ALTHOUGH Chinese consumers now spend nearly triple the time on shopping than the Americans do, retailers in China still need to finetune their business models to meet and cater to Chinese shopping habits in order to reap better profit, a McKinsey & Company report said yesterday.
Chinese consumers now spend 9.8 hours a week shopping on average against 7.2 hours for the other three BRIC economies - Brazil, Russia and India - and 3.6 hours in the United States, the report showed. China is the fourth member of the BRIC economies.
"Although China should be one of the greatest retail opportunities worldwide, individual retailers are having a hard time just to break even," said Richard C.K. Cheung, a principal of McKinsey and the author of the report.
"They (retailers) just don't know how Chinese consumers shop and have got their formats wrong as a result," Cheung told Shanghai Daily.
People's increasing incomes helped China's retail sales to rise 13.7 percent to US$800 billion last year as the country aims to increase domestic consumption to sustain future growth.
McKinsey predicted the Chinese retail market will reach US$1.3 trillion in five years and will contribute 30 percent to global net retail sales growth between 2003 and 2008, according to the report.
However, compared with soaring retail sales, the profit margin for retailers in China is at around one percent compared with three to five percent in overseas markets.
Many stores lose money because they are in the wrong locations, are oversized and suffer from high inventory losses, McKinsey said in the report.
McKinsey & Company also attributed increasing rents and competition for retailers earning lower profit.
The research found out Chinese consumers had less loyalty to individual stores as more than 60 percent of Chinese spend less than 50 percent of their time in their main store, compared with 21 percent of US consumers and 57 percent for BRICs.
"Retailers need to capitalize on the tendency of Chinese consumers to make impulse purchases,"said Anne Tse, the associate principal and co-author of the study. "Rather than banking on winning loyalty, they need to grab attention and sell as they (shoppers) come through the store."
The report also found out that Chinese consumers shop more frequently because of their liking for fresh quality, and they are aware of food safety.
The research was conducted on more than 6,000 middle-class shoppers in BRICs including 2,000 in China as well as a combined 2,000 consumers in the United States and France on consumer behavior.