Catch a Glimpse of the Future of Retail from China’s Generation Z.

China’s Gen Z consumers account for 13 percent of household spending, this number is over four times that of their peers in the U.S. and they do most of this spending, through cash via social media.

Bloomberg interviewed Shanghai university student Milky Guan who says she buys cosmetics based on recommendations from a Chinese social media shopping website called Xiaohongshu, or Little Red Book, and she cares very little about the big stores or big name brands. Guan says she follows a popular influencer on the website and simply buys the products suggested by this influencer, by clicking on links embedded in the video.

Guan is not alone, China’s generation Z is changing the face of the country’s retail industry. These young people, born 1996 and later are so accustomed to mobile devices, that they spend almost all their time and money on it. This generation ignores well-known brands, with flashy advertising campaigns to buy goods from less popular brands suggested by their social media influencers. These influencers use means such as messaging, short videos, live streaming, and social media apps.“I’ll first go to Xiaohongshu or other social media platforms to seek advice from bloggers who have used products,” says Crystal Yu, a 21-year-old college student in Shanghai, quoted in the article, explaining how she shops. “I rely on them to help me filter the options.”

There are speculations that this current shopping trend in China paints a picture of what the global retail industry would look like by 2022. Bloomberg quotes researcher Frost & Sullivan who says that “More than $413 billion of goods will be sold through social e-commerce in China by 2022, an almost fivefold increase from $90 billion in 2017.”

Both big and small retail companies now use TikTok, a short video app, to try to appeal to Gen Z. Zhang Xiaobo, general manager of the intelligent television division at iQiyi, China’s largest streaming video website tells Bloomberg, that generation Z is too important a market to ignore,“The young generation has great passion and curiosity to explore something new,”  “They are leading the trend for a consumption upgrade, and they’re a consumer group that we can’t ignore.”

Market researcher Technavio revealed that, in the US, Social commerce totaled $16.94 billion in 2018. This figure is 3 percent of the $513.61 billion in online sales estimated by the U.S. Department of Commerce in 2018. Popular U.S., platforms such as Instagram and Snapchat have included direct e-commerce features.

There has always been the debate as to whether Key Opinion Leaders on the internet are actually giving honest product reviews or just trying to make a quick buck from their fans. However, China’s Generation Z, do not appear bothered by this debate. The progress of e-commerce in China has been credited to the country’s highly developed online payment systems, which makes it easy to click and buy in a second. It is believed also, that China’s Gen Z consumers are often the lone child, and therefore often over-pampered by their parents and grandparents, and always having a lot of money to spend. According to OC&C Strategy Consultants, in China, generation Z represents 13 percent of household spending, compared with only 3 percent for their U.S. counterparts.


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