Nervous Chinese consumers hesitating to return to retailers

Mainland Chinese retailers are discovering that a return to normal business after the coronavirus will take longer than expected.

Shopping malls and high-street shops have begun to reopen across the country as the worst of the pandemic which paralyzed the nation in February appeared to be over.

According to figures from China’s Ministry of Commerce, about four in five restaurants and cafes and 90 percent of commercial facilities have now reopened.

But retailers are reporting footfall is well down on pre-coronavirus levels. One worker at a Walmart store in Shanghai told a reporter that customer numbers were running at about half the usual level. “Sales are not growing at all.”

Data from the China Chain Store & Franchise Association shows that more than half of companies operating shopping malls expect a decline in sales of between 30 percent and 70 percent during the first quarter of this year. None expect growth.

Fast-food operator Yum! China had earlier reported in a shareholder update that customer numbers were down by about 20 percent late last month, but it expected turnover to steadily recover. Store closures peaked in mid-February when about 35 percent of the company’s network of KFC, Pizza Hut and Little Sheep chains were closed, the balance offering delivery only. Almost all stores are now trading again.

But the problem for retailers – ranging from food to fashion – is that consumers remain nervous about the potential to contract the virus and are continuing to practice social distancing. This has led to many who may have routinely dined out after work, eating at home instead.

Other consumers are practicing frugality due to lost earnings or concerns about their ongoing job security, while many Mainland Chinese consumers are shopping online.

While shops in major cities have been given the official green light to resume trading, many luxury stores remain closed.

Electrical goods retailer Suning says some of its stores are experiencing only about half the pre-coronavirus footfall.