Annual review: Eight key words for the consumer market in 2024

As 2024 is coming to an end, the consumer market has experienced a complex and changeable year. Faced with increasing operating pressure and the continued decline of the market, brands are looking for new growth points amid opportunities and challenges. The Jingzhe Research Institute has summarized eight key words for the consumer market in 2024, aiming to reveal the future development trend of the industry.

Looking back at the year 2024 which is about to pass, brands in the consumer market have particularly complicated feelings.

This year, operating pressure continued to rise and the consumer market continued to decline. Behind the coexistence of opportunities and challenges, more former leaders have retired from the table, and the once thriving new track is facing an industry reshuffle.

What is surprising is that while consumers adhere to rational consumption concepts, they are beginning to seek more satisfaction beyond functions, thus creating new opportunities for the consumer market.

As the end of the year approaches, Jingzhe Research Institute attempts to summarize the eight key words of the consumer market in 2024, and work with participants and witnesses of the consumer market to see the future development trends of the industry.

1. Disenchantment with consumption

In 2024, facing consumers who put on the "armor" of rational consumption, various price "assassins" have suffered Waterloo one after another. The collapse of the former Internet celebrity ice cream Zhong Xuegao is a representative case.

However, the ice is not formed in a day. As early as the summer of 2022, Zhong Xuegao caused a heated discussion on the Internet because it was placed at 31 degrees room temperature for an hour without melting. Many netizens watched the live broadcast of "burning Zhong Xuegao" online. At that time, Zhong Xuegao responded urgently, saying that because its products are high-end products, the solid content is as high as 40% or more, and no additional drinking water is added, so the phenomenon of not melting after burning occurs.

*Image source: Zhong Xuegao official Weibo

However, when the seeds of doubt had been planted, and the seemingly flawless crisis public relations, doubts about the product did not subside. Especially when professional counterfeiter Wang Hai concluded through experimental demonstration that "Zhong Xuegao's Velvet Cocoa Ice Cream, which costs only 1.32 yuan per stick, was sold at 18 yuan per stick," it dealt a fatal blow to the "Ice Cream Assassin."

In the first half of this year, the selling price of Zhong Xue Gao's products has dropped significantly. The price of its near-expiry products has dropped to 2.5 yuan per stick, which has shrunk by more than 90% compared with the astonishing price of 60 yuan per stick at its peak.

The collective downfall of the "consumer assassins" shows that consumers who respect rational consumption concepts have gradually begun to realize the essence of consumption and have also discovered that some so-called "high-end products" in the past were actually given too much symbolic meaning that exceeded their actual use value.

For example, brand premiums that can highlight consumers’ identity, status and taste, or various Internet celebrity products that have “social value” and become popular in a short period of time. When consumers are no longer coerced by consumerism and have to carefully calculate between limited consumption budgets and necessary consumption needs, the consumer market has entered the stage of consumer disenchantment.

For brands, after the disenchantment of consumption, the various illusory and excessive symbolic meanings attached to products through marketing means are becoming increasingly difficult to support the selling price of products, while also placing higher demands on product polishing.

2. Substitution Economy

In the past year, "substitute" has almost become the most common hot word in the entire consumer field.

In the cosmetics market, domestic brands have launched products with similar effects to those of international brands, but the price is sometimes only half of that of the big brands. With the same experience and cheaper prices, domestic brands are ushering in their own era. Similar scenarios of "big brands replacing the big brands" are also being repeated in more consumer fields.

For example, in the ready-made beverage market, traditional coffee chain brands such as Starbucks encountered a price war jointly launched by Luckin Coffee and Kudi, and then the "war" spread to the new tea beverage market. Mixue Ice City, which has been planning to enter the sinking market for many years, is quite popular among consumers because its many products are priced as low as single digits.

Another typical market that has seen an explosion of the "substitute economy" is the tourism sector.

In the past two years, with the development of seeding platforms such as Xiaohongshu, content sharing travel experiences has successfully created a batch of Internet celebrity travel destinations, including the domestic niche islands dubbed "Little Madai" and the atypical attractions such as Xiamen Jimei School Village, known as "Little Kamakura", which have attracted a large number of tourists to check in because of their similar scenery and small flow of people. During this year's National Day, niche destinations such as Mangshi, Yunnan and Tengger, Inner Mongolia, have also transformed themselves into "Southeast Asian substitutes" and "Sahara substitutes."

Data shows that from January 1 to mid-October this year, the number of searches related to "alternative travel" on the Mafengwo platform increased by 33.7% compared with the same period last year, and the amount of content increased by 134%. More than 2 million users shared and exchanged their "alternative travel" experiences. As the popularity of related topics continues to rise, "alternative travel" has become a major trend in the tourism field.

The prevalence of the "substitution economy" reflects the trend of rational consumption, where consumers want to meet their actual needs as much as possible while reducing their spending. For example, in "substitution tourism", consumers choose niche destinations not only because they are cheaper, but also because the destinations themselves can provide a travel experience close to the "substitute destinations". Even for consumers who are tired of the crowded scenic spots, niche destinations can provide a better travel experience.

Therefore, the emergence of the "substitution economy" is not because of the decline in spending budgets, so consumers self-hypnotize themselves to "what kind of bicycle do you want" and choose lower-grade products or services. Instead, it is to find a balance between price and consumer experience on the basis of solving daily needs. This is also the growth point that brands need to strive to capture in the future consumer market.

3. Emotional Value

Although consumers have to be more careful with their budgets due to their "thinner" wallets, they still have higher expectations for consumption experience. In particular, the growing demand for emotional value has brought about many hot phenomena in the consumer market.

During this year's National Day Golden Week, the Jellycat pop-up store in Shanghai Jing'an Kerry Center became popular on social networks with its unique "play house" packaging service. Netizens commented that Jellycat's packaging service made people feel full of emotional value, "a little childish for primary school students, but just right for adults."

*Image source: Jellycat London official Weibo

As a result, young people rushed to Jellycat to check in, and filmed short videos and posted them online, further promoting the popularity of the brand. This led to long queues in front of the Jellycat pop-up store, and even attracted scalpers.

In fact, Jellycat officially entered the Chinese market as early as 2013, but it was not until this year that it really entered a stage of explosive growth. This also reflects that the popularity of Jellycat has a deep relationship with people's demand for emotional value in the current consumer market.

From a product perspective, Jellycat's dolls have cute images and soft materials, but this cannot be used as a core value to impress consumers to buy compared with other products in the same industry. However, the exclusive character design and story background customized by the Jellycat brand for each doll are the differentiated advantages of its products over other competitors.

In particular, Jellycat's "playing house" offline experience service not only makes the emotional value concrete, but also creates additional social value for the purchase. As a result, each doll goes beyond the scope of a simple commodity, impresses consumers, and then achieves widespread popularity through social networks.

*Image source: Jellycat London official Weibo

In addition to Jellycat, other similar products that provide emotional value include the blessing bracelets that are popular among young people, as well as aromatherapy, singing bowls, meditation, etc. that help release emotions to achieve decompression effects. This has even led to an advanced version of travel repair in the wine and travel industry. And this type of goods or services has a more common name - healing economy.

According to the Global Health Research Report, the global market size of the mind, body and soul industry related to the healing economy will reach 7 trillion US dollars in 2025. In China, the market size of the healing economy is expected to reach 10.4 billion in 2025. Whether it is to help consumers relieve stress or to meet their psychological needs emotionally, emotional value will bring more imagination to the growth of the consumer market.

4. Scenario Consumption

After 2022, as travel restrictions were lifted, people returned to various offline business scenarios with great enthusiasm. However, after a brief emotional release, many urban business districts and cultural and tourist attractions showed a clear downward trend in passenger flow.

The reason for this phenomenon is that, on the one hand, household consumption expenditure has decreased, resulting in a decrease in the frequency of people going out to consume. On the other hand, offline business has lost its appeal to consumers after being suspended intermittently for two years. Therefore, many offline business forms have started a round of innovation in order to regain customer flow. Among them, cities and scenic spots have developed night tour projects, which have become a new form that has rapidly emerged in the cultural tourism market.

The emergence of night tours benefited from the policy guidance of local governments on promoting the prosperity of the night economy after 2019. At that time, many cities relaxed the management of the street stall economy. After nightfall every day, various street stalls began to appear on the streets, forming the basic form of "urban night economy".

On the basis of the street stall economy, some cities and scenic spots have also begun to create night tour projects. For example, on the short video platform, the Tang Dynasty City that Never Sleeps, which was popularized by "Sister Doll" and "Fangmou Duduan Combination", has various Tang Dynasty-style dance and music performances, such as the reappearance of the Colorful Feather Dance, where actors dressed in gorgeous Tang Dynasty costumes danced on the quaint streets. There are also folk artists showing traditional handicrafts such as paper cutting and sugar painting, and tourists can watch the production process on site and even participate in the experience.

Although some people later believed that the Tang Dynasty City That Never Sleeps brought very little profit to its cultural tourism company, thus questioning the night economy, it is undeniable that the "Tang Dynasty City That Never Sleeps" has become a cultural tourism business card for Xi'an, attracting countless foreign tourists to check in. Therefore, from a macro perspective, the "Tang Dynasty City That Never Sleeps" has successfully created a very attractive scene, bringing passenger flow back offline, and how to increase profits requires further discussion from the operational level.

*Image source: Xi'an Tang Dynasty City That Never Sleeps Official Weibo

The essence of scene consumption is to attract consumers by creating unique scenes and offline experiences, and then realize sales conversion through products and services. This logic is partly due to consumers' demand for emotional value, and partly because immersive experience promotes the generation of consumption motivation.

Similar forms can be found in commercial properties across the country, including intangible cultural heritage markets created through traditional performances such as "iron flower making" and "fire kettle", local restaurants that use fruits and vegetables in winnowing baskets and bamboo baskets as restaurant decorations, and shopping districts and pet restaurants that put up "pet-friendly" signs to attract pet owners.

5. Integration of the young and the old

If brands want to find new growth points in the current market environment, it ultimately comes down to finding the right group of people who generate consumer behavior.

In May this year, after conducting a survey of nearly 12,000 Chinese consumers, international consulting firm McKinsey released the five major consumption trends of China's five main consumer groups in 2024. In the analysis of consumer groups, three groups of people were mentioned in the "optimistic consumer group": Generation Z, wealthy seniors in first-tier cities, and wealthy middle-aged and elderly people in third-tier cities.

Young people have always been one of the core user groups in the consumer market. They have a certain perception of the economic environment, but because they have not yet formed a family, they have less pressure in life and generally maintain an optimistic attitude, so they are more willing to consume, especially in catering, pet products, cultural entertainment, etc. They pursue more social interaction, emotional companionship, spiritual enjoyment and health.

Similar to the living conditions of young people, wealthy seniors in first-tier cities no longer have to work hard. In terms of economy, they not only have stable pensions, but also have accumulated a certain amount of personal savings. Therefore, they have high disposable income and have positive consumption expectations for improving the quality of life, especially in terms of home appliances, tobacco, alcohol, sugar, tea, consumer electronics and traveling. They maintain a great willingness to consume.

Compared with the attention that Generation Z and the elderly in first-tier cities have received in the consumer market, the wealthy middle-aged and elderly groups in third-tier cities have rarely been mentioned before. The main reason is that the market environment in third-tier cities does not provide more consumption opportunities, thus limiting the consumption expenditure of the wealthy middle-aged and elderly.

In addition, in the daily living expenses of the middle-aged and elderly groups, the budget will be used more to cover the daily related expenses of their children and the third generation of the family.

But this does not mean that the middle-aged and elderly groups cannot make considerable "contributions" to the consumer market.

Especially after the successful rise of e-commerce platforms such as Pinduoduo that target the sinking market, wealthy middle-aged and elderly people in third-tier cities have been exposed to more commodities through online shopping platforms. Whether it is rice, flour, grain, oil, fruits and vegetables, or daily necessities such as household cleaning and personal care, they have broken the restrictions of regional economic development on the consumer market and have the opportunity to reach the wealthy middle-aged and elderly groups.

As the original driving force of the consumer market growth, Generation Z, the "silver economy" and wealthy middle-aged and elderly people have become the core groups of consumer growth. On social media, the elderly are becoming more and more fashionable and starting to experience all kinds of new products. Young people fall in love with "old things" and learn about health preservation and consider retirement in advance. The middle-aged and elderly people are starting their online shopping life while experiencing the novel entertainment experience brought by short videos and live broadcasts.

It can be foreseen that "integration of the young and the old" is the source of growth for the consumer market, and will also bring new vitality to related industries such as elderly care, health preservation, entertainment, cultural tourism, etc. in the future.

6. Channel sinking

When rational consumption concepts become the main theme of the consumer market, the intensified competition in the stock market has become an inevitable operating pressure. However, in the face of the market trend that consumers are becoming more and more rational, in addition to trying to attract the attention of existing consumers, finding incremental markets through channel changes is also a relatively reasonable solution.

In recent years, milk tea, coffee and membership-based supermarkets have been continuously expanding their stores, and most of the new stores are located in third- and fourth-tier cities. Especially when traditional supermarkets such as Yonghui and Carrefour are in trouble, Sam's Club, which is positioned more high-end, is constantly expanding its store scale.

According to media reports, by November 2024, Sam's Club will have more than 50 stores in the Chinese market, most of which are concentrated in first-tier cities and economically developed regions such as the Yangtze River Delta and the Pearl River Delta. On this basis, Sam's Club has been testing the waters for expansion in second-, third- and fourth-tier markets in recent years. According to the previously announced expansion plan, in addition to the already opened stores in Dongguan and Wuhan, Sam's Club will also open new stores in more non-first-tier cities such as Hefei, Chengdu, Shaoxing, Jinjiang, Wenzhou and Jiaxing in the next few years.

It should be pointed out that Sam's counter-cyclical growth also reflects the fact that channel sinking is not simply a low-price competition. On the contrary, there is also the possibility of consumption upgrading while the channel sinks.

Generally speaking, people understand the sinking market as a consumer group with lower disposable income and willingness to consume. However, everyone ignores the lag in channel construction. When consumers in first-tier cities are pushed to the position of consumption upgrade by Hema and Sam's Club, there are still many consumer groups in third- and fourth-tier cities, counties and towns that have not experienced it and have a large base.

They may be the second generation of wealthy people in county towns who have no worries about food and clothing and are "passively relying on their parents", or they may be "small town ladies". They are also potential users whose consumption needs have not been fully developed.

So when Sam's Club didn't open in the county, "small town ladies" would buy on its behalf. In Lululemon's live broadcast room, many fans from third- and fourth-tier cities also placed orders. In the home appliance market, smart refrigerators, washing machines and other smart home appliances are also entering the sinking market households with the help of policies such as "home appliances going to the countryside" and "old for new", seizing the dividends of consumption upgrades.

In short, the large-scale expansion of the sinking market is not only to spread the cost through economies of scale, but more importantly to reach potential consumer groups such as "small town ladies", tap into unmet consumer upgrade needs, and bring about certain new growth while creating a new battlefield.

7. Upward Dimension Competition

For most consumer brands struggling in the stock competition, changes in the external market environment mean intensified competition within the industry. In order to compete for consumers' attention and recover the trend of declining order volume, it is difficult for brands to avoid joining the price war.

However, when the external market environment deteriorates, upgrading competition is the effective way to avoid falling into the vicious cycle of price wars. In 2024, many brands upgraded from single products and prices to IP operations, functional appeals and business scope.

Jingzhe Research Institute mentioned in the article "Chinese Health Water, a New Myth in the Sugar-Free Universe?" that more and more "Chinese Health Water" players are emerging in the fast-moving consumer beverage market. Among them are Yuanqi Forest, which opened the door to the "sugar-free sparkling water" market, as well as traditional fast-moving consumer goods companies such as Wahaha and Master Kong.

The reason why consumers pay for "Chinese health water" is not only because of the continuous awakening of "health awareness", but also because consumers' functional needs for products are constantly upgrading. For example, in the "Chinese health water" market, there are red bean and barley water, red dates and wolfberry water, longan water, mung bean water, tangerine peel water, etc., which are popular products with different functions.

In addition to product upgrades, horizontal expansion of business scope has also become a major means of upgrading competition in the coffee and new tea beverage sectors.

According to the Jingzhe Research Institute, in the past two years, new tea brands including Shanghai Auntie, Cha Yan Yue Se, Heytea, and Cha Baidao have all opened chain coffee brands. The new tea brands cross over to coffee, essentially because of the serious product homogeneity. In addition to daily drinking, consumers buy coffee in scenes closely related to work, study, breakfast, afternoon tea and other life scenes. Therefore, the coffee business can help new tea brands integrate more fully into daily consumption scenes, provide consumers with more comprehensive product choices, and further expand the consumer market.

More importantly, industry data shows that the scale of China's coffee market is expected to reach 217.1 billion yuan by 2025 and is expected to reach 1390.8 billion yuan in 2029, with broad market prospects. The coffee category and new tea drinks have very similar business logic and a large number of overlapping industry resources in terms of supply chain management, store operations, and marketing promotion.

Therefore, under the premise of controllable risks and high feasibility, upgrading the competition by expanding business categories will undoubtedly provide new tea beverage brands with more possibilities in the existing industry competition environment.

8. Precision Conversion

The biggest challenge facing many brands today is that growth is hindered and profits are falling. And because of the continuous increase in supply chain costs and the continuous decline in product sales, the extremely compressed profits have left many brands struggling on the edge of losses. Some brands even voluntarily give up profits and use low prices to exchange for market share in order to maintain operations. However, there are still growth opportunities in some areas, especially for high-order products.

Jingzhe Research Institute has introduced in the previous article "In the Fur Live Broadcast Room, We Can See the "Confidence" of Women's Clothing E-commerce" that fur garments with four-digit and five-digit prices are rapidly rising in live broadcast e-commerce, and some brands have achieved a new record of sales exceeding 100 million yuan in a single live broadcast. The reason why the fur live broadcast room can explode quickly is accurate conversion.

Nowadays, short videos and live broadcasts have become one of the main ways for people to obtain information and relax. The number of users active on content platforms such as Douyin every day is in the billions. Among the huge content users, there are naturally potential consumers of various consumer brands. Therefore, brands can fully use short videos and live broadcasts to expand traffic and reach more potential target consumers.

Moreover, through the real-time communication mechanism in the live broadcast scene, while reaching potential consumers, brands can also continuously screen users by combining product pricing and content operations, and even try to convert them on the spot. Therefore, although the live broadcast data of many fur live broadcast rooms are not as high as those of common live broadcast rooms with goods, as long as they capture accurate users and achieve transactions, their operating efficiency is higher.

It is worth mentioning that live streaming is not the only conversion channel for content platforms.

Since the content scene and the e-commerce scene can be seamlessly connected, when users are attracted by native content and want to learn about a certain type of product in the search scene, they can obtain information content and product information in the search results at the same time, and can also jump to the mall to purchase with one click. This seamless jump path is also the key to accurate conversion.

From the perspective of consumers, they may have passively received certain content information at first, but because the content triggered their interest and led to active learning, they were motivated to consume. In addition, when passers-by are successfully converted into "loyal fans" by the live broadcast room, they may form stable repurchases based on their recognition of the products and merchant services. This is also an effective way to improve operating efficiency for brands that are overwhelmed by costs and profits.

In fact, the essence of accurate conversion is to make rational use of business channels, quickly find target users, and then achieve rapid conversion and continuous sales through high-quality products and services. Although for some brands that are trying live e-commerce from scratch, new channels also face new risks, but compared to falling into the vortex of price wars, it is obviously more scientific and positive to rely on platform resources and their own capabilities to find competitive advantages in operating efficiency.

Summarize

Looking back at the consumer market in 2024, increasingly cautious consumers will undoubtedly pose new challenges to brands. However, the more difficult the situation, the more brands should stay sober and find opportunities in challenges.

As the saying goes, everything has two sides. It is true that consumers have to live within their means, but while budgeting carefully, consumers still expect their needs to be met and have not lowered their requirements for products and consumption experience.

In view of this, brands need to further calm down and observe the market, narrow the distance between themselves and consumers, and understand their real needs and expectations of brands. Then, when other competitors are busy "reducing costs and increasing efficiency", they can reach users with reasonable prices and appropriate channels, grasp certain needs, and achieve certain growth.

As for tomorrow, perhaps brands no longer expect a new round of explosion, but there are still many subtle business opportunities in the current environment that have not been noticed. Facing the unknown 2025, brands should not only respond positively, but also firmly believe that as long as they don't leave the table, there is still a chance.

Author | Bai Lu This article is written by the operator author [Jingzhe Research Institute], WeChat public account: [Jingzhe Research Institute], original/authorized to be published in the operator, and reproduction is prohibited without permission.

The title image is from Unsplash, based on the CC0 protocol.