Summary of the Key Points in Plain Language
This article uses the latest official consumption data from the first half of 2026 to reveal the significant changes happening in the domestic consumer market. The old notion that only buying large items like household appliances and cars constituted spending has completely fallen apart. Nowadays, the growth rate of intangible services such as dining out, beauty treatments, and travel is five times that of physical goods. Consumers no longer buy into the long-term promises made by businesses; instead, they are willing to spend money on experiences that bring them immediate joy and meet their needs. The rules of the market have completely changed, and whether you are running a business, building a brand, or just looking for new opportunities, you must first understand these new dynamics.
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Detailed Explanation of the Key Points
1. The most obvious shift: The focus of consumption has moved from buying large items to experiencing products
In the past, when the statistics bureau released consumption data, it would only provide a general figure for total retail sales. For the first time in 2026, “service consumption” was calculated separately, revealing a stark difference: service consumption grew by 5.3% in the first half of the year, while physical goods consumption only increased by 1.1%, a difference of five times. In other words, people's priorities for spending have changed significantly. Previously, people would save for months to buy a new phone or household appliance or save up to buy a car, but now there is a general decline in spending on large items. Instead, there has been a surge in spending on smaller, more immediate expenses such as groceries, cosmetics, and dining out. It’s not that people don’t have money to spend; rather, they are more cautious about spending large amounts on long-term items and prefer to enjoy immediate pleasures—like a good meal on the weekend, a beauty treatment, or a short trip. Although consumption remains the main driver of GDP growth, the market structure is no longer dominated by large-item purchases; a new era of consumption, where “goods and services each account for half,” has arrived.
2. The most surprising reversal: The era of online dominating offline sales has ended
Over the past decade, the beauty industry has seen online platforms like live streaming and social media platforms like REDnote significantly impacting physical stores. Everyone thought that offline stores would eventually be replaced by online sales. However, the data for the first quarter of 2026 showed the opposite: overall beauty industry growth was 7.9%, with online sales growing by 5.5% and offline sales by 11.8%, the first time in five years that offline sales outperformed online sales. This isn’t because online sales have declined; rather, it’s because the intensity of online competition has become too much for consumers. Live streaming often shows products with exaggerated effects that don’t match reality, and consumers are tired of being deceived by filters. Now, consumers’ needs are much more practical—they want to test products before making a purchase. Brands are turning back to physical stores to provide hands-on experiences. It’s not that offline stores have defeated online ones; rather, the two channels are no longer competing for the same market share. Online platforms focus on recommending products and comparing prices, while physical stores offer tangible experiences, allowing consumers to make more informed decisions.
3. The most valuable new asset: Emotional value is no longer just a gimmick; it’s a real selling point
In the past few years, the skincare industry has been obsessed with specific ingredients like retinol, niacinamide, and hyaluronic acid, with brands claiming miraculous effects after three months of use. However, consumers are now asking for tangible results. The decision-making cycle for buying skincare products has lengthened, and there is less hoarding. Online skincare sales actually decreased by 7.7%, while makeup sales increased by 20.1% and perfume sales by 12.4%, and baby and childcare products by 19.2%. These categories offer immediate feedback—lipstick makes you look whiter immediately, and perfume makes you feel happier right away. In an uncertain environment, consumers don’t want to buy into vague long-term promises; they want immediate solutions to their problems or improvements in their mood. Domestic beauty brands are now competing with international ones in the mid-to-high-end market, with domestic brands accounting for 57% of the market share. In the first quarter, the export growth of cosmetics was nearly 20%. Domestic brands are no longer just imitating foreign ones; they are earning revenue from all over the world.
4. The new, harsh reality of competition: “Cost-effectiveness” is no longer enough; “value for money” is the key
The old strategy of offering the lowest prices no longer works. The food industry is particularly competitive, with over 14.5 million restaurants in the country, and the number of new stores opened in the first half of the year decreased by 17%. To survive, businesses must innovate. For example, Haidilao has opened snack stores, and Cha Yan Yue Se sells related snacks and delivers meals to customers’ homes. The food industry is moving towards providing comprehensive lifestyle solutions. In the same way, the cosmetics industry has seen a shift from focusing on price to focusing on quality and meeting specific consumer needs. Small, niche markets can be highly profitable.
5. A message for ordinary people: Don’t focus on big trends; small, targeted markets can offer big opportunities
There are no easy profits in the current consumer market. Large industries like cars and household appliances are growing slowly, but many niche markets are growing by 5% or more. Whether you want to start a business or find a new career direction, don’t try to compete in broad, general markets. You don’t need to create a beauty brand that targets everyone; you can make a profit by offering specialized skincare services for sensitive skin. You don’t need to open a popular restaurant; you can cater to the elderly in your community with nutritious meals. China’s large consumer market is still valuable, but the old strategies of relying on information asymmetry or low prices no longer work. By focusing on the real needs of a specific group of people, even in a small niche, you can still reap benefits.