According to a market survey commissioned by Roland Berger, China’s recently implemented “second-child policy,” which allows all married couples to legally give birth to two children instead of only one, will help to propel demand for mother-infant-child products and services over coming years. Market offerings designed for infants and children (-1~14 years old) are expected to outweigh those for mothers: the market of these products is expected to grow by 12% annually and reach nearly RMB 1.7 trillion by 2020, while that of services is on track to reach RMB 1.74 trillion, growing at a rate of 17% per year. Food and clothing, which already comprise a large proportion of infant and child products, are predicted to account for 67% of the products market then; education, which generates the most value of all infant and child services, will make up approximately 35% of the segment by 2020.
Differences in household consumption of mother-infant-child products are largely correlated with differences in child age, household income and regional market factors. China’s current per-capita consumption of products and services for mothers, infants and children is approximately RMB 7,748 per year. A closer look shows that RMB 4,299 of this expenditure is allocated to product purchases, while RMB 3,449 is spent on services. For urban infants and children, the per capita consumption on products and services was RMB 11,197 in 2015, around 39% of which was allocated to services. As a general trend, the proportion of expenditure on services is higher for families who live in more economically developed cities, have older children and generate higher household incomes.
The broad trend in retail channels is a migration from offline to online channels, which are expected to account for 40% of sales by 2020, a significant increase from the 32% recorded in 2015. Despite the potential impact of this transition, the majority of sales will still be made through offline channels, which will continue to be supported by the continuing expansion of shopping malls in China. Brick-and-mortar specialty stores selling mother-infant-and-child products are set to become the leading offline sales channel, controlling a 40% offline market share by 2020. In contrast to this offline trend toward specialty shops, online retail is trending toward greater diversification: integrated online shopping platforms, accounting for a 40.5% online market share, were in a relatively dominant position. Purchases made on mobile devices are also predicted to account for around half of the online shopping market in 2020.
Through in-depth analysis of the recent policies aimed at promoting and regulating the development of China’s mother-infant-child products and services market, Roland Berger has identified retail channel development trends that industry players should track in order to maintain a competitive edge. In this increasingly competitive environment, a reaction to the following trends should be integrated into strategic planning.
Consumption patterns for mother-infant-child products and services reveal attractive opportunities for cross-selling between different product categories as well as between product and service offerings. One-stop-shopping retail formats and practices that optimize customer experiences will be increasingly effective at influencing purchasing decisions related to mother-infant-child products and services. These formats build channel trust and customer loyalty, while simultaneously helping customers minimize the time they spend shopping. According to the aforementioned survey commissioned by Roland Berger, 80% of consumers say they are likely to buy mother-infant-child products while they are receiving related services, and vice versa. In order to meet diverse consumer needs, channel operators of all types are taking steps to offer a comprehensive range of products and services.
Consumers of mother-infant-child market products and services increasingly look to multiple channels, instead of relying on any single consumption channel. Rapid changes in consumer needs at each phase of infancy and childhood mean that retailers seeking to encompass the full customer buying cycle should seek to develop a presence both online and offline while simultaneously making their products and services available on all channels. Survey results show that more than half of the respondents consider both online and offline channels when making mother-infant-child product purchasing decisions. At present, approximately one-third of consumers have made purchases using an app developed by an offline retailer, which hints at the possible successes afforded by an omni-channel approach to integrating products and services.
The study sizes up China's market for products and services designed for mothers, infants and children, highlighting emerging developments in retail channels.
