Consumer Trends and Optimal Corporate Strategies in the New Environment

Sep 05-2025   

*This article is based on the keynote speech by Xie Huali, Research Associate Professor of NSD, Ministry of Education Chang Jiang Young Scholar, Peking University Boya Young Fellow.

The Consumer Market in the New Environment: The Rise of Sinking Markets

Where are the opportunities in an environment of seemingly weak consumption?

In recent years, overall consumption growth has been modest. Regionally, the eastern areas have experienced genuine sluggishness, while central regions perform well, even exceeding the national average. At the city level, first-tier cities lag, whereas second- and third-tier cities show resilience. This reveals that current consumption challenges are primarily structural, with localized factors driving the downturn. A key reason is real estate’s outsized impact in major cities. As the cornerstone of household wealth, real estate fluctuations significantly influence consumption.

2024 data indicates that residents in large cities face constrained disposable income due to mortgage or rent burdens, while those in smaller cities enjoy higher discretionary spending. China’s vast population follows a pyramid-shaped income distribution, highlighting the untapped potential of the “sinking market”—a segment covering 90% of the geographic market area and over 1 billion people. With recent improvements in internet access, high-speed rail, and logistics infrastructure, this market’s developmental value continues to grow.

Three Major Consumer Trends: Digitalization, Greenization, and Personalization

Consumer behavior exhibits three structural and categorical trends. The first one is digitalization: Consumption is increasingly digital. Macro-level data shows online retail growth outpacing offline growth. The second one is greening: Heightened health awareness has made eco-friendly and wellness-focused products highly sought-after. The last one is personalization. China’s “China-Chic” gaming market, valued at over 60 billion yuan with more than 20% annual growth, exemplifies this trend.

These shifts challenge simplistic narratives of “consumption downgrade” versus “upgrade”, demanding nuanced analysis.

Strategic Choices for the New Environment

How should businesses adapt?

• Online-Offline Integration: Consumers now weigh time versus distance—online shopping eliminates geographic limits, while offline shopping offers experiential advantages. Blending both channels efficiently communicates product information, aids consumer decision-making, and strengthens brand trust through social interaction, optimizing the overall experience.
• Personalized Branding + Social Marketing: Generation Z exhibits paradoxes: they crave unique, customized products yet seek peer validation. Thus, brands must cultivate distinct identities while leveraging social channels to guide consumption.
• Product-Service Integration: Modern strategies emphasize long-term customer relationships, transforming one-time sales into sustained services. Cross-sector collaborations are also rising, breaking traditional boundaries to create innovative experiential scenarios.