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Chinese demand for outdoor sports equipment amid changing middle class lifestyle

The middle class in China today goes after a balanced lifestyle. They consume with a view to appreciate life and derive leisure experience. And they like to engage in various outdoor activities and short trips to "go get some fresh air." Having a specialist positioning, combined with upscale, trendy image, many outdoor brands took the opportunity to promote the concept of alternative lifestyle brought by outdoor sports equipment. This, coupled with the proliferation of travel and outdoor related channels on the internet, which enrich people’s talking points on the subject, has directly stimulated the rapid growth of outdoor market in recent years.

On the one hand, there is a stylish, specialist image built by department stores for outdoor clothing and products, which shoots for the discerning middle class’ hearts and produces a cross-over market of sports and leisure apparel. On the other, the advent of outdoor stores provides a wider product selection and professional sales services. Also, they organise fan clubs of outdoor activities and proactively connect customers through social media platforms, enhancing the popularity of outdoor activities and products.

Photo: Professional outdoor image: stylish and leisure (1)
Professional outdoor image: stylish and leisure (1)
Photo: Professional outdoor image: stylish and leisure (2)
Professional outdoor image: stylish and leisure (2)

Therefore, apart from product price, quality, design and style, as well as developing appropriate sales channels, Hong Kong suppliers wishing to enter the mainland market should also consider consumer attitudes towards outdoor products in order to set foot in the niche, high-end market segments. Consumers are specifically looking for professional fashion sense brought by products and brands, as well as the variety of specialised services provided.

Changing middle-class lifestyle

As China's economy continues to grow, the middle class population consisting of relatively well-educated people and professionals has been expanding in recent years. But with years of consumption experience, as well as changes in social and workplace environment, the middle-class lifestyle has also been evolving, making an impact on their consumption behaviour.

It is worth noting that at present the middle class in China goes after a healthy, balanced lifestyle. Consumption focus is shifting gradually from brand chasing, materialism and status symbol in the past to taste, personal style and leisure experience. One result of the change is growing interest in all kinds of outdoor activities, directly stimulating demand for related supplies.

The trend is attributable to the increasing workload of the middle class. Especially in large cities, the middle class people tend to work longer hours and feel increasingly stressful. So in leisure, many of them engage in various outdoor activities and short trips in order to "go get some fresh air."

A survey1 by HKTDC shows that the middle class has regular travel habits. Among respondents, 39 % had self-drive travel experience in the past year while 35% have travelled to other cities for holiday by high-speed rail. In addition, 74% of respondents agreed to the statement that they ought to spend more leisure time together with family/friends. Apart from having meals together, respondents going for short-distance outing with family and friends during weekends have significantly increased. Also, 80% of respondents said that in the past year, they took short trips to nearby cities.

In fact, the number of mainland residents travelling domestically increased from 1.7 billion in 2008 to about 3 billion in 2012, growing about 15% on average annually. Of course, there were some who chose to go abroad for sightseeing, hoping through a variety of trips and outdoor activities to relax. There were also some outdoor sports enthusiasts engaged in all kinds of outdoor activities of high physical demands, including hiking, long-distance walking and mountain biking during holidays. 

Chart: China’s travel market
 

Rising tide of outdoor fashion

With more people travelling and engaging in outdoor activities, many international and home-grown brands of outdoor goods took the opportunity to promote all types of outdoor products to the middle class and above, and especially the 30- to 40-year-old stable and high-income earners. Having a specialist positioning, these brands put highlights on superior product features, and focus more on product promotion of fashion styles. Monotonous designs have changed into colourful fashion products. Aside from traditional outdoor sports lovers, mass-market leisure goods users are also their target customers. The goods are marketed as casual wear, as well as apparel and equipment used at picnics or during travels. As a lot of outdoor activities are associated with sports, so the brands can simultaneously absorb consumers originally using outdoor sports clothing as casual wear.

Photo: Professional and fashionable (1)
Professional and fashionable (1)
Photo: Professional and fashionable (2)
Professional and fashionable (2)

Since the 2008 Beijing Olympics the government has been promoting sports for all. Many outdoor brands ride on this sport boom to highlight their upscale professional fashion image and emphasise the attitude of alternative lifestyles. Some social media and online platforms, such as Sina, Sohu and Tencent also took this opportunity to launch dedicated channels, providing news and information of a variety of outdoor activities. As outdoor activities become hot topics for discussions among consumers, it helps to popularise outdoor sports and therefore promote the development of the relevant product markets.

Chart: Outdoor fashion concept
 

China's total retail sales of outdoor sports equipment rose from less than Rmb1 billion in 2004 to about Rmb18.1 billion in 2013, an average annual growth of 40% over a decade. The five major saleable products are apparel, shoes, backpacks, outdoor equipment and accessories, involving approximately 900 brands, of which half are domestic and half are foreign. 

Chart: Total retail sales of outdoor sports equipment in China
 

Targeting high-end consumers

With the growing popularity of travel and outdoor activities, sales of outdoor supplies stores continue to rise. Department stores, in particular, have capitalised on the rise of consumer demand for outdoor products to step up marketing of outdoor brands in recent years. Also, department stores have always been major retail channels for consumer goods in China, thus outstripping outdoor stores to become the major outdoor goods sales channels.

Chart: Retail sales of outdoor supplies, by channel
 
Chart: Retail sales of outdoor supplies, by channel
 

Outdoor apparel and shoes are major products sold in outdoor supplies stores and major department stores, accounting for 80% of sales in these channels. Among the products are various types of jackets, outdoor sports suits, fast drying clothes and socks, sunscreen hats, hiking shoes and other trail running shoes. The basic selling points of brand products are their special features such as quick drying, wear resistance, UV resistance, waterproof, breathable, warm and light.

In addition, major department stores and shopping malls proactively package these outdoor supplies as not only used in various professional and outdoor activities with specific energy demands, but also as general fashionable casual wear suitable for weekend outings or longer travels. They also emphasise the products’ professional features as the selling point, supplemented by the outdoor style being distinctive from general sportswear, setting them apart from other leisure and sports apparel. Moreover, their high-end product brand image is highlighted to avoid intense competition of the low-end market.

Therefore, the outdoor market not only benefited from the popularity of outdoor activities in recent years, but also the active promotion by the major brands and department stores among the discerning middle-class consumers, directly stimulating the rapid growth of outdoor market. Apart from opening up sales channels and promoting products and brands, Hong Kong companies wishing to enter China’s outdoor sports equipment market should also pay heed to consumer attitudes towards outdoor products in order to effectively set foot in the niche, higher-end market segments.

Advent of outdoor stores

At present, many well-known outdoor brands sell their products in counters set up in department stores. Examples include Korea’s Kolon Sport and Japan’s mont-bell which develop markets mainly through department stores. However, some brands open their own specialty shops in the form of chain stores while continuing with counter sales in department stores with a view to strengthening the brand image, to cater to higher-end consumers’ and outdoor enthusiasts’ demand for professional supplies, and to provide more professional sales services.

More prominent examples include China’s brands Toread and Mobi Garden. Sporting goods "Li-Ning" also created a new line "Li-Ning Adventure" with outlets stores. As to foreign brands, there are Black Yak of South Korea, North Face and Columbia of the US, Lafuma and Aigle of France, and Nikko of Hong Kong, etc. These brands open their own outlets stores in large and medium-sized cities along with department store counters.

There are also a large number of distributors opening independent outdoor stores in major commercial districts and residential areas, selling multi-brands of outdoor products. Some of the more sizable distributors go even further to ride on the outdoor fashion craze in recent years by establishing a physical store network, selling a wide range of fashion brands of outdoor products through chain stores in major cities. Notable examples include Sanfo, Astop, Dayu and Snowfavor.2 [More details ...]

Photo: Outdoor store chain (1)
Outdoor store chain (1)
Chart: Outdoor store chain (2)
Outdoor store chain (2)
Photo: Outdoor store chain (3)
Outdoor store chain (3)

Compared to counters in department stores, products sold in outlets stores and distributors’ store networks are more professional and diverse. In addition to the general leisure travel equipment including all types of outdoor clothing (eg. jackets, down jackets and fast drying clothes), outdoor shoes, backpacks, tents, sleeping bags and trekking poles, they also sell more specialised equipment, such as ski tools, outdoor underwear, lighting, rock climbing and ice climbing equipment, high-end mountain biking and water sports professional appliances.

It is worth mentioning that French sports equipment superstore operator Decathlon has established a network of about 80 physical stores in China. In addition to the sale of general sports equipment, it mainly engages in promoting all types of outdoor supplies. Different from the professional image of outdoor shops, Decathlon superstores provide an array of product selections, highlighting value for money. They provide outdoor activities information on the spot, which can effectively arouse the consumers’ desire to buy outdoor products.

In addition to operating physical stores, some distributors and brands also make use of well-known e-commerce platforms, such as Taobao.com and JD.com, or create online store of their own. By combining physical store and online sales, they hope to connect with a wider consumer base. However, distributors told HKTDC that the consumers buying online are more interested in lower-priced products, and are mainly from the younger consumer group, which are not in line with their targeted group of high-end consumers. For this reason, they only offer a limited selection in online stores, at a lower price and of styles catering to the younger customers in the hope of increasing their profile in the online shopping channels, rather than looking to online shopping as an ultimate business development goal.

Chart: A variety of outdoor supplies (1)
A variety of outdoor supplies (1)
Chart: A variety of outdoor supplies (2)
A variety of outdoor supplies (2)

Tips for suppliers

Here are some practical tips for Hong Kong's outdoor sports equipment suppliers making an entry into the mainland market. Well-known outdoor brands are potential customers for companies engaging in original equipment manufacturing (OEM) or original design manufacturing (ODM). Brand owners with their own outlet stores, in particular, are mostly equipped with product design and development teams and their main mode of cooperation with manufacturers are to source OEM products. Many of them, including buying offices of foreign brands, are set up in major cities such as Beijing and Shanghai to facilitate their marketing strategy in the country.

As for suppliers wanting to market its own brand products, in addition to negotiating with department stores for counter sales, they may consider working with chain stores and outdoor supplies distributors to test the market.

In any case, in addition to factors like product price, quality, design and styles, Hong Kong companies must take into account that high-end consumers of outdoor supplies pay more attention to professional fashion sense and the expert services provided by brands and stores. In fact, coaches, retired athletes or experienced outdoor enthusiasts are hired by such distributors to give professional advice to customers on the spot about related products and activities in the stores of major brands. Product features, specifications and relevant credentials need to be cited whenever necessary. In this respect, suppliers are required to assist by supplying relevant information for reference alongside with the products.

Many brands and distributors also give quality and money-back guarantee to consumers while some even provide maintenance and replacement parts service. Requests to repair are rare nowadays though. Apart from bicycles and some expensive equipment, the average consumer, in fact, mostly would consider buying a new product when there appears wear and tear. But companies, by providing maintenance and product-related accessories, such as mountain bike parts and belt buckles and accessories of backpacks and tents, can give customers courtesy service and professional feel. So keep in mind the distributors’ need to provide warranty service as well as ensure supplies of product parts and accessories.

In addition, major distributors as well as department stores, one after another, have launched fan clubs in recent years. Members can enjoy shopping discounts and receive regular information on Weibo – China’s version of Twitter -- or other social media platforms. Family outdoor activities such as outing, short hikes and outdoor charity activities are organised, along with the more challenging mountaineering, skiing, and long-haul travels. Some brands and distributors frequently sponsor outdoor activities, including cross-country running, mountain climbing and mountain biking competitions. Their goal is to raise brand profile among users through sponsored events, and they may ask their suppliers to provide relevant supports from time to time.

 



Details please refer to HKTDC’s “Survey on China’s middle-class consumers” published in July 2013
For more details, please refer to another research article of the HKTDC Research, “Chainstore China and the growing middle class demand for outdoor sports equipment

Content provided by Picture: Wing Chu
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