China’s Consumption Re-bounce After The Epidemic

The new crown pneumonia epidemic brought a very memorable Spring Festival to the Chinese people. Under the influence of the epidemic, the movement of people was greatly restricted. A number of industries have been affected, and they have chosen to suspend business and work online to respond to the sudden epidemic.

Data show that in the past ten years, the sales of national retail and catering companies during the Chinese New Year holidays increased from 340 billion yuan in 2010 to 105 billion yuan in 2019. Affected by the epidemic, the entire Chinese people will almost “home” at home during the Spring Festival in 2020, and the decline in retail sales will be inevitable.

Except for China, confirmed cases of new coronary pneumonia occur in more than 70 countries around the world. This means that the huge risks behind the epidemic will inevitably become an international consensus. The sudden outbreak has had an inestimable impact on society, the economy and industry, and the impact on the consumer industry cannot be underestimated.

According to the survey, the top three difficulties currently facing Chinese catering companies are: pressure on labor costs, sharply reduced revenue, and pressure on store rents. At present, the average labor cost and rental cost of the catering industry account for 32.67% of the revenue of catering enterprises, and the average raw material cost of the industry accounts for 41.31% of revenue. Under the epidemic, catering companies lost nearly 90% of their operating income. At the same time, it also bears a large amount of fixed expenses such as labor costs, house rents, and huge losses caused by raw materials. Therefore, the cash flow problem has become the biggest problem facing catering.

Industry insiders said that under the epidemic, the difficulties of the consumer environment were temporary. China has consumer demand and ability, but what it lacks is the timing of consumption. After the epidemic, the consumer market will certainly be restored and it will even promote China’s ability to increase consumption.

In the face of changes in the social environment and consumer attitudes, catering companies should do two things well.

On the one hand, the retail layout needs to be adjusted. Optimize online and offline structures and rationally strengthen online layout. It can increase the coverage of online consumers and reduce the burden of offline costs. On the other hand, carry out reasonable e-commerce promotions to recover losses. After the epidemic, e-commerce promotions can be conducted reasonably to drive consumption, clear inventory, and recover losses. In addition, online fan operations can be strengthened to increase brand reputation and fan stickiness.

After the epidemic, green health and safety will become the leading catering consumption. Consumers will further realize the transition from “buying cheap” to “buying trust”, and merchant credit has become the focus of consumer attention. The traceability of the supply chain will be further strengthened, and the industry will continue to reshape consumer confidence by strengthening its own standardization and improving its safety and health management capabilities.