Recovery of consumer mkt seen accelerating

Indicators that the country's consumer market is beginning to recover are emerging, and one unlikely measure is the price of fried chicken. At a financial seminar on May 8, Wu Mianqing, CEO of BigOne Lab, said the so-called "KFC Index", which tracks average transaction prices at the fast-food chain across China, is showing signs of recovery nationwide.

Over the past two years, KFC's per-transaction spending has steadily declined, reflecting broader consumer caution: shoppers were purchasing more but paying less. That trend began to stabilize in the fourth quarter of 2025, and Wu sees potential for positive growth in 2026.

"If pricing trends at a foundational food and beverage leader shift, it is often an early signal of consumption recovery," he told the Shanghai Observer.

Macroeconomic data provide further support. Total retail sales of consumer goods in China rose in the first quarter by 2.4 percent year-on-year, accelerating by 0.7 percentage point when compared with that of the fourth quarter of 2025. Economists have debated a "downgrading" of Chinese consumption in recent years, yet the rebound in retail data has prompted a reassessment of that narrative.

Qin Shuo, a financial commentator, told the Shanghai Observer that the apparent softness is more structural than cyclical. While headline CPI growth has remained subdued, he said that consumption is not shrinking — its volume, diversity and complexity continue to expand. Shoppers are spending across a broad range of goods, from high-end imported items to local lifestyle brands.

"Looking at the market in terms of physical goods, there is no downgrade," Qin said. Micro-level indicators also point to recovery in high-end consumption. Wu said that international luxury brands have experienced strong growth in China since the second half of 2025. Warming capital markets and diversified sources of consumer confidence are fueling renewed spending.

Luxury brands are increasingly treating China as a global testing ground. In the third quarter of its fiscal year 2026, ending March 28, Tapestry Group, the parent of Coach, reported 30 percent growth across the Asia-Pacific, with China surging 55 percent year-on-year. The company's net sales rose to $1.92 billion, up 21 percent, while net income jumped 69 percent to $344 million.

China is now Tapestry's largest market outside the United States.

Last quarter, Coach added 2.4 million new customers worldwide, with over 35 percent in the Generation Z segment. The brand has opened more than 350 stores across 90 Chinese cities, spanning tier-1 to tier-4 markets, with plans to expand into another 200 cities.

In addition, Liu Gongrun, deputy director at the CEIBS Lujiazui International Institute of Finance, told the Shanghai Observer that traditional metrics overlook the rapid growth of service consumption. In cities like Shanghai, where services make up roughly 80 percent of GDP, residents are spending on immersive experiences, cross-border livestreaming and other high-engagement offerings. Younger consumers, Liu added, are increasingly driven by cultural resonance and experience rather than by purely purchasing products.

Qin said that the combination of local innovation and demographic shifts has created a new rhythm for Chinese consumption: diversified, rational and innovative.