We no longer support this browser. Using a supported browser will provide a better experience.

Please update your browser.

Close browser message

As a global leader, we deliver strategic advice and solutions, including capital raising, risk management, and trade finance services to corporations, institutions and governments.

Learn more about our solutions:


Serving the world's largest corporate clients and institutional investors, we support the entire investment cycle with market-leading research, analytics, execution and investor services.

Learn more about our solutions:


We are a leader in investment management, dedicating to creating a strategic advantage for institutions by connecting clients with J.P. Morgan investment professionals globally.

Learn more about our solutions:


Our financial advisors create solutions addressing strategic investment approaches, professional portfolio management and a broad range of wealth management services.

Learn more about our solutions:


Leverages cutting-edge technologies and innovative tools to bring clients industry-leading analysis and investment advice.

Learn more:


The latest news and announcements.

Learn more:


For company information and brand assets for editorial use.

Learn more:


The latest news and announcements.

Learn more:


In a fast-moving and increasingly complex global economy, our success depends on how faithfully we adhere to our core principles: delivering exceptional client service; acting with integrity and responsibility; and supporting the growth of our employees.

Learn more:


J.P. Morgan is a global leader in financial services, offering solutions to the world's most important corporations, governments and institutions in more than 100 countries. As announced in early 2018, JPMorgan Chase will deploy $1.75 billion in philanthropic capital around the world by 2023. We also lead volunteer service activities for employees in local communities by utilizing our many resources, including those that stem from access to capital, economies of scale, global reach and expertise.

Learn more:


With over 50,000 technologists across 21 Global Technology Centers, globally, we design, build and deploy technology that enable solutions that are transforming the financial services industry and beyond.

Learn more:


Technology Banner

For general inquiries regarding JPMorgan Chase & Co. or other lines of business, please call +1 212 270 6000.

Learn more:


For general inquiries regarding JPMorgan Chase & Co. or other lines of business, please call +1 212 270 6000.

Learn more:


China’s Consumers Show Up for Shopping Season

In a special consumer retail spotlight, J.P. Morgan Asia Equity Research explores the trends that emerged in 2020 and what they mean for momentum in 2021, as economic recovery from COVID-19 continues and China’s “New Retail” wave gains traction.

January 7, 2021


During the 11.11 sales, what trends did you see compared to previous seasons?

In the weeks leading up to the 2020 shopping season, search data showed strong year-over-year (YOY) growth for “Singles’ Day” or 11.11-related terms, and e-Commerce app usage was up 15% YOY. Digging deeper, interest in local clothing and alcohol brands, as well as luxury fashion and imported alcohol, showed strong growth. There was also near-term pickup in cosmetics, home appliances and tourism.

We also surveyed 270 Chinese consumers ahead of 11.11 to gauge spending intentions. Forty one percent of respondents expected to spend more relative to previous years, while 27% expected to spend less.

The rising demand for local products and local spending on imported products can be attributed to attractive discounts and increased spending on better quality products. Additionally, as a result of COVID-19, consumers shifted their spending from outside of China on things like travel, hotel accommodation and overseas shopping, to domestic spending on other Chinese products.

Attractiveness of discounts and overall product variety informed consumer choice of e-Commerce platform. Seventy four percent of survey respondents said they would use JD.com, and 64% would use Taobao, China’s largest online retailer owned by Alibaba. E-Commerce app usage was strong earlier in the year, as consumption shifted from offline to online amid the pandemic.

James Sullivan Quote The top retail trend that emerged from 2020 is the intensification of consumer behavior further moving from offline to online (O2O), which should benefit companies with better O2O integrated services. The growth of disposable income remains the key indicator that we closely follow, given it directly impacts consumer spending. If travel restrictions relax in 2021, we believe the travel-related sectors should see a notable rally. James Sullivan Head of Asia ex-Japan Equity Research J.P. Morgan


Turning to those who planned to spend less this season (27% of respondents), 60% planned to cut back on shopping to focus on growing their savings during times of uncertainty, while 35% prioritized saving for future travel plans.

Fifty six percent of respondents planned to prioritize their spending on fashion items, mainly clothing, shoes and accessories. China-based apparel giant, Peacebird, emerged as their preferred brand, highlighting broad consumer interest in streetwear. When it comes to preferences for local alcohol, survey respondents favored China’s top liquor brand Moutai.

FIG 4 0% 20% 40% 60% 80% 100% Sportswear Will definitely buy Bought previous year Will buy if discounts attractive Fashion wear/ shoes/ accessories (excluding sportswear) Cosmetics Cellphones Source: J.P. Morgan Jewellery Laptops/ Computers Distribution of consumer responses Other consumer durables (Fridge, washing machine, air purifier etc) Other Electronics (printers etc) TV Travel packages 4 wheeler 2 Wheeler Which items are you looking to purchase during the 11.11 season vs. those purchased in the 2019 season?

The survey also showed strong purchasing interest during 11.11 sales for sportswear, fashion, premium cosmetics and consumer electronics. Within China’s $33 billion sportswear market, respondents showed preference for global brands Nike and Adidas but locally, Li-Ning, which has ambitious growth plans in the U.S. and Europe, emerged as the leader. Search trends involving home appliances were relatively flat YOY but saw recovery from early lows in October. More than 50% of respondents interested in consumer durables indicated a preference for China-based electrical appliance manufacturers Gree and Midea.


How did 2020 consumer spending growth compare to J.P. Morgan’s expectations?

"We expected spending this season to post steady YOY growth, but not skyrocket as it did in 2019," says Rajiv Batra, Chief Southeast Asia Strategist. "With 41% of survey respondents planning to increase spending relative to 2019, while only 27% planning to spend less, this sentiment primarily drove our expectations, as well as lower incomes relative to the previous year for 33% of respondents."

However, spending growth during 11.11 was better than expected, as reflected in 25-30% Gross Merchandise Value (GMV) growth reported by Alibaba and JD.com. That said, GMV for the full month of November rose only 16% YOY, partly suggesting a slowdown post 11.11. This could be a result of shopping normalization in the aftermath of COVID-19. While the pandemic brought a boost to online spending, spending has been finding its way back to physical stores as local mobility improves.

FIG 5 35% 30% 25% 20% 15% 10% 5% 0% Down >15% Down 0-15% No material change Up 0-15% Up >15% How does your 11.11 planned spending amount compare to your spending in the 2019 sales? Source: J.P. Morgan Distribution of consumer responses

Past data shows a strong relationship between monthly online GMV and time spent on e-Commerce apps. November is usually an outlier because GMV growth typically outpaces e-Commerce app usage. In 2020, too, average Daily Active Users growth during November 1-11, up 6-7% YOY, was outpaced by 25-30% GMV growth. It appears that 11.11 sales led to higher conversion from usage to actual purchases and higher value transactions.


How did COVID-19 and China’s economic recovery play into consumer retail consumption?

We observed that most of the consumer staple categories remained intact during COVID-19. While a majority of consumer discretionary sectors experienced delayed, rather than diminished, spending some saw a notable impact including travel-related sectors and catering. Most of the other categories have returned to pre-pandemic level, and some did even better, such as luxury products, which benefited from consumption repatriation.

However, 11.11 can’t be viewed in an apples-to-apples comparison to 2019 since the promotional period lasted longer than normal to boost sales as a result of the pandemic. But in general, the discounts depended on channel inventory. For sectors with normalized inventory, such as home appliances, we saw benign competition; but for those with high inventory, apparel and footwear, retailers increased the discounts offered.

One notable change: market leader Alibaba extended the promotion period from two days to 11, splitting the peak demand into two shopping windows. We believe the change showed more concentrated consumption during the promotion period, like what happened during the 6.18 promotion earlier in the year.

Also, several leading online platforms, such as Meituan and Pinduoduo, have invested aggressively into the emerging community group purchase model. This location-based approach allows residents within the same apartment structure to receive discounts by purchasing together in bulk. Their strategic investments have benefited from the rising online penetration for grocery products in the lower-tier markets. We expect that continued investments in the community group purchase business will accelerate the online penetration for fresh food and Fast-Moving Consumer Goods (FMCG).


Greater China Leads Recovery

For many luxury brands, pent-up consumer demand in Greater China propelled recovery from the pandemic. With demand largely aided by consumption repatriation due to the global travel controls, we see categories in the premium space, and with higher exposure to overseas spending, as having a more explicit room to grow in China’s domestic market in 2021. We believe that the government’s policy including duty-free shopping is also supporting demand.

In one example, multinational fashion holding company Tapestry recently reported 1Q21 earnings (July to September), which showed that Greater China is leading its global recovery. The company saw 40% growth YOY, with sizeable improvement across its brands: Coach, Kate Spade and Stuart Weitzman. The top-line growth was helped by innovative product assortment, enhanced marketing and expanded reach across direct channels and third-party online distribution.

Kevin Yin, Head of Greater China Consumer Research, J.P. Morgan


China’s Bet on New Retail

As growth across the Internet’s overall user base lags, China’s top e-Commerce companies are turning to offline opportunities to jumpstart the momentum online.

According to Asia Equity Research, the trend is clear: In the past two years, the Internet’s overall user base growth has come to a halt. Data from QuestMobile shows that China’s mobile Internet user numbers grew only 4% YOY to 11.3 bn in 2018. To drive growth and monetization across existing users, China’s Internet companies have been exploring opportunities in the offline space – an initiative often referred to as “New Retail.”

“We define new retail as combining online operators’ capabilities with offline retailers’ resources. This pairing allows consumers to shop more easily for physical goods regardless of location,” says Alex Yao, Co-Head of Asia Technology, Media & Telecommunications (TMT) Research. “We expect the development of new retail will tap into a total RMB24 trillion addressable market, with a 9% penetration rate in 2023.”

According to the National Bureau of Statistics of China, online penetration of physical goods was at 20% in 2019. “This means, the offline retail market was still 4.4 times the size of the online market, despite the fast growth of online sales over the past decade,” says Yao. However, store-based retailers have resisted the pressure to move online, and those who embraced it experienced challenges with establishing their own platforms. “We see new retail as being just as important for China’s Internet players, as these operators are for offline retailers,” says Yao. “Both will benefit from new retail development.”

James Sullivan Quote We believe the development of new retail in China has reached its 5-6th innings, with increasingly clear revenue models and earnings outlooks. New retail will allow China Internet operators to generate increasingly sizable profit over the next 3-5 years, by tapping into an addressable market that is double the size, by GMV, of the current online physical goods market. Alex Yao Co-Head of Asia TMT Research J.P. Morgan

J.P. Morgan views the new retail addressable market as three segments:

This segment is poised for fast online penetration due to high demand for fresh foods. It also holds strategic value for Internet players to acquire new users. New retail initiatives offer more convenience to consumers (i.e., online ordering and delivery), which should boost traffic for online and offline participants. We forecast the total GMV of this sector will grow from RMB 6 trillion in 2019 to RMB 8 trillion in 2023E. Overall online penetration is expected to reach 12% by 2023, up from 2% in 2019, leading to GMV facilitated by new retail of RMB 952 billion.

There is heightened demand for small convenience stores where modern channels haven’t (or can’t) penetrate. Their widespread locations should allow Internet companies to engage new users, and the stores could serve as stations for last-mile services. However, online penetration has been slower in this segment, which can be attributed to the fragmented space and underdeveloped technology adoption. We expect this sector to grow 3.3% from RMB 6.8 trillion in 2019 to RMB 7.7 trillion in 2023. Online penetration will rise from less than 1% in 2019 to 7% in 2023E, leading to GMV facilitated by new retail of RMB 538 billion.

According to our estimates, the above two segments represented approximately 30% of total retail sales in China in 2019. For the remaining 70%, some are hard to move online (e.g. gas, autos, etc.) and others are not really “new retail” as there are already large online players penetrating the market in areas like dining and travel services. Excluding these sub-sectors, that leaves channels such as department and home décor stores, and services such as spas and nail salons. We estimate that the remaining addressable market will grow from RMB 6.5 trillion in 2019 to RMB 7.9 trillion in 2023. Online penetration is expected to grow slowly to 7.5% by 2023, as some segments may face difficulties moving sales online.

When looking at the potential of new retail more broadly, a wild card is the emerging community group purchase model that leverages group leaders. These are typically social individuals or owners of small stores with offline services, such as providing storage space and pick-up stations.

With this model, e-Commerce platforms collect online orders on the more popular items for daily needs, such as fresh foods and FMCG products, to gain bargaining power and control inventory risks. The next day, they deliver the pre-ordered products to the pick-up points near the buyers’ communities. The model is the latest effort in China’s O2O space, cleverly lowering the last-mile fulfillment cost while achieving better delivery efficiency versus the traditional e-Commerce model. We expect this business model to grow quickly in the lower-tier markets in coming years.

Back to top button Back to top

This material is not a product of the Research Departments of J.P. Morgan and is not a research report. Unless otherwise specifically stated, any views or opinions expressed herein are solely those of the authors listed, and may differ from the views and opinions expressed by J.P. Morgan’s Research Departments or other departments or divisions of J.P. Morgan and its affiliates.

RESTRICTED DISTRIBUTION: Distribution of these materials is permitted to investment banking clients of J.P. Morgan.

Distribution of these materials to others is not permitted unless specifically approved by J.P. Morgan. These materials are for your personal use only. Any distribution, copy, reprints and/or forward to others is strictly prohibited. Information has been obtained from sources believed to be reliable but J.P. Morgan does not warrant its completeness or accuracy. Information herein constitutes our judgment as of the date of this material and is subject to change without notice. Actual events or conditions are unlikely to be consistent with, and may differ materially from, those assumed. Accordingly, actual results will vary and the variations may be material.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. In no event shall J.P. Morgan be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction. J.P. Morgan makes no representations as to the legal, tax or accounting consequences of a transaction. The recipient should consult their own legal, regulatory, investment, tax, accounting and other professional advisers as deemed necessary in connection with any purchase of a financial product. This material is for the general information of our clients and is a “solicitation” only as that term is used within CFTC Rule 1.71 and 23.605 promulgated under the U.S. Commodity Exchange Act. Questions regarding swap transactions or swap trading strategies should be directed to one of the Associated Persons of J.P. Morgan’s Swap Dealers.

JPMorgan Chase and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging, financial advisory and other investment banking activities are performed by a combination of J.P. Morgan Securities LLC, J.P. Morgan Limited, J.P. Morgan Securities plc and the appropriately licensed subsidiaries of JPMorgan Chase & Co. in EMEA and Asia-Pacific. Lending, derivatives and other commercial banking activities are performed by JPMorgan Chase Bank, N.A. J.P. Morgan deal team members may be employees of any of the foregoing entities.

© 2021 JPMorgan Chase & Co. All rights reserved.