Summary of 2017 Tianjin Retail Market
By Lesley Chai, Assistant Manager at JLL Research Tianjin

      在刚刚过去的 2017 年，零售业发展态势依然迅猛，无论是在线零售业还是线下零售业，表现都非常强劲。其中网上购物依然保持高速增长，在 11 月份的双 11 全球购物狂欢节中，当日的在线销售额又一次刷新了记录，全球的销售额竟然达到了惊人的 253 亿美元，比去年同期增长约 40%，这足以见得人们对线上购物仍然充满热情。随着智能手机的普及和网络覆盖面的扩大，网上购物变得更加方便且快捷，物流和在线客服服务也越来越好，风险性也大大降低。其中天津市的购物者在双 11 当天贡献的在线销售总额达到了不可思议的 24 亿元人民币。这一销售额几乎是天津大悦城 2016 年全年的销售总额。

      那么我们再来看实体零售店的发展，总体而言实体零售商场的发展比较稳定。在 2017 年天津市新增四个大型实体零售商场。这些商场的地理位置不再位于城市的中心，而是定位为社区商场，为周边城区的居民提供便利与服务。商场也不再仅局限于购物，而是增加了健身休闲餐饮娱乐等多功能设施，集多重功能为一体。此外商场也对自身品牌进行了升级，比如天津大悦城就引进了 Calvin Klein，古驰，迪奥等等大牌奢侈品入驻。同时随着人们对精神文化消费需求的增加，很多商场也引进了时尚书店，比如，最近比较火爆的言又几、西西弗等书店就相继在天津市各大商场开业。虽然有些人会认为线上商城抢走了线下商城的营业额，但是现在的实体商家已经改换了思路，将线上与线下联合起来，携手为消费者提供更便利的服务和更优惠的价格。例如天津市大悦城就在双 11 当天与线上相结合推出了抢红包活动，反响很好。

      总体而言，随着人们对物质及精神消费需求的增长，天津市无论在线上消费、销售还是线下零售方面，依然会有持续增长，所以我们有理由对天津市零售业保持持续乐观的态度。

With 2017 having come to an end, the four main points below show how the Tianjin retail market performed during the year both online and offline, the efforts retail landlords took to remain competitive and the benefits shoppers could get from the competitive retail environment.

• Online shopping maintains high rate of increase

Early results from the one-day “double 11 festival” shopping spree in November showed another strong result for online retailers. Data showed that people remain passionate about shopping online, especially on the day featuring the largest discounts of the year. Total sales on Tmall, the largest e-commerce platform, during the “double 11 festival” reached USD 25.3 billion, which is about a 40% increase from the same day in 2016. The sales number on Tmall was almost quadruple the total online transactions seen on U.S. Cyber Monday in 2017, which stood at USD 6.6 billion.

With the rising popularity of smartphones and development of delivery networks, online shopping has become more convenient and less risky for customers. In Tianjin particularly, both online shopping sales on 11th November and during the whole year experienced fast growth over the last four years. Based on Tmall’s report, online sales contributed by Tianjin shoppers during the “double 11 festival” totalled RMB 2.4 billion. Sales for that one single day almost reached the total sales of Tianjin Joy City for the whole of 2016. Online retail sales figure in Tianjin increased at 44% y-o-y in 2016 and was expected to maintain two-digit growth in 2017.

• Brick-and-mortar retail market continues to develop steadily

In 2017, three new retail projects came on stream and added 309,000 sqm of shopping space. The new supply entered at a slower pace after the supply peak achieved over the last two years, a decline of 35% y-o-y. With new completions in 2018 expected to increase at only 6% as compared to new supply in 2017, the retail market has entered a cycle of steady increase courtesy of new retail space having been built.
 

Although there was a decline y-o-y in total new stock in 2017, diversity of location and positioning continued to increase. Global Mall Tianjin is located on the fringe of the city and is positioned as a community mall to service the residents and workers around the catchment, while TeeMall, with a larger area of 190,000 sqm, opened in the Heping Road submarket, which is the core retail area in the city centre. New space was added to an existing (in 4Q17), Yanlord Riverside Plaza Phase IV. The mall in the Old Town submarket is small but features a mid-to-high-end lifestyle mall, including restaurants, gyms and a supermarket that entered the country first in Tianjin.
 

All three new malls opened near existing malls, which increased the regional competition in each submarket.
 

• Adjusting the tenant mix is a key way for malls to remain competitive

Property owners of well-performing malls started to upgrade their tenant mix to help rent growth and to achieve higher profits. For example, developer of Tianjin Joy City (in the Old Town submarket in Nankai) moved several fashion brands, such as Calvin Klein, upstairs and introduced jewellery brands, which pay higher rents to landlord. The developer also introduced higher positioning brands, including Michael Kors, Dior Beauty and Gucci Accessories, near to the main entrance on the ground floor.

Property owners of other malls also kept adjusting their tenant mix or reviewed their positioning to be competitive. For example, the property owner of Riverside 66 in the Heping Road submarket, developed by Hung Lung, planned a high position on the ground floor when it opened in late 2014. As the Heping Road submarket positioned as a mass-market shopping area, the developer of Riverside 66 struggled with the project’s empty space on the ground floor and the lack of foot traffic. During late 2017, the developer introduced several mid-to-high-end fashion brands, including Izzue, i.t. and Tommy Hilfiger, as it changed the strategy of positioning luxury brands on the ground floor. The developer also leased space on the basement level to a small movie theatre to provide more entertainment options for shoppers.
 

Another trend in terms of tenant mix is that developers of shopping malls introduced bookstores to add more cultural experience into the malls. The newly opened bookstores during 2017 are listed in the table below:
In addition to bookstores, traditional leasing demand drivers, including F&B, children-related brands and entertainment brands, continued to expand gradually. In addition, the opening of new malls has attracted new brands into Tianjin, which benefits shoppers as they have more opportunities to be the first to try the new brands. For example, TeeMall is originally from Guangdong Province, so the developer brought in several local restaurants and a new bookstore brand to introduce to Tianjin shoppers. Global Mall was developed by a Taiwanese developer, Kindom, and hence features some typical Taiwanese cuisines and Rock Record KTV from Taiwan.
 

• Cooperate and compete with online retail during the holiday season

This year, more number of physical shopping centres actively cooperated with the online giants, trying to share the interest shown in the online shopping festival. The omnichannel retail format is beginning to take shape.
 

Two malls in Tianjin, Riverside 66 and Tianjin Joy City, joined Tmall’s “red pocket” promotion that was held on 11th November. At a certain time on that day, once shoppers walked into the mall, they could open the Tmall app on their phone and catch the “red pocket”, which are coupons that can be used in both online and office stores.
 

Other malls and department stores, including Galaxy International Shopping Centre and Milenio Plaza, provided discounts throughout the day, and the duration of promotion at some of the stores was extended to a whole week to encourage shoppers to keep buying offline.

Conclusion

During 2017, there was an increase in sales in both online and offline retail; online retail sales kept a two-digit growth rate. Three new malls opened in the city in 2017 and another four malls are expected to come up in 2018. As new malls are introduced and property owners of existing malls actively adjust the tenant mix, Tianjin’s brick-and-mortar retail landscape is continuing to expand, not only in terms of geography, but also in terms of becoming more diverse on positioning, size and tenant mix. We hope that the high level of competition will stimulate retail developers in Tianjin to be more innovative and mature.