Retailers guarded over New Year expansion plans

Most retailers in China have a conservative attitude towards store expansion in the coming 12 months, according to a report released by UBS Investment Research on Tuesday.

About 94 percent of those monitored had a moderate attitude as to expansion, higher than the 85 percent in 2015 and the 72 percent in 2014.

Of all surveyed stores, 67 percent said they have plans to expand by less than 10 percent in 2016. Only 6 percent said stores will be expanded by 10 to 20 percent in the following 12 months.

The ambitious plans mostly come from department stores which set their plans five years in advance. Even if they do open more branches in 2016, they will find it extremely hard to attract the right brands to come in, said Spencer Leung, analyst specializing in consumer goods study of the Chinese mainland and Hong Kong.

Some 22 percent of retailers said that they will close some stores this year.

Sportswear, clothing and textiles will possibly see their distribution channels' efficiency enhanced in 2016, which will help increase the listed companies share prices. But industries including shoes, department stores, supermarkets, skincare and cosmetics will see their distribution channels' efficiency decline.

Leung also predicted that 2016 will witness the end of the copycat era. Only companies which spend enough on innovation and come up with new products will achieve success. Low-priced and over-designed products will not flourish in the market.

"As Chinese consumers travel overseas more frequently, they will get knowledge of products on a global perspective. What's more, comments on products can be easily found on the Internet. Consumers can easily find better quality products," he said.

"Sales might not work anymore. It is not the question of pricing, but rather the quality".