Guotai Haitong: Service consumption is the core driving force for the industry's recovery. It is highly likely that the mild recovery trend will continue until 2026.

Guotai Haitong released a research report stating that from January to November 2025, service consumption (culture, entertainment, catering, education) increased by 5.4% year-on-year, while essential consumption (food, daily necessities) showed resilience and became the core driving force for industry recovery. With consumption support policies and expectations of fundamental improvement in place, the consumer industry is likely to continue a moderate recovery trend in 2026, focusing on recovery opportunities driven by the CPI mainline (recovery elasticity ranking: service industry > mass consumption > high-end consumption) and structural opportunities created by new consumption (growth track). Key points from Guotai Haitong: 2025 Consumer Industry Review The impact of economic weakness combined with external shocks on the consumer industry has been fully reflected in the fourth quarter of 2025. Based on tracked core consumer indicators such as social retail data (national + first-tier cities), national key retail and catering sales, employment data, per capita disposable income, consumer confidence index, etc., most of the fundamental data has bottomed out in the fourth quarter of 2025, showing characteristics of "stabilization, recovery, structural optimization, and confidence repair" in the consumer industry. Support mainly comes from the recovery of service consumption and the resilience of basic consumption, with service consumption (culture, entertainment, catering, education) growing by 5.4% year-on-year from January to November, highlighting the resilience of essential consumption as the core driving force for industry recovery. Direction of Consumer Recovery in 2026 The driving force of China's economic growth is shifting from "goods consumption-driven" to "service consumption-driven." Looking ahead to 2026, the resilience of the consumer market recovery depends on prices (CPI drive). From the perspective of price transmission mechanism, the resilience of recovery shows a ranking of "service industry > mass consumption > high-end consumption." Service Industry: As the core engine of consumer recovery in 2026, the service industry, with the characteristics of "low supply elasticity and strong demand rigidity," is expected to benefit first from the CPI rebound and demand release, with a focus on subsectors such as cultural tourism services, health services, and education services; Mass Consumption: Food, daily necessities, etc., as essential necessities in residents' lives, with the attributes of "strong demand rigidity and high consumption frequency," have strong cost-shifting capabilities during the CPI rebound cycle, and the consumption incentives for the sinking market in expanding domestic demand policies will further broaden the demand space for mass consumption; High-end Consumption: High-end liquor, duty-free products, luxury goods, high-end home appliances, etc., are greatly affected by economic expectations and wealth effects. Their recovery process needs to go through the complete chain of "economic recovery growth in residents' property income improvement in consumption confidence release of high-end demand," with the recovery pace lagging behind the service industry and mass consumption. New Consumption: Focus on opportunities in the growth track The rise of new consumption is driven by the supply side's "brand and product aging + acceleration of new channels for product innovation" and the demand side's "structural changes in consumption groups + differences in consumption preferences + Generation Z becoming the main force in new consumption." On the supply side, the traditional consumer industry has long faced pain points such as brand aging and product homogeneity, pushing the industry to embark on the path of innovation and upgrade. The core breakthrough directions in the future are: firstly, the renewal and reconstruction of old product categories, through refining scenarios, strengthening effectiveness attributes, embedding cultural connotations, and endowing emotional value to enhance product premium and user stickiness; secondly, the empowerment and efficiency enhancement of new channels, accelerating the pace of product innovation by leveraging the flow advantages and operational characteristics of emerging channels. On the demand side, the structural changes in the main consumer groups are the key driving force, with significant differences in consumption preferences among different generational groups. Generation Z young people, with unique consumption concepts (pursuing "self-expression, community identity, emotional value," willing to pay for diversity, interests, self-enjoyment, niche labels), and strong consumption potential, gradually become the core force in new consumption, nurturing diverse product and service offerings in the new consumption market. Risk Warning Consumption recovery falls short of expectations; risks of policy implementation effects and industry competition intensification; risks of uncertainty in external environments and cost fluctuations.