On January 22, Chinese New Year’s Eve, the Nike and Adidas stores at the intersection of Xinhua First Road and Jiefang Road in Linyi City, Shandong Province, were particularly bustling. Some of the latest spring collections from these two well-known sports and leisure brands had just hit the shelves, attracting many locals looking to shop for new outfits for the New Year.
In this approximately 100-square-meter Nike store, the focus is mainly on casual footwear and apparel, with casual sneakers taking up over 30 square meters. The selection of shoes is quite comprehensive, though still dominated by casual styles, with athletic shoes playing a secondary role. “Our store mainly caters to casual wear. Customers often come here for casual clothes and shoes because they’re suitable for most everyday occasions. Plus, since it’s an internationally renowned brand, wearing them also gives a sense of class and status,” revealed Xiao Li, a store clerk. Although the prices of athletic footwear and apparel are not much different from casual items, most customers are reluctant to buy them because sportswear is suitable for fewer occasions and limited time.
In the shoe section, the reporter observed that around twenty types of casual sneakers were mostly priced between 500 and 800 yuan, with only a very few exceeding 1,000 yuan.
Not far away, the Adidas store had a similar focus, also emphasizing casual wear. “In smaller places, fashion trends are often followed by the crowd. The market for athletic wear isn’t very big,” an Adidas clerk told the reporter.
Tong Hua (a pseudonym), who works in Shanghai, bought a pair of Nike “couple jackets”—casual jackets—for his parents, and selected a pair of stylish outdoor sneakers for his young nephew at the Adidas store, spending a total of over 1,800 yuan. Last Spring Festival, Tong Hua gave his parents a pair of Adidas couple hiking shoes.
In Tong Hua’s view, Linyi, a third-tier city located in southeastern Shandong, has seen its residents developing a stronger brand consciousness when it comes to clothing and consumption. Tong Hua’s father is the branch manager of a bank in a county under Linyi’s jurisdiction. Aside from wearing a uniform during work hours, he prefers casual attire at other times.
Xiao Li, who has worked at the Nike store at the intersection of Xinhua First Road and Jiefang Road for two years, observed through experience that many of her customers are employed in government departments or the banking sector, and some private business owners also frequently visit this flagship store in the busy area. “To be honest, Nike’s pricing is still a bit high for ordinary working-class people, especially since income is limited in smaller cities,” Xiao Li said.
Tong Hua still remembers that when he was admitted to university in 1997, his parents took him to the Li-Ning store in Linyi City to buy T-shirts and sneakers. But by the time he started working and bought gifts for his parents, he opted for Nike and Adidas. When he discovered that Linyi also had Nike and Adidas stores, he stopped shopping for such items in Shanghai altogether.
In this third-tier city with a population of just over 2 million, where the per capita annual disposable income is less than 20,000 yuan, the pricing of Nike and Adidas is high enough to deter many—but being able to afford an international premium brand at such price points in a smaller city is also one of the reasons these brands remain popular. This is Tong Hua’s observation.
Xiao Li told the reporter that in 2008, there were only six Nike stores in Linyi City, but by 2011, the city had at least 15 (a conservative estimate), with several even owned by the same proprietor.
“Nowadays, with television and the internet so developed, regional differences in consumption are getting smaller. What’s available in Shanghai is also available in smaller cities. The purchasing power in smaller places is also rising rapidly, which naturally drives changes in consumer attitudes—people are more willing to try new things, pursue higher quality, and develop stronger brand awareness. Unless a brand isn’t available, (well-known brands) will definitely attract a fair number of customers as long as they open stores in Linyi,” Tong Hua summarized the consumption characteristics of third-tier cities based on his own observations.
Nike and Adidas may have precisely captured the shifting consumption trends in China’s vast third- and fourth-tier small and medium-sized cities, with an increasing number of their stores expanding into these areas. In 2010, Kasper Rorsted, who had just taken office as the Greater China Managing Director of Adidas, announced that by 2015, Adidas would open 2,500 new stores, primarily in smaller cities, bringing the total number of cities covered by the brand to 1,400.