China is poised to become the world’s top retail market in 2019, displacing the U.S. According to a new report from eMarketer, China’s retail sales this year will surpass that of the U.S. by more than $100 billion.
This year, China’s total retail sales will grow 7.5 percent to reach $5.636 trillion. For comparison, U.S. retail sales will grow 3.3 percent to reach $5.529 trillion. Growth rates are slowing for both countries, but China’s growth rate will exceed that of the U.S. through 2022.
“In recent years, consumers in China have experienced rising incomes, catapulting millions into the new middle class,” said Monica Peart, senior forecasting director at eMarketer. “The result has been marked rise in purchasing power and average spending per person.”
E-commerce is a major driver of China’s retail economy, with sales growing more than 30 percent in 2019 to reach $1.989 trillion. That means 35.3 percent of China’s retail sales occur online, by far the highest rate in the world. The U.S. lags far behind, with e-commerce on track to represent 10.9 percent of its retail sales. China surpassed the U.S. in ecommerce sales in 2013.
By the end of this year, China will have 55.8 percent of all online retail sales globally, with that figure expected to exceed 63 percent by 2022. The U.S.’s share of the global e-commerce market is expected to drop to 15 percent by 2022.
Alibaba will lead e-commerce sales in China with a 53.3 percent share. Its share has been steadily declining for the past several years, as smaller players chip away at the ecommerce giant’s dominance. In particular, social commerce platform Pinduoduo has seen triple-digit growth since 2016, although its share remains small.
“Relative newcomers and multichannel retailers continue to take share from giants Alibaba and JD.com,” Peart said. “The mature players set their sights on further international expansion. Smaller local players are finding their niche in the Chinese ecommerce market by integrating WeChat and using online-to-offline data to better target consumers.”