SHANGHAI, June 1 (Reuters) – Yang Zengdong, 40, a mother of two, is ready to take her family on a long-awaited outing to mark Shanghai’s grand reopening from the COVID-19 lockdown on Wednesday.

Her ambitions – to go to a mall, see what’s open and maybe buy a drink or some little toys for her young daughters – are modest, but even those simple pleasures have been impossible during the grueling two-month lockdown.

Unfortunately for retailers desperate for a quick and “vengeful” return from shoppers of the kind seen in 2020 when China experienced a “V” recovery from its initial battle with COVID-19, the excitement that is palpable in the streets of the newly bustling city are tempered by distrust of the future.

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Shanghai’s lockdown may be over, but China is sticking to its zero COVID elimination strategy, fueling concern in the city of 25 million that it could all happen again.

“A lot of my friends, people with families and kids, their idea is to buy a bigger fridge or some food – they’re not interested in buying unnecessary things right now,” said Yang, who works as a teacher.

The focus on necessities echoes remarks by e-commerce giant Alibaba Group (9988.HK) CEO Daniel Zhang last week.

“Across all of these different levels of consumers, demand for essential items has increased and there has been less price sensitivity. Whereas when it comes to non-essential purchases, there has been more price sensitivity” , Zhang told analysts, adding that consumers were also stocking up. prepare for future uncertainty.

Although Shanghai will inevitably see a rebound in retail, it will emerge from a low baseline, with retail spending in April falling 48.3% year-on-year. Read more

Buying is unlikely to be boosted by stimulus payments to consumers, as seen in other countries. China prefers to target such spending on infrastructure and businesses, rather than consumers who are inclined to save.

Jason Yu, managing director of market research firm Kantar Worldpanel for Greater China, predicts an initial recovery in spending at food and beverage outlets suitable for pickup and delivery, with coffee, bubble tea, cakes and other upcoming “pleasure-related categories” are falling sharply.

The beauty is also set to enjoy a return to public life, Yu said, adding that the upcoming “618” shopping festival – which is attended by all major Chinese e-commerce platforms and many big brands – could boost sales.

“There will be pent-up demand for the skincare and beauty categories, especially if high-end brands market more aggressively with discounts,” he said.

LUXURY DIVISION

As China’s largest and wealthiest city, Shanghai has long been a magnet for luxury retail and is home to 12% of luxury brand stores on the mainland.

The reopening of the high-end Plaza 66 shopping center last weekend saw queues snake past a Hermès store – an encouraging sight for luxury brand executives in Paris and Milan who are banking on getting back in shape Chinese consumers.

“Many stores offer incentives to keep shoppers coming back, including tripling the points they can earn in their loyalty programs,” said Amrita Banta, chief executive of luxury consultancy Agility Research and Strategy.

Still, she’s not betting on the status quo for luxury spending in Shanghai.

“I would expect the first few days of opening to see a lot of people, but it will also have the effect of keeping other people home who don’t want to risk being in busy areas,” she said.

Professor Yang said life in Shanghai remains tinged with a sense of risk.

“I’m not afraid of catching the virus, but I’m afraid of a positive test result and central quarantine,” she said.

“I think for most people it’s a time to enjoy the outdoors but also to protect themselves and their money. Now is not the time to pass and waste.

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Reporting by Casey Hall; Editing by Michael Perry

Our standards: The Thomson Reuters Trust Principles.

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