How to connect offline to China's Gen Z and Alpha?

The Chinese retail space changes at lightning speed, from flagship designs to e-commerce or livestreaming. Both cultural and technological shifts can be fast, furious and overwhelming for brands trying to stay ahead. Despite the focus on the Gen Z and millennials driving Chinese luxury retail, Generation Alpha is also emerging as force to be reckoned with in commercial life, with habits and consumption patterns that will define the future of retail. Young Chinese consumers are finding new consumer interests away from blind boxes and claw machines: ‘Guzi’ (谷子) stores. ‘Guzi’, derived from the phonetic English ‘Goods’, describes merchandise featuring popular ACG (animation, comics, and games) characters, including badges, standees, and posters. Similar to the popularity of an IP like Jellycat, characters from Crayon Shin-chan, Chiikawa, March Monster, and Tempted Love are making their presence known through dedicated ‘Guzi’ shops, subtly reshaping China’s retail landscape. ‘Guzi’ repopulating offline spaces iResearch reports that China’s ACG industry grew by 27.6% percent in 2023, reaching a market size of $30.9 billion (221.9 billion RMB). ACG culture is starting to sweep major cities Beijing, Tianjin, Shanghai, Wenzhou, and Jinan, transforming commercial districts into cultural hubs where fans gather to celebrate their favorite characters. In Jinan, eight specialty stores have quietly sprung up in major shopping areas, with outlets reporting daily sales exceeding 10,000 RMB ($1370). The rapid rise of IP-based marketing is also transforming malls, even mid-high end ones, into cultural consumption spaces, with young people finding a sense of belonging and emotional connection through their purchases. Queues of fans clutch plushies, bags of metal badges and other merchandise as they eagerly wait their turn to “eat Guzi” (吃谷), a term coined to describe buying ACG goods. For fans, ‘Guzi’ is more than materialistic; it’s an experience resonating on a deeper, emotional level. For Gen Alpha, offline ‘Guzi’is “an emotional feast” ‘Guzi’ economy is largely being fueled by Gen Z and Gen Alpha consumers, allowing young consumers to express their passion for specific cultures and characters through purchases. And amid traditional retail’s decline, the pivot for shopping centers to ACG communities is also carving out spaces where fans feel like they truly belong. Li Baijia is a 19-year old college student who has been an ACG fan since middle school; prior to 2022, most of her ‘Guzi’ purchases were online, but as pop-ups and stores spread across Wenzhou, her hobby moved offline. “Shopping offline is like an emotional feast,” says Li. The shift from online to offline has transformed ‘eating Guzi’ into a cultural trend: in-person shopping experiences add layers of community and connection that online can’t offer, with its social aspects turning niche cultures into shared experiences, as fans gather at stores to admire each other’s ‘ita bags (痛包)’(from the Japanese word for ‘painful’, bags adorned with merchandise of their favorite character) and pore over latest finds, fostering belonging difficult to find in digital worlds. An ACG Content Industry White Paper reports the number of ACG users in China was an estimated 490 million in 2023, with 120 million identified as core users. The market’s vast scale and its dedicated fanbase have fueled the rapid expansion of offline ACG retail stores, catering to the growing demand of this vibrant community. Brands jumping on the ‘Guzi’ bandwagon Major brands including bubble tea chains Heytea and Good Me and fast-food giant KFC are rolling out collaborations with popular ACG IPs, through exclusive stickers, keychains, and standees, as consumers eagerly line up to purchase and share their hauls on social media. Brand collaborations with ACG properties on unique ‘Guzi’ merchandise could serve as an important model for luxury brands hoping to connect with the latest generation of Chinese spenders: Gen Alpha. ACG consumers are highly loyal to their favorite characters and are willing to pay a premium for products that hold cultural and emotional significance. These small trinkets, often bought in bulk, provide emotional value and a way to purchase “happiness.” “For fans, it’s not just about buying limited editions; collaborations are a must-have too,” said a respondent. “The more ‘Guzi’ you collect, the more authentic the sense of companionship feels.”

‘Guzi’ stores: How to connect offline to China’s Gen Z and Alpha?

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‘Guzi’ stores: How to connect offline to China’s Gen Z and Alpha?