Euromonitor International has launched a comprehensive industry report The Impact of Coronavirus on FMCG and Service Sectors in China sharing insights into how this epidemic will impact China’s consumers goods industries.
This report discusses the negative impact and growth opportunities in key industries including Retailing, Food & Drinks, Consumer Health, Electronics and Home Appliances, amongst others.
Some of the key insights highlighted in the report:
With China accounting for 56% of global apparel production, the temporary halt of production capacity will pose a challenge to apparel brand owners’ supply chain management. As families are spending more time together indoors, there is strong potential to cultivate online shopping habits among the older generation, with apparel and beauty categories most likely to benefit. E-commerce is already one the biggest sales channels of beauty and personal care in China, and accounted for 38% retail sales value for coloured cosmetics in 2019
2. Offline apparel and footwear sales severely hit
The Chinese apparel and footwear industry reached CNY2, 621 billion in 2019 in retail value, with healthy growth momentum over the past five years. However, it is currently going through a rough period given its heavy reliance on offline channels. Closed stores and disrupted marketing campaigns due to virus outbreak will negatively impact many apparel and footwear companies 2020 sales forecast. Q1, during which the spring festival occurs, is normally the peak season for the industry, therefore, the sales loss in the quarter might be difficult to compensate for throughout year.
3. Food & Drinks
In 2019, online sales of fresh food accounted for 6.3% of retail sales value and this share is expected to increase in 2020 due to the quarantine policies. Local authorities have advised on sufficient dairy intake to boost immunity and the Chinese government has specifically instructed not to restrict the delivery of livestock products
·Alcohol sales via off-trade channels are less affected than on-trade, considering consumers’ habit of stocking up on red wine and baijiu before the Spring Festival. No-contact delivery services are now the preferred method and creative food delivery methods are increasingly common. For example, JD.com uses unmanned aerial vehicle (UAV)
4. Consumer Health
·Based on Novel Coronavirus Diagnosis and Treatment Plan in early 2020, over the counter drugs containing traditional Chinese medicine ingredients can be used to have certain effects in clinical therapeutics against the virus. This has resulted in an increase in demand for forsythia, ginseng, houttuynia (Chameleon plant) and radix isatidis (Banlangen)
·During the SARS outbreak, laundry sanitisers saw a retail sales value CAGR surpassing 90% in 2002-2004. Such drastic increase in demand can be expected in this scenario
5. Electronics & Home appliances
At the end of 2019, China’s video game market size is estimated at USD35.6 billion. Video games software will experience strong performance in the first quarter of 2020, due to a rise in home screen time. The Ring Fit Adventure for Nintendo Switch has gone viral even though it has not yet been officially introduced to the market. Because COVID-19 is suppressed by high temperatures and ultraviolet rays, washing machine and dishwasher products bearing high-temperature wash functions, A/C models with UVC disinfection features and irons that can disinfect fabrics with high-temperature vapour are expected to be the specific beneficiaries