China's retail sector is entering a critical phase of transformation, with growth in 2026 expected to hinge less on foot traffic, channel expansion or price subsidies, and more on brands' ability to meet consumers' personal, emotional and experiential needs, according to a new report by world's leading consumer intelligence firm NielsenIQ.

In its report, "Guide to 2026: 10 Key Trends Defining the China Consumer and Retail Market," NielsenIQ said Chinese shoppers are increasingly buying products that feel "relevant to me", marking a decisive shift toward self-oriented, value-driven consumption.

"China's economy continued steady progress in 2025," said NielsenIQ China Managing Director Ryan Zhou, citing GDP growth of 5.2 percent year-on-year in the first three quarters and a 4 percent rise in retail sales of consumer goods from January to November.

"Powered by China's vast market scale and rapid pace of innovation, the retail sector has demonstrated resilience while unlocking enormous potential through continued creation and upgrading of consumer demand. As consumption motivations shift decisively toward the self, emotions and experiences are becoming new drivers of purchase decisions," he added.

NielsenIQ China Chief Customer Officer James Luo emphasized that over the next five years, China's consumer and retail market will truly enter the 'era of me'.

"For retail brands, real growth will depend on their ability to build long-term consumer connections. Looking toward 2026, the brands that can genuinely place the consumer's 'me' at the center — helping people love themselves better and continuously evolving — will be the ones that define and own the future of the consumer market," he said.

Data from the National Bureau of Statistics showed that China's retail market remained broadly stable in 2025, though growth varied sharply by channel. Retail sales excluding automobiles rose 4.6 percent year-on-year between January and November, while online retail grew 9.1 percent.

Emerging formats such as discount stores and membership warehouse clubs maintained double-digit growth, while lower-tier markets continued to outperform, with county- and township-level consumption accounting for 38.7 percent of national retail sales.

NielsenIQ data showed similar divergence across fast-moving consumer goods (FMCG) channels. As of September 2025, FMCG omnichannel sales rose 3.4 percent, with offline sales falling 5 percent and online sales surging 18.5 percent.

Content-driven e-commerce platforms such as Douyin, Kuaishou and Xiaohongshu grew 27 percent, becoming a major source of incremental demand, the report said.

In technology and durable goods, omnichannel sales rose 10.2 percent, supported by policy incentives and innovation, with consumers increasingly following an "online research, offline experience, online purchase" path.

Looking ahead, NielsenIQ identified lower-tier markets, Generation X consumers, overseas expansion and instant retail as key growth drivers.

Consumers aged 44 to 59 are expected to drive value-based consumption, favoring functional benefits, family relevance and mature brand positioning, the report said.

Chinese brands expanding overseas must move beyond simply exporting products and instead embed themselves locally, the report said, pointing to Southeast Asia for scale expansion and markets such as Japan, South Korea and Singapore for premium brand building.

Instant retail, meanwhile, aligns with consumers' growing preference for immediate fulfillment, shifting consumption from planned purchases to on-demand needs.

"In the next growth cycle, the winners will be those who engage more deeply in consumers' lives and resonate emotionally. Only companies that accurately seize consumer trends and boldly redefine their value propositions will prevail in this era of retail transformation," Zhou said.