Holidays' happysales

The sales figure is 38.2 per cent higher than for the same period of last year, according to statistics from Shanghai Municipal Commercial Commission.

The big night was New Year's Eve night, December 31. Sales at 45 department stores rose by 135.1 per cent. Shanghai No 1 Yaohan Department Store had sales eight times higher for the same period of last year.

Two people were injured when they were squeezed in crowds thronging the stores.

"Such a flourishing situation is really rare in the history of the store and was beyond our expectations," said Liu Fuqun, deputy general manager of Shanghai No 1 Department Store Co Ltd.

"But, I don't think it fully reflects that there is a strong consumer demand," he added.

Optimistic?

Liu's words were echoed by Zhu Lianqing, director of the Commerce Research Centre of Shanghai Academy of Social Sciences Institution.

"In fact, I think the consumer peak at the beginning of the new century is a special case, and can't be thought of as a turn for a better market," said Zhu.

Zhu attributed the peak to the special feeling of the new millennium and the retail promotions, such as big discounts.

Zhu gave Shanghai Friendship Europe Shopping Centre as an example. About 70 per cent of the sales on the night of December 31 in the store were concentrated during the two hour discount period.

Liu also said, that on January 2 and 3, when the discounts were over, the sales quickly dropped to be even less than the same period of last year.

Though off to a good start, analysts said it's impossible to see more consumption peaks in the new year. Shanghai Municipal Commercial Commission expected retail sales this year will reach 167 billion yuan ($20.2 billion) to 170 billion yuan ($20.5 billion), about 5 to 7 per cent higher than last year. "Miracles won't happen and the situation is still serious in the consumption market of 2000," concluded Zhu, "The basic reason is the slow rise in people's incomes."

In the first half of the 1990s, the income of the city's residents rose at a rate of over 10 per cent, while in the last five years, the average rise stayed at 8.5 per cent, a slower rate of increase.

Statistics indicate the yearly increase in residents' expenditure also decreased from 15 per cent in the first half of the 1990s to about 5 per cent in the last five years.

Income and spending

Differing from Western people, consumer spending by Shanghainese is not decided by their current income, but by their anticipated income, according to analysts.

"This means Shanghainese will think of their future economic situation when they decide to buy," said Zhu.

With the yearly average income of city residents at 8,700 yuan ($1,050), a three-member family can save about 5,000 yuan ($604) a year.

"Being laid off, children's tuition and medical treatment all make people save their money in the bank instead of spending it," said Zhu.

Only 32 per cent of the city's GDP is spent on consumer goods while in Western countries, the rate is 78 per cent.

The slump in consumer spending not only relates to income, but also is affected by the change in people's consumer spending attitudes, according to Liu.

The local market turned from a seller's market to a buyer's market over the past 10 years. After meeting the basic consumer demands, Shanghainese are transforming into a new consumer trend - personalized consumption.

"During the process of the transformation, most customers tend to stagnate in their consuming habits," said Liu, "It's a normal regular pattern."

Though miracles aren't expected to appear in the slumping market, most commercial enterprises will still strive to stimulate consumption, and discounts are a common method.

"Discounts can only stimulate business for a short period and they also mean a lower profit," said Liu, "What the retail stores should do is to introduce new and high-grade consumption ideas."

Most analysts said e-commerce will be a highlight in the future. "I think it will have a great effect in the city in three years when the construction of website and electronic banking finishes," said Liu, "It will first be popular among young people and then become popular with other ages."

by Shanghai Star.