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GfK: Baby boom in Chinese cities drives online spending

China’s productive population gives birth to approximately 17 million babies annually. This trend together with the rising personal income is contributing to the rapid growth of baby care product market, according to market research firm GfK.

The firm started retail audit tracking of baby care products covering clothing, feeding and hygiene tools, safety equipment, transportation, furniture, and toys in China in 2010. The study, tracks ten key Chinese cities, indicated the market reach USD425 million in 2011, an increase of 16pc from the previous year. Although data of 2012 is yet available, the market is expected to grow further, thanks to the popular year of the Dragon.

“GfK predicts the fast growing market to close the year on a high, with at least 20pc growth achieved in total sales earnings over last year for both online and offline retailers,” said Walter Leung, managing director of GfK Hong Kong.

Findings in the last two years also revealed more consumers are increasingly turning to the Internet as a platform to purchase baby care products. While total Internet sales accounted for about 7pc of the total market value in 2010, penetration rate escalated to 10pc in 2011. This figure is likely to rise in 2012, GfK noted earnings derived from online retailers is expected to contribute more than 14pc of the overall baby care product market.

"It is interesting to highlight the difference in buying behaviour across various regions,” said Leung. “The online buying phenomenon for baby care products is definitely more apparent in China compared to the European countries of Germany and France where consumers still prefer to make their purchases at brick and mortar stores.”

Leung noted the online market is growing at a faster rate is due largely to its lower pricings. For instance, the price of a baby bottles sold online averages at USD7.10, which prove more attractive than those retailing at departmental stores and baby care specialists which averaged at USD10 and USD7.90.

“Physical retail stores in the baby care market are facing intensifying competition from increasing number of Internet retailers who have started selling baby care products,” he said. “To compete effectively with the offline market, it is important for online retailers to keep enhancing the other aspects of sales, such as it’s after sales service, delivery time.”

 

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