Growth In Chinese Consumer Market Spells Change For Retailers

Yesterday, the National Retail Federation kicked off its annual Shop.org summit in Retailers are improving their strategy for capturing Chinese consumersSeattle, where retailers from throughout the United States are convening to address key issues in their changing industry. An influx of immigrants to the U.S. in recent years means that retailers are now catering not just to their traditional consumer base, but also to a newer contingent of multicultural and multiethnic groups. As a result, many companies will need to take specific steps to improve customer service among these different subsets of the population.

One such group that has seen an increase in its representation in the retail consumer market is Chinese customers. As an ever-growing population, retailers who wish to successfully court this expanding base of Chinese consumers, a thorough understanding of how these individuals differ from traditional Western markets is essential.

A significant slice of the pie

Chinese Americans represent a significant portion of the U.S. population makeup, both in terms of size and socioeconomic status. According to the Centers for Disease Control and Prevention, Chinese Americans comprise the largest Asian American population, sitting at 4 million people nationwide. Of these, 47 percent immigrated from China or were otherwise not born in the U.S. As the Los Angeles Times reported, U.S. states are experiencing an average of 33 percent growth in their Asian American population each year.

Not only do Chinese Americans represent a demonstrable percentage of the population, but they are socio-economically situated to be primary participants in the U.S. retail industry. ChineseAdvertisingAgencies.com stated that 38 percent of these individuals have at least a bachelor’s degree, compared to the overall national average of 22 percent. What’s more, the median annual household income of Chinese Americans was reported by the source to be $41,583, with the average household earning around 30 percent more than the national average.

Ready to spend

Fortunately for retailers, Asian Americans represent a potentially very lucrative market to appeal to. According to the LA Times, the highest potential for impulse buying was found to exist in the segment of the population. Their annual salaries are the highest of any cultural group in the U.S., and their excess of disposable income finds its way into retailers’ cash registers – Asian American households spent 19 percent more on retail goods than the national average in 2012, the Times indicated. In fact, consumer spending among Asian Americans is estimated to reach $1 trillion by 2017.

Appealing to the market

Retailers who hope to capitalize on the boom in Chinese American consumer spending need to understand the key ways in which the population’s buying habits differ from that of the conventional Western consumer. As the LA Times pointed out, Asian Americans are more plugged into online retail, with 77 percent making use of online shopping, versus 61 percent of the rest of the U.S. population.

Of course, Chinese Americans do shop in-store as well, and businesses can prepare themselves to help their multicultural customers make the most of their shopping experiences. A study published by Hong Kong Polytechnic University uncovered an interesting distinction between Chinese and Western consumers, namely the propensity for haggling while shopping. The results of the survey found that Chinese consumers had a significantly higher bargaining intention than did their American counterparts, and also tended to bargain more aggressively. This may be in part due to the fact that multigenerational housing is more common among Chinese Americans, meaning that a need for more efficient and cost-effective shopping is paramount among that population.

Breaking down language barriers

Businesses need to prepare to interact with these Chinese American consumers. The LA Times reminded us that 70 percent of these individuals speak a language other than English – in fact, Chinese is the second most spoken non-English language in the country behind Spanish. Language training for business is a valuable way to equip customer service representatives with the basic competencies they can use to communicate more effectively with Chinese American consumers, creating a more welcoming atmosphere and, as a result, improving business prospects.

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