The Retail Hits Different

The second tier Chinese cities I’ve visited are very different from mid-sized metros in the United States. Obviously with so much more population that’s going to be true, but especially in terms of things like retail.

I saw a number of smaller cities and villages from the train, but my experience with the larger second-tier cities like Taiyuan and Datong in smaller provinces (again I’m not going to claim to be an expert and am just going off observation) is that the hyper density changes the retail landscape from an urbanism and business competition perspective dramatically compared to US cities.

I imagine this is in addition to different types of policies and cost of living than in the United States, but as Olivia Plotnick notes in the article linked above, it’s also an emergence of a generation in China that looks out for different retail experiences. She’s mostly talking about mall and upscale shopping experiences, but I also saw more shops here than you would ever see in US cities, even if you pulled together all the lower tier malls and strip centers. I feel the US is dominated by chain stores, whereas I saw some chains but also way more original retail experiences.

As a side note, visiting malls in China feels like being transported back to 80s and 90s with all the people bubbling around inside them. It’s wild as an 80s kid hopping back into that experience.

I also didn’t see a major supermarket or goods chain in my travels like a WalMart or Safeway. I know they exist and some like Sams Club have created a foothold, but in US cities you can’t really miss them. I also suspect that the advantage they have in the US on pricing just isn’t the same here and so their competitive advantage disappears. We know also that local corner store chains have cornered the market and haven’t let larger chains like 7-11 into the smaller cities.

But I’m also interested in what this means for transportation. As Reece Martin notes on his blog, cities in Asia never went for light rail or streetcars the way many western cities have. From my visit here, Reece’s reasons why this is the case seem true. There’s hyper density here so middle-capacity systems don’t really scale as well as say a subway or buses on the wide main roads in these cities. It’s also the case that there’s lots of walking, electric motor scooter riding, and even more driving now which as we discussed before creates some traffic issues.

Electric motorscooters in the bike/scooter lane in Taiyuan China

But this is also a reason the retail seems different. With so many people living in a smaller area, there are way more “rooftops” that can be served with a greater breadth of store offerings. Getting there by taking the elevator and walking is also easier than in a car oriented suburb.

I’ll be heading back to the US soon but this trip has been super interesting and much much different than last year’s journey to Hong Kong, Shenzhen, and Macao. There’s so much to explore and so many different angles to what I’m seeing and experiencing, I just wish I had more time.

***

For this intro post and more news in your inbox every morning, sign up for a two week free trial of The Overhead Wire Daily, our popular newsletter established in 2006.