Linn Maung
China’s economy is currently experiencing a severe recession widespread unemployment and numerous business bankruptcies. Many stores now sit deserted with the once vibrant scenes of shopping centers becoming a thing of the past. Following the collapse of Sunning group’s top three supermarket chains, Carrefour stores belonging to the famous supermarket chain, RT Mart and the renowned Japanese Isetan department store chain which has been operating since 1997 in Shanghai and Tianjin have announced their closure.
Metro China’s Hutai Road store is now out of business too and closed. Currently the famous Shanghai City Hypermarket City shop which specializes in distributing famous Brands such as boutiques and other high-end items has also announced its closure.
On April 16, the famous Shanghai City Supermarket City Shop and announced the suspension of operations for all stores. On the same day the National Bureau of Statistics of the Communist Party of China released data stating that GDP in the first quarter of this year increased by 5.3% year-on-year, which was criticized as a ‘nonsense’. On April 16th Shanghai City International Enterprise Development Company Limited issued a notice Shanghai City supermarket has been struggling in recent years and despite taking a variety of self-rescue measures it is still unsustainable.
The company decided to commence the process of shutting down operations from April 16th 2024. All its Supermarket stores are closed. The notice also informed employees that from now on the company will enter a state of suspension and liquidation. Employee’s salaries will be calculated until April 15th, social insurance premiums will be paid until April 2024 and Severance compensation if any will be left to be properly paid in accordance with the law after liquidation.
According to its official website Shanghai City Supermarket was established in 1995 as a high-end imported Boutique Supermarket. It previously had 10 stores in Shanghai and is one of the largest imported food and daily Necessities supermarkets in Shanghai and even in whole of the Yangtze River delta. Regarding the sudden announcement of store closures, city supermarket’s official customer service responded online to the paper saying City Supermarket was forced to completely cease operations due to continued losses.
People from mainland are also talking a lot on social media; some people think that online shopping has impacted physical supermarkets; however some analysts believe that it is because of the Covid policies implemented in Shanghai in 2021. Foreigners were scared away with strict lockdown measures, while the main customer base of urban supermarkets are foreigners in Shanghai. Some people believe that this reflects China’s overall economic situation with foreign investment withdrawing, housing prices falling, and serious unemployment.
On April 16, the National Bureau of Statistics of the Communist Party of China released data stating that China’s GDP in the first quarter was 29.6 trillion Yuan representing a year-on-year increase of 5.3%. However, Mainland stock markets plummeted again. Mainland netizens criticized the statistics Bureau of the Communist Party of China citing it as‘nonsense’. “Who else can we believe they are all lying to us”- a netizen wrote online. Some ridiculed, “I can’t figure it out, GDP is much higher than expected and yet the stock market is plummeting. I don’t know who to blame”.
As China’s economy continues to decline, people’s consumption has decreased and foot traffic in shopping malls has significantly reduced. Many commercial streets are deserted with shops closed, losing the prosperity of the past. The 2023 to 2024 China Department Store Retail Industry Development report co-authored by the China Department Store Business Association and the Feng group and Feng Research Center, shows that 86.3% of Department Store retail companies believe that the primary challenge is insufficient consumer purchasing power.
Regarding customer flow; 70.1% of department stores had customer traffic in 2023 not exceeding that of 2019. In terms of sales 64.9% of department stores failed to return to 2019 levels. The report also points out that 60% of department stores believe that e-commerce platforms have also had a certain impact on the offline Department Store retail industry.
