A shirt costs 1,800 yuan, and the "noblewoman" supports the consumption ceiling of the county

Source: Visual China

Contributing Author | Wang Buxun

Edit | Wang Weikai

Produced by | Prism Tencent Xiaoman Studio

"Ten years of drifting north, not as good as a county lady. This sentence stung a lot of "small town problem-solvers", they studied hard, passed various exams, and finally had a foothold in Beijing, but after returning home on holidays, they found that their lives were not as good as the "noblewomen" in the county.

When the white-collar workers in Beijing were waiting to go to Hema and Sam to pick up discounted fresh food after work, the ladies were grabbing the goods at a higher price in the county purchasing group, and they were not distressed.

"County ladies" are becoming a group that has attracted the attention of consumer brands. They have money, leisure, and status in the local social circle, and have become the vane of fashion consumption in the county. Consumer brands such as L'Occitane, Lululemon, Starbucks, and Haidilao, which originally focused on urban white-collar workers, began to target them, and listed third-tier and below cities as new markets to focus on.

According to the data, Starbucks has opened more than 6,800 stores in China, of which 486 are located in county-level cities. Of Haidilao's more than 1,300 stores, 50 are located in county towns and 111 are located in county-level cities. On March 4, Haidilao announced that it would implement the franchise model, and many netizens shouted the slogan "Haidilao is not a dream in the county".

In the past, there was only the fight of "Honey Snow Ice City" in the county, and now, "Haidilao" is unwilling to let go of this "mosquito leg meat". Is the county really experiencing consumption upgrades? Are the "ladies" a real business opportunity?

The ceiling of the county's consumption level

During the Spring Festival this year, He Yan (pseudonym), who works in Shenzhen, accompanied her to go shopping, and personally felt the consumption level of the county lady.

"A shirt is 1,800 yuan, a new Chinese top is 3,800 yuan, and a woolen coat is 20,000 yuan. "In a women's clothing store that has been open for more than ten years, the price tag on the clothes scared her = a surprise. Her hometown is a county-level city in Hunan Province, where the average salesperson earns only 2,500 yuan a month.

This women's clothing store is a well-known "lady shop" in the county, and most of the people who come here to consume are not "ordinary people". Friends told her that every time the store is new, people rush to buy it, and there is only one piece of each style. In the end, my friend spent 3,800 yuan to buy the new Chinese top.

"The family wants to stay in their hometown, and the family is poor and goes to another country. This friend of hers meets everyone's imagination of a "county lady", her husband is the head of the real power department, she works in a state-owned enterprise, and her parents used to be county leaders. Although her salary is not high, she has relied on the accumulation of two generations of her family to live a solid life in the county.

In recent years, the rise in prices and consumption in the county has put pressure on many young people who have returned to their hometowns. Clothing stores, restaurants, casinos, and many places have even higher consumption levels than in first- and second-tier cities. And the ceiling of prices in the county is supported by the ladies.

However, He Yan also felt that the number of noble ladies was decreasing. Before she went to university, the county was among the top 5 in the province in terms of GDP due to its abundant coal resources. At that time, the county's brand was almost in sync with Changsha. 20 years ago, the first KFC was opened in the county, and some mid-to-high-end women's clothing brands such as Bo, Dayiyan, and Alena also opened stores in the county.

But with the gradual depletion of coal resources, these brands have gradually left the county. Nowadays, the most popular are cheap brands such as Yibohui and Aiyifu, "the unit price of a piece of clothing will not exceed 100 yuan".

In fact, the "noble ladies" are a minority after all, and the vast majority of young people in the county are still worried about their livelihoods. Some brands that were originally aimed at urban white-collar workers did not go so smoothly when they wanted to enter the sinking market ambitiously, such as Starbucks.

In April last year, Starbucks founder Schultz said when he came to China that he would open more than 10,000 stores in China, and as Starbucks gradually completes its layout in first- and second-tier cities, county towns will be their main market. The data also shows that as of June last year, Starbucks had opened 382 new stores in China, many of which were located in county and county-level cities.

However, in the view of Wang Long, a researcher at Jihai Data, the sinking of Starbucks is not complete, and there are two main paths for the expansion of chain brands, opening stores in new places and increasing the density of stores.

Jihai is an enterprise focusing on geographic big data services, and is committed to providing accurate and effective geographic big data intelligent decision-making services.

Top 100 counties, the main battlefield of the sinking market

For brands, the factor that determines whether or not they open a store is the local spending power. For example, L'Occitane, which is supported by county ladies, has a total of 250 stores in China, while stores in third-tier cities and below are mainly concentrated in Zhejiang and Jiangsu, and wealthy cities such as Lishui, Zhuji, Shangyu and Taizhou.

The same applies to Lululemon, where the official Douyin flagship store will be launched on January 12, 2024. In the past three months, many fans in the live broadcast room have come from third-tier cities that have not yet opened offline stores, such as Taizhou, Zhenjiang, Weifang, etc.

In November last year, lululemon CEO Calvin McDonald revealed at the earnings conference that the performance of Chinese stores continued to exceed expectations, and lululemon will continue to look for opportunities in first- to third-tier cities. The number of stores in China will increase from 148 today to 220 by 2026, and the expansion will include county-level cities such as Zhuji, Zhejiang, which ranks 12th among the top 100 counties in the country.

It's a basic common sense that small cities are not as good as big ones.

In 2022, the population of cities below the provincial capital decreased by 5.25 million, while the population of 36 municipalities directly under the central government, provincial capitals and cities with independent planning increased by 5.22 million.

The illusion of consumption upgrading in county seats, in fact, mainly comes from some super counties, whose per capita GDP has long surpassed that of Beijing, Shanghai and Guangzhou.

For example, Jiangyin, Kunshan and Zhangjiagang have higher GDP per capita than not only the provincial capital Nanjing, but even the capital Beijing. In addition, the place with the highest per capita savings in the country is not Beijing, Shanghai and Shenzhen, but Qingtian County, Zhejiang Province.

For example, Kunshan, which has dominated the top 100 counties for many years, has a GDP higher than that of Côte d'Ivoire, Uzbekistan, Croatia and other countries.

In addition to the top 100 counties, there are more than 1,900 counties in the country, and these places are obviously not enough to support the sales of several big brands.

Wang Long, a researcher at Jihai Data, told me that they have counted the stores of Starbucks, Haidilao, and KFC, and 90% of them are in developed areas such as Jiangsu, Zhejiang and Shanghai, mainly in the top 100 counties. In these counties, there are indeed some super "lady shops".

A fashion manager in Shanghai told me that she discovered many years ago that "in the Shanghai showroom, women's clothing designer brands such as Haizheng Wang mainly order buyers from small fourth- and fifth-tier cities in Jiangsu and Zhejiang, and the performance of these buyers is no worse than that of big cities." Despite being located in the county, these buyers can make millions of dollars in annual turnover.

A typical example is the heart of Yiwu, known as the county seat "SKP", with sales exceeding 3.5 billion in 2023.

The competition for the county seat is about supply chain capacity

I am reluctant to buy a shirt for thousands of dollars, but a few dollars of milk tea will not make young people feel shy in their pockets. According to a research report, the ready-made tea shop market in third-tier cities and below is the largest market segment from 2022 to 2027.

In fact, what is really "rolling" up in the county market is also those new drinks that focus on "consumption downgrading", such as Mixue Bingcheng, Shanghai Auntie, Ancient Tea, Tea Baidao, etc. Since 2024, thanks to their performance in the sinking market, these four milk tea brands have submitted prospectuses to the Hong Kong Stock Exchange, which is eye-catching.

Taking Mixue Bingcheng as an example, as the most typical representative of the Xiacheng market, its prospectus shows that as of September 30, 2023, they have entered 1,700 counties and 3,100 townships. Mixue Bingcheng bluntly stated in the prospectus that they have avoided the first- and second-tier cities with fierce competition in the mid-end and high-end, and instead focus on third-tier and below cities, where 57.7% of Mixue stores are located.

Shanghai Auntie mentioned that they aim to bring cost-effective healthy ready-made products to consumers all over China (especially in third-tier cities and below), and its light version launched in 2023 is specifically aimed at consumers in third-tier cities and below.

Gu Ming bluntly said that they are the only company that can frequently deliver short-term fresh fruits and fresh milk to stores in lower-tier cities, with 38% of their stores located in towns and villages far from urban centers.

He Yan remembers that when she was still studying, a cup of milk tea at the school gate did not exceed 5 yuan, and after Mixue Bingcheng came, the milk tea shop that had been open for many years disappeared. Nowadays, brands such as Chayan Yuese and Heytea have also begun to sink into the market, forming a "dimensionality reduction blow" to Mixue Bingcheng.

The entry of tea and joy tea is regarded by many people as a manifestation of the county's consumption upgrade, but things are not so simple.

According to He Yan, previously, her county seat was the world of Mixue Bingcheng, and every holiday, the two Mixue Bingcheng on the same street would be crowded with people. During the Spring Festival this year, Chayan Yuese opened its first store in this county, and many people abandoned the cheap milk tea brand. However, people soon found out that the queue in front of the Chayan Yuese Gate was too long, and on the days of the Spring Festival, they couldn't even wait in line for an hour.

"There was no expansion before, and this business strategy seemed to be a choice, but it was actually limited by capacity. Is it because it tastes good? Wang Long, a researcher at the Polar Sea Research Institute, analyzed to the author that he believes that it is difficult for Chayan Yuese to become the real opponent of Mixue Bingcheng.

In his opinion, Mixue Bingcheng's defeat of the husband-and-wife milk tea shop in the county is not a dimensionality reduction blow on the product side, but a dimensionality reduction blow on the supply chain. "Michelle Bingcheng, Luckin Coffee, Juewei Duck Neck, Zhengxin Chicken Steak, including KFC and pot rings, are essentially supply chain businesses."

Wang Long analyzed that in order to achieve the scale of 10,000 stores, the unit price of customers must be relatively low, and the mainstream price band is 10-20 yuan. The unit price of Mixue Bingcheng is about 8 yuan, the absolute duck neck and Zhengxin chicken steak are 15 yuan, and Luckin Coffee is also in this range, and the most expensive is KFC, which costs about 25 yuan. He believes that the reason why KFC is considered to be doing better is that it has a higher unit price at the same scale of 10,000 stores.