A couple snacks on burgers and fries, while a level above at the shopping centre, a family enjoys a traditional hotpot dinner in a modern setting. A young male executive sips his Starbucks latte as he waits for his date. Two ladies step out of a shopping centre in trendy gym gear after an invigorating workout, with their new purchases in ZARA bags slung over their arms. After work, some friends go to a karaoke bar to sing their hearts’ out. At the same time, a group of company executives heads up to a fine-dining restaurant in the centre’s upper levels to entertain visitors from abroad.
These are scenes regularly played out at shopping centres not only in developed nations, but also in emerging markets such as China. And not only in first-tier cities like Beijing and Shanghai, but in fast-growing second- and third-tier cities as well.
Retail sales have shown strong growth, fuelled by rising disposable incomes nationwide. According to data from China’s National Bureau of Statistics, in the last 10 years, disposable incomes have grown 180% to hit a national average of almost CN¥20,000, or $3,150, in 2010.
While incomes in first-tier cities like Beijing and Shanghai have grown, the pace of growth is higher in cities such as Chengdu, Xi’an and Dongguan. For example, household disposable income in Chengdu, the fast-growing capital of Sichuan Province, has grown 15% in the past year to more than CN¥12,000.
Alongside incomes, retail sales have shown strong growth. Total retail sales in China in the first nine months of 2011 grew 17% year-on-year to more than CN¥1.3 trillion. At CapitaMalls Asia, we see this trend in both strong shopper traffic and increased tenants’ sales at our shopping centres. The growth in tenants’ sales has outpaced the increase in shopper traffic, showing that the shoppers we attract are spending even more at our tenants’ outlets. In fact, our shopping centres in China and India have shown double-digit increases in tenants’ sales.
More about retail in emerging markets
Chng Chet Siew, Senior Vice President of Regional Investment & Asset Management, Leasing at CapitaMalls Asia will be speaking at “Expanding footprint in emerging economies – A retailer’s portfolio of high yielding stocks” (MAPIC 2011, Wednesday 16 November, 16.15). (Chng Chet Siew is standing in for company CEO and scheduled speaker, Lim Beng Chee.)
About CapitaMalls Asia
CapitaMalls Asia has a portfolio of well-located shopping centres to cater to retailers’ expansion. CapitaMalls Asia now owns 96 shopping centres in Singapore, China, Malaysia, Japan and India. In China alone, CapitaMalls Asia has enjoyed an early mover advantage, with 55 shopping centres in 35 cities throughout the country today.
With our industry-leading network of 10,000 leases in the region, CapitaMalls Asia has worked to bring brands to these new markets to meet the needs of an increasingly sophisticated shopper. Brands such as ZARA, H&M, Swatch and Nike are commonplace in shopping centres China. With emerging markets like China set to be the next engine of growth, CapitaMalls Asia offers opportunities for retailers to expand in the region.