albert Chan
China Retail Sales: May 2021
Following 30.7% year-over-year growth in January and February, 29.9% growth in March, and 15.1% growth in April, year-over-year growth in China’s total retail sales (ex. food service, incl. automobiles and gasoline) continued to slow in May 2021, albeit remaining in double digits. Total retail sales grew 10.9% year over year, reaching ¥3.2 trillion ($503 billion).
Growth was against undemanding comparatives from one year earlier, when the country was contending with the Covid-19 outbreak—sales declined by 0.8% year over year in May 2020. Nevertheless, against pre-pandemic 2019 values, total sales in May 2021 saw solid growth of 9.6%.
Figure 1 shows the recovery trajectory of total retail sales in China. We expect retail sales to see year-over-year growth in the high single-digits or low teens in the coming months.
Figure 1. Total China Retail Sales (ex. Food Service; incl. Automobiles and Gasoline): YoY % Change
[caption id="attachment_128715" align="aligncenter" width="700"]
January and February figures are reported togetherSource: National Bureau of Statistics/Coresight Research[/caption]
Retail Sales Growth by Sector
All sectors saw positive year-over-year sales growth in May:
- As in the previous months of 2021, gold, silver and jewelry retailers saw the largest sales growth in May, coming in at 31.5% year over year or 19.1% on a two-year basis.
- Both gasoline and the construction and decoration material sectors saw growth of 20.3% in May, the second-strongest growth rate. However, if we compare the absolute value of the construction and decoration sales with pre-pandemic May 2019 figures, the sector only witnessed a 3.8% increase.
- Sales by beverage retailers grew 19.0% year over year, the third-highest growth rate, followed by the alcohol and tobacco sector, which grew 15.6% year over year. On a two-year basis, the beverage sector grew 32.9%, and the alcohol and tobacco sector grew 19.5%. Both traditional beverage and alcohol companies have been pivoting to online channels amid the Covid-19 pandemic. According to the Liquor and Tobacco Made in China Association, online sales of alcohol drinks will grow 16.8% in 2021.
- Beauty retailers experienced 14.6% year-over-year growth in May. Compared to the same period of 2019, sales by beauty retailers saw the highest growth among all sectors, at 36.3%. Against strong online sales comparatives last year, sales of skincare products and makeup products on Tmall declined by 25.7% and 13.0%, respectively, year over year in May, according to the company. We expect beauty e-commerce to be strong in June, boosted by the 6.18 Shopping Festival hosted by Chinese e-commerce giants and social platforms in China.
- The apparel and footwear sector grew 12.3% year over year in May. On a two-year basis, the sector increased by 8.2%, above April’s increase of 4.4% and March’s 3.0% increase. Several domestic apparel brands continued to benefit from the ongoing government-led boycott of international brands in China after several raised concerns over working conditions among cotton-picking workers in Xinjiang region. According to Chinese investment bank Orient Securities, domestic sportswear brand Xtep saw sales on Tmall jump 43% year over year in May and sales by Chinese brands Anta and Li Ning on Tmall also increased by 25% and 14%, respectively, year over year. Adidas and NIKE, on the other hand, saw year-over-year sales on Tmall drop by 39% and 65%, respectively, in May.
- Food retailers saw higher growth in May, reaching 10.6%, following 6.5% growth in April and 8.3% growth in March, as shown in Figure 2. The food sector has performed steadily overall, with little fluctuation during the Covid-19 crisis. Food retail saw year-over-year growth of 11.4% in both May 2020 and the same period of 2019.
Figure 2. China Retail Sales (ex. Food Service; incl. Gasoline and Automobiles), by Sector: YoY % Change and Two-Year % Change [caption id="attachment_128716" align="aligncenter" width="700"]
The sector breakdown is based on surveys from enterprises with annual sales of ¥5 million (around $730,000) and aboveSource: National Bureau of Statistics[/caption]
Online Retail Sales Account for 23.9% of Total Retail Sales
In May, online retail sales growth in China reached 7.8% year over year. The channel accounted for 23.9% of total retail sales in the period, close to April’s figure of 23.2%.
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.
Figure 3. Online Retail Sales as % of Total Retail Sales (incl. Automobiles, Gas and Food Service)
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Online retail sales include food serviceSource: National Bureau of Statistics[/caption]