As the retail market transitions beyond the era of rapid growth, it must adapt to shifting consumer behaviours. The focus is no longer solely on scale but on creating value. This shift presents significant opportunities for the emergence of differentiated brands, retail spaces, and services that meet evolving consumer expectations. Savills has recently released its 2025 China Retail Trend report, providing insights into emerging trends and the outlook for China’s retail market.

Luxury Consolidation Gains

The recovery of overseas travel has presented challenges for China’s domestic luxury market, with some brands and shopping malls reporting year-on-year (YoY) sales declines. Entry-level luxury consumers are more susceptible to the economic slowdown, making the contribution from Very Important Customer (VIC) segments even more critical. To enhance consumer experience and foster loyalty, luxury brands are focusing on exclusive social events and personalised services through VIC salons, alongside expanding lifestyle offerings such as food and beverage options.

F&B Shifts to Quality and Affordability

Consumers' reduced dining-out frequency and more cautious spending have led to a decline in restaurant revenues. In response, many are adjusting store sizes and menu selections to reduce costs and improve efficiency. The average store size of sample F&B brands shrank by 16% in 2024. The decline in demand for banquets and business dining has also resulted in a shift towards more casual gatherings for personal or family and friend’s occasions, with more affordable set menus.

Second-Hand Market Goes Hybrid

Second-hand transactions are increasingly popular among young people. Leading online platforms are exploring offline models to enable omni-channel operations. Meanwhile, items such as vintage goods, memorabilia, cultural items, or licensed products foster a sense of community among people who are passionate about the stories behind these items. This trend points to further potential for space utilisation for events and meetups, further strengthening the appeal of second-hand goods.

Timeless Fashion Never Fades

In an increasingly complex socio-economic environment, consumers are seeking emotional comfort and authenticity while remaining wary of excessive marketing. In this context, brands and products with classic elements and emotional ties are making a comeback. We expect the reinvention and reinvigoration of classic brands to become a significant trend in the coming years.

Big Kids Drive IP Demand

The Kidult trend is growing in popularity worldwide, as adults find comfort and joy in toys, games, and shows traditionally associated with children. Brands ranging from Disney and Lego to Pop Mart and Jellycat are tapping into the potential of this market. Savills’ analysis of tenants in Shanghai’s shopping malls shows that the space occupied by IP-related stores increased by 19% in 2024.

Fewer Fashion Stores, Bigger Impact

Established international fashion brands are increasingly prioritising profitability and sustainability over rapid expansion. Many are shifting their focus to core stores in key cities while closing underperforming locations. Emerging domestic brands like Basement FG and W Management are thriving by engaging with consumers through social media, influencer collaborations, and frequent offline events, creating buzz and appealing to younger audiences.

Sports Specialisation & Venue Synergy

The sports products category has achieved double-digit revenue growth for two consecutive years, driven by a growing consumer interest in various outdoor activities. As sports engagement evolves from a hobby to a real passion, new specialist stores in various sports categories are emerging across China. Many projects are incorporating green spaces or rooftop areas to create outdoor atmospheres or building sports venues like skate parks and rock-climbing walls to attract consumers and encourage them to stay longer.

Bazaars Spark Brand Excitement

Many malls are creating bazaars as a solution to fill vacant spaces, with some projects even dedicating long-term large spaces for market activities to create excitement and innovation. Beyond mall-operated and branded markets, retailers and online platforms are also experimenting with their own market concepts to form vibrant ecosystems.

Inbound Tourism Fuels Global Growth for Chinese Brands

China's recent adjustments to its visa policies have significantly boosted inbound tourism, with foreign tourist arrivals in Beijing and Shanghai in 2024 reaching 85% and 75% of 2019 levels, respectively. The rapid growth of China's retail real estate and home-grown brands has led to increased spending by tourists, contributing to an overall rise in retail revenue. Some brands and malls who have actively promoted themselves on overseas social media, have capitalized on this trend and garnered positive word-of-mouth from tourists.

Abundant Supply And Falling Rents Bring Opportunities For Retailers

Eleven major cities are set to see the launch of 5.6 million sqm of quality shopping mall space in 2025, with both Beijing and Hangzhou each receiving over 500,000 sqm. Rents are anticipated to decline further, though the extent of these declines will vary depending on location and project. This could present an opportunity for brands to secure more favourable lease terms in prime locations.