Chinese consumers are demonstrating a strong appetite for quality of life, wellness and meaningful experiences with increased spending confidence and intentions despite an overall cautious sentiment, according to a new report released by global consulting firm AlixPartners.

The report, based on a survey of over 3,000 respondents across China, said 41 percent of the interviewed consumers intend to spend more on health-related products, while more than 30 percent plan to increase their spending on groceries, clothing and travel as they continue to prioritize wellness and practicality.

It is noteworthy that more than 40 percent of young consumers plan to spend more on travel in 2025. Travel and holiday spending lead the way in consumer confidence growth from 2024 to 2025, fueled by a surge in demand and a shift toward meaningful and experience-driven consumption, the report noted.

The focus on self-care and quality of life is also reflected in the moderate confidence growth of spending related to entertainment, dining out, sporting goods, toys, books and cosmetics.

The report stated the Gen Z consumers — people born between the mid-1990s and early 2010s — in first-tier cities are spearheading the travel spending surge, followed by middle and high-income individuals in second-tier cities and affluent seniors in lower-tier cities.

The luxury sector is seeing recovered confidence among high-income consumers in first and second-tier cities, yet the spending growth will likely be tempered in the short term as shoppers prioritize quality, value and sustainable options over impulsive high-ticket purchases.

Moreover, affluent seniors and middle-income urban residents are driving demand for essential and discretionary goods, presenting vast growth opportunities for businesses that can adapt their strategies and engagement with precision amid the evolving consumer landscape, it added.

China's economy has entered a transformative phase, and while consumers are generally more cautious with their spending, the survey revealed that perceptions of economic prospects vary significantly by geography, income and age group — differences that have profound implications for their spending, said Lisa Hu, partner and managing director of the Consumer & Retail Practice at AlixPartners China.

Hu noted that to thrive in this new era, businesses must go beyond a broad-based approach and demonstrate agility, innovation and a sophisticated understanding of targeted customer behavior across categories.

Despite the emergence of new channels such as social e-commerce and livestreaming in the past few years, traditional e-commerce platforms have taken a significant position for consumers.

According to the survey, online channels remain the dominant purchasing avenue for most categories, especially for interest-related goods like travel, entertainment, clothing, beauty and cosmetics, toys and books, as 60 percent of such purchases are conducted online.

"China continues to set the global benchmark for e-commerce innovation thanks to its expansive ecosystem with an abundance of choices," Hu said, adding that retailers need to frequently and consistently monitor consumer behavior to navigate this complex landscape effectively.

An integrated approach remains key to customer engagement given that shoppers utilize a variety of online and offline channels to research and make purchases.

Businesses should continue to innovate and deploy cutting-edge digital tools that help build deeper emotional connections with consumers, aligning their strategies, investment and execution with China's uniquely distinct market dynamics, according to the consultancy.

China's retail sales, a significant indicator of consumption strength, rose 3.5 percent year-on-year in 2024, said the National Bureau of Statistics. Online sales remained a bright spot, jumping 7.2 percent year-on-year last year.