Economic structural recovery, new trends of service consumption emerge

Zeng Li (Head of Jones Lang LaSalle's South China Research Department)

(Data picture)

Xu Jiamiao (Analyst of Jones Lang LaSalle in South China)

August is hot, crystal and dry, but it is not enough for the continuous burst of summer consumption enthusiasm in various regions of Guangzhou. As an important part of the Ministry of Commerce's "2023 Consumption Boost Year", the "Summer Consumption Season" has met the public's diverse consumption needs for summer leisure, night leisure, travel leisure, parent-child leisure and so on, and the market feedback is warm.

The realization of consumption requires the matching of consumption environment, scene, content, consumption intention and ability. Stimulating consumption vitality can not be separated from dynamic coordination and mutual promotion of market supply and demand to form a new structural growth point. Looking back at the recovery picture of Guangzhou's consumer market in the first half of the year, the market impact of the "new normal" of consumer supply and demand has quietly taken shape. A number of economic data show that the rapid release of service consumption demand led to the recovery of Guangzhou's consumer market this year. In the first half of the year, the total revenue of cultural and tourism consumption in Guangzhou increased by 49% year on year, the average room opening rate of major hotels increased by nearly 20% year on year, and the number of orders for meals increased by about 50% year on year. All kinds of service consumption showed a trend of high growth and steady growth.

In recent years, the proportion of service consumption in China's overall consumption has stabilized at more than 40%, which shows the "new normal" of simultaneous structural changes in residents' consumption as the economy turns to a stage of high-quality development. Behind the evolution of consumption trends, in addition to the direct impact of the fundamentals of economic development, there is no lack of science and technology, culture, social concepts and other multiple and complex factors. Consumption channels are constantly expanding. While new types of consumption provide more optional services, social media's influence on consumption decisions is growing, and the iteration of consumption behavior patterns is accelerating to reshape the market. In general, the current consumers' requirements for the quality of the whole chain of consumption activities are constantly improving, and they pursue multi-level and customized consumption experience. Characteristics of the "new normal" of consumption

The new characteristics of the consumer demand side are not only reflected in the structural tendency of service consumption recovery over commodity consumption in the first half of the year, but also reflected in the emergence of new trends in the process of service consumption recovery. "Special forces tourism" and "City Walk" have become hot words in the field of culture and tourism. These two popular travel modes seem to be quite different, but they also reflect the transformation of popular travel concepts. Local consumption trends such as city tour and surrounding tour have been strengthened, and the consumption characteristics of individuation, quality and diversification are obvious. The tourism choices of foreign tourists have increasingly reflected the demands of exploring the local authentic cultural heritage.

The new trend of mass cultural tourism consumption purpose and behavior provides a vane for the adjustment of cultural tourism products and services. From a traditional perspective, Guangzhou has only two 5A scenic spots, and its tourism resources are not rich. However, during the May Day holiday this year, Guangzhou's tourism revenue exceeded 10 billion yuan, ranking among the top five in the country, and stood out among a number of tourist cities. Integrating cultural resources and digital technology, Guangzhou has created a number of high-quality cultural tourism routes, including self driving camping, immersive performing arts and other new business forms of cultural tourism with various characteristics, to meet the increasingly diverse spiritual and cultural needs of citizens and tourists, which has been unanimously praised.

In addition, Guangzhou accelerated to restart the exhibition economy and the performing arts market, attracting a large number of targeted consumer groups. At present, the interest consumption continues to penetrate into the youth group, and the consumption demands of pleasing oneself and socializing have created a blue ocean of consumer market. According to the statistics of Guangzhou Culture, Broadcasting and Tourism Administration, the number of large and medium-sized performances in Guangzhou in the first half of the year was the first in China, and the number of performers who came to Guangzhou to hold concerts was also the first in China. During the summer vacation, eight large-scale animation and game exhibitions were held in Guangzhou, attracting many fans. Therefore, from January to May, the operating income of the above scale cultural, sports and entertainment industries in Guangzhou increased by nearly 29% year on year, and the operating income of the exhibition industry increased by 1.5 times year on year.

The booming cultural and tourism economy and exhibition economy have brought a large number of tourists and exhibition visitors, helping Guangzhou's catering industry to accelerate recovery. At the same time, the thriving travel of local residents, such as city tours and one-day tours, also actively promotes the local consumption of catering. From January to May, the turnover of catering enterprises above the designated size in Guangzhou increased significantly year on year, of which the turnover of catering service enterprises increased by nearly 28% year on year. The business performance accelerated and improved to inject a shot of strength into the market. In fact, due to the business restrictions caused by the epidemic, the confidence growth of Guangzhou's catering industry has slowed down in recent years.

According to the statistics of Jones Lang LaSalle, since 2020, the number of restaurant leasing transactions in Guangzhou's high-quality retail properties has shown a negative year-on-year growth trend, and its proportion in the total number of leasing transactions has declined. However, since the socio-economic recovery this year, the enthusiasm of the catering consumption market has quickly spread to the investment side. According to the statistics of Jones Lang LaSalle, compared with the same period last year, the number of catering business leasing transactions in Guangzhou's high-quality retail properties in the first half of the year increased by 128%, and the catering business contributed nearly 40% to leasing transactions. The drainage capacity and profitability of catering business have recovered rapidly, which has a significant impact on the business structure of shopping centers.

Under the "new normal" of consumption, the improvement of demand level of catering consumption market has promoted the continuous enrichment and expansion of Guangzhou brand matrix. According to Jones Lang LaSalle, 39 new restaurants were added to Guangzhou's high-quality retail properties in the first half of the year, an increase of 1.4 times over the same period last year. The broad catering consumption market, as well as the one-stop social networking and consumption scenarios provided by quality shopping centers, accelerate the cultivation and gathering of excellent catering brands, including some national and regional first restaurants. In addition, in the catering market of Guangzhou, it is also observed that more catering brands try to launch selection stores, upgrade stores and other product lines that cater to the consumption needs of high-quality and diversified customers. The refined operation trend of broadening brand consumption scenarios and extending service boundaries will help Guangzhou's catering market accelerate its large-scale development.

At the same time, the trend of consumption demand compounding is also redefining catering consumption. In addition to tasting food flavor, consumers are increasingly concerned about the comprehensive service level of restaurants such as food innovation, dining environment, restaurant brand connotation, etc. With the increasing emphasis on the sense of ritual and pleasure brought by cultural factors in catering consumption, the trend of cultural empowerment of catering brands is becoming increasingly obvious. In the new consumption environment, the reputation of "Eating in Guangzhou" has become increasingly attractive to consumers at home and abroad, not only because Guangdong cuisine pays attention to the original taste of food materials and pursues real materials to meet modern requirements for healthy and light diet, but also because of its humanistic strength. The "broad spirit" of "sigh tea culture" and "flat material high engineering" coincides with the "sense of relaxation" and "small and beautiful" that the contemporary public is increasingly pursuing. Guangdong cuisine accounts for more than 30% of the Michelin star rated restaurants nationwide, and the popularity of Guangdong cuisine is also significantly reflected in the performance of the local commercial market in Guangzhou. According to the statistics of Jones Lang LaSalle, among the high-quality retail properties in Guangzhou in the first half of the year, the turnover of Cantonese cuisine increased by more than 60%, accounting for 15% of the total turnover of catering leasing.

Focusing on each segment of the commercial market in Guangzhou, the structural differentiation of consumers and demand superimposed by the "new normal" of consumption has affected the site selection strategy of different types of catering. Taking social needs as an example, in the first half of the year, with the resumption of business banquets, family and friends gatherings, travel group building and other dining activities, the demand for local cuisine and hotpot barbecue restaurants with strong social functions is rapidly rising. However, from the distribution of new stores, the business districts with large customer flow of practical consumers are more attractive to hot pot and barbecue businesses. Therefore, with the recovery of culture and tourism, Beijing Road and Panyu Wanbo Business District, which are adjacent to tourist attractions, recorded a 30% year-on-year increase in the proportion of hot pot barbecue in catering rental transactions in the first half of the year. The frequency of citizens dining out has increased, which has promoted the activity of catering consumption atmosphere in emerging commercial areas such as Baiyun New Town, Panyu, Pazhou, and so on. As a result, it has also attracted the attention of many hot pot barbecue catering brands, and has successfully removed more large-scale catering shops. However, in mature commercial areas with high per capita consumption capacity, such as Pearl River New Town and Tianhe North, close to the business center, the demand for business and family banquets is gradually released, so the local cuisine merchants expanding stores in these business areas have increased by nearly 10 percentage points compared with last year. The supporting role of service consumption will be more obvious

In the second half of the year, with the gradual release of "retaliatory consumption", whether the service consumption can continue to expand steadily has aroused concern. However, we should see that the core thrust of the growth of service consumption is the quality and enrichment of consumer demand. Even under the influence of short-term economic fluctuations, the trend is irreversible in the long run. According to the second quarter survey of the People's Bank of China, about 26% of the projects that residents plan to increase spending in the next three months are selected for tourism. The National Bureau of Statistics recently also disclosed for the first time that the retail sales of services from January to July increased by 20.3% year on year, much higher than the overall growth rate of 7.3% of the total retail sales in the same period.

The boom of transportation, cultural tourism, accommodation, catering and other sectors driven by summer travel is the main driving factor for the improvement of retail sales in July. In fact, the popularity of summer travel remains high, and high-frequency data such as Baidu migration index, air passenger flights, railway passenger volume, subway passenger flow in large cities, and movie box office also remain high. The prices of air tickets, tourism, accommodation, etc. all rose by more than 10% year on year, driving the core CPI back up. In July, the subitems of the service industry production index of accommodation and catering, transportation, warehousing and postal service also increased by 20.0% and 7.3% year on year respectively. The National Bureau of Statistics also emphasized that employment in the accommodation and catering industry, transportation industry, tourism and other industries has led to the overall stability of the employment situation. In July, the unemployment rate of migrant agricultural registered population fell 0.1 percentage points to 4.8% month on month.

Along with the accelerated recovery of offline consumption scene, the contact aggregation consumption continued to recover, and the service consumption recovered strongly. At present, the recovery pace of service retail is still far faster than the overall growth rate of social zero. Since the beginning of this year, the recovery trend of service retail is faster than or stronger than that of commodity retail has not changed. The difference is more obvious in summer consumption and travel. Looking ahead, service consumption will play a more significant role in supporting consumption expansion.

A few days ago, the National Development and Reform Commission issued the Measures on Restoring and Expanding Consumption, which proposed to continuously improve the long-term mechanism for promoting consumption and further optimize supply based on demand. Objectively speaking, Guangzhou still has enough room for development in actively responding to and accurately adapting to the "new normal" of consumer demand. It is expected to improve the effectiveness of consumer supply, activate the potential demand of the consumer market, and further consolidate and improve the recovery power of the cultural tourism, exhibition, entertainment, catering and other industries through optimizing the consumption environment, upgrading the consumption scene, and expanding the consumption content.

As the forefront of the industry directly facing the final consumer, retail business is also bound to accelerate the quality transformation in the changing situation of the consumer market to provide multi-level and customized consumer experience. Therefore, in order to meet the growing demand of the public for food and beverage consumption in terms of health, social interaction and culture, Guangzhou high-quality retail business is expected to continue to expand the richness and uniqueness of food and beverage business. At the same time, the customer group guided by the demand for dining out will "return to offline", which will bring more opportunities for the growth of customer flow to stores in the retail business that was in the "weak recovery" stage. For these types of businesses, enterprises that accurately adjust their product structure according to the characteristics of new customer demand are more likely to seize the opportunity of industry supply and demand gradually moving towards structural balance, and obtain the first mover advantage to meet the new normal of consumer demand through in-depth optimization of high-quality supply.

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