retail sales growth (ex. food service, incl. automobiles and gasoline) declined by 2.1% year over year, representing the first reported year-over-year decline in 20 months (growth turned positive in July 2020) and the steepest decline since April 2020 (when sales were down 4.6%), as consumption weakened amid widespread Covid-19 cases and lockdowns. We anticipate that retail sales will continue to take a hit in the coming months as China has taken a zero-tolerance approach to Covid-19 infections, implementing strict restrictions in several cities to fight its latest outbreaks. As well as hitting demand, this will lead to further supply chain bottlenecks that will pose headwinds for future retail growth.

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Figure 1. Total China Retail Sales (ex. Food Service; incl. Automobiles and Gasoline): YoY % Change [caption id="attachment_145918" align="aligncenter" width="700"] January and February figures are reported together
Source: National Bureau of Statistics/Coresight Research[/caption]   Retail Sales Growth by Sector Most sectors saw negative year-over-year growth in March, as reported year-over-year growth turned negative for the first time since June 2020.

• Reflecting strong grocery demand as more consumers were under lockdown, beverage and food retailers saw strong growth. Beverage retailers saw the highest year-over-year sales growth among all sectors, with an increase of 12.6%. The food sector saw sales growth of 12.5% year over year, the second-strongest growth rate among all sectors.
• School, office supplies and computers specialists’ sales continue its strong sales growth momentum in March, with sales growth of 9.8% compared to March 2021.
• In March, the apparel and footwear sector posted a double-digit sales decline after recovering in January and February 2022. The apparel and footwear sector exhibited a steep sales decline of 12.7% year over year in March.
• Gold, silver and jewelry retailers were hard hit in March 2022, as sales declined by 17.9% year over year.
• Auto retailers’ sales again posted negative sales growth after six consecutive months of sales declines except in January and February 2022. Auto sales declined by 7.5% compared to March 2021.
• Furniture specialists’ sales continue to decline in March and decelerated from sales declines in January and February 2022. Furniture sales declined by 8.8% in March, down from January and February’s 6.0% sales declines.
• The alcohol and tobacco sector showed continued sales growth in March, exhibiting 7.2% year-over-year growth; however, it decelerated from January and February’s sales growth of 13.6%.
• In March 2022, the beauty sector posted negative sales growth for the first time since March 2020, declining by 6.3% year over year.
• Construction and decoration sales were virtually flat at 0.4% compared to March 2021.
• Communication equipment retailers’ sales increased by 3.1% year over year.

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Figure 2. China Retail Sales (ex. Food Service; incl. Gasoline and Automobiles), by Sector: YoY % Change [wpdatatable id=1913]

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The sector breakdown is based on surveys from enterprises with annual sales of ¥5 million (around $730,000) and above Source: National Bureau of Statistics

  Online Retail Sales Account for 30.9% of All Retail Sales In March, online retail sales in China significantly accelerated year over year to 44.6% from 10.2% in January and February 2022. The channel accounted for 30.9% of total retail sales in the period, the highest after 36.5% in November 2021. Online penetration in March accelerated due to the Covid-19 lockdowns in many regions of the country. Online retail sales include food service, as the National Bureau of Statistics does not provide online data that exclude food service. In Figure 3, online sales are benchmarked to total retail sales.

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Figure 3. Online Retail Sales (YoY % Change) as a Proportion of Total Retail Sales (%) (incl. Automobiles, Gas and Food Service) [caption id="attachment_145919" align="aligncenter" width="700"] Online retail sales include food service
January and February figures are reported together
Source: National Bureau of Statistics[/caption]