Confessions of a Chinese Shopper

By Lin Bai | Tuesday, December 15, 2009

In the US, ‘Black Friday’ is the unofficial start of the holiday shopping season. Marked as the Friday after Thanksgiving, hordes of people line up at retail stores hours before the store opens in hopes to be one of the first to get in on early holiday shopping.

In China, while they may not have ‘Black Friday’, the idea of bargain shopping is not novel and is part of the shopping culture that now is prevalent in the market today. On November 14th, there was a line 600 people deep waiting patiently hours before the opening of H&M store in China – all waiting for the worldwide start date of H&M’s Jimmy Choo line.

‘M-SHAPE’ SOCIETY

For me, the whole dichotomy of an affordable apparel brand with high-end style such as H&M is hard for me to grasp. ‘Affordable’ and ‘high-end’ doesn’t belong in the same sentence together and I’ve been accustomed to the idea of very segmented shopping tiers.

For many retail analysts, the trend of ‘affordable luxury’ is the sign of a shrinking middle class – otherwise known as the M-shaped phenomenon. Japanese economist and strategist Kenichi Ohmae refers the ‘M’ as the polarization of the extreme rich and extreme poor in society – thus the ‘M’ shape with peaks and valleys in societal status.

In a well-developed modern society, class distribution is often inverted where the middle class forms the bulk of society. However, with China’s economy booming as fast as it is as a consequence of rapid globalization (whether for good or bad), the middle class diminished and quickly assimilated on to either side of the economic class spectrum.

I should preface that the M-Shape phenomenon is a global phenomenon and China is not just the exception. Even here in the United States, the middle class is slowly disappearing and the gap between rich and poor continue to grow. Unfortunately, going ‘upwards’ is often much more difficult than sliding ‘backwards’ and more of the polarization of the Chinese middle class has shifted to the poor.

So, how does this tie together with H&M and what does this mean for brands in China. For starters, this does present a very unique consumer market where, like everyone around the world, these lower-end consumers still aspire to a better quality of life. However, they are value buyers and have monumental expectations for great quality at affordable prices. For brands such as H&M and IKEA, China is a golden opportunity to tap into this enormous market.