Today, the National Bureau of Statistics released the macroeconomic "data package" for December. Overall, the retail market, online retail, and offline dining consumption all showed weak growth, with growth rates lingering in the low single digits. Notably, the penetration rate of online physical retail in the fourth quarter of 2024 declined year-on-year again (the first time this year), suggesting that the relative advantage of online channels seems to have (temporarily) disappeared.

1. Overall Market & Online Growth Remains at a Low Point

The overall retail market grew by 3.7% year-on-year in December, slightly improving from November's growth rate of 3%. However, as we previously mentioned, the November data was affected by the pre-purchase consumption during the Double Eleven shopping festival in October. When looking at the combined data for October and November, the retail market grew by 3.9% year-on-year, indicating that December's retail performance is still in a weak cycle.

Online physical retail (adjusted) grew by 3.8% year-on-year, and similarly, the combined growth for online physical retail in October and November was 3.3% year-on-year. It is evident that December's performance showed slight improvement compared to earlier months, but the growth rate has remained just slightly above 3% for three consecutive months, which is undoubtedly quite weak.

2. Online Retail Penetration Rate Declines Again

In the fourth quarter, online physical retail sales were approximately 4 trillion yuan, growing only 3.5% year-on-year. The overall retail market's growth rate has hovered around a low of about 2% to 5% throughout the year. In contrast, the growth rate of online retail has dropped from 11% at the beginning of 2024 to 6% in the second and third quarters, and further down to only 3.5% in the fourth quarter. It is clear that the trend of declining growth rates for online retail has persisted throughout 2024.

As mentioned above, the growth rate of the overall retail market has been relatively stable, indicating that the overall retail market did not drag down online sales. On the contrary, after experiencing 2023, the first year of the post-pandemic era, the penetration rate of online retail, which had negative growth throughout the year amid offline recovery, saw a return to growth in the first three quarters of 2024 (with an increase of about 1 percentage point year-on-year). However, by the fourth quarter, the penetration rate of online retail declined year-on-year again, albeit slightly (0.1 percentage point). The relative advantage of online channels seems to have (temporarily) disappeared again.

3. How are other channel situations?

Similar to the weak sales of goods, in service consumption, taking dining expenditure as an example, the growth rate in December dropped from 3%~4% in previous months to only 2.7%, the lowest for the entire year of 2024. From this indicator, the prosperity of offline dining consumption is even worse compared to goods consumption.

In terms of product categories, the largest single item, automotive retail (accounting for about 1/4 of the total retail sales above the limit), saw its sales growth rate drop significantly from over 10% in the previous two months to only 4.1% in December, possibly influenced by the earlier timing of this year's Spring Festival.

For other major categories, the growth rates of essential grain, oil, food, and daily necessities remained relatively stable. In discretionary items, clothing, cosmetics, and jewelry saw nearly zero growth or slight declines in December, still relatively weak.

Conversely, benefiting from national subsidies, the retail growth rates of home appliances and communication products remained high. Additionally, consumption of tobacco and alcohol showed a significant recovery in December as the year-end approached.

From the perspective of cumulative growth rates, categories that performed well throughout the year 2024 include essential food grains and oils, tobacco and alcohol for gifting and business scenarios, as well as home appliances, furniture, and communication equipment related to real estate and subsidies.

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December Social Retail Review: Are the advantages of online channels diminishing?