Despite a sluggish retail environment in China, the country’s Singles’ Day shopping festival witnessed a higher-than-anticipated consumer spending, according to consulting executives. The event, which is China’s equivalent to Black Friday, commenced on October 14th this year, a week earlier than it did in 2023.
Although major e-commerce companies used to disclose gross merchandise value (GMV) to measure sales over time, they have refrained from doing so for the third consecutive year due to weak consumer sentiment. Chris Reitermann, CEO of Ogilvy APAC and Greater China, mentioned that many brands found the sales better than expected, although on a lower scale.
Several multinational corporations are cautious about the market while experiencing slow growth in their sales. Yet, these companies continue to reap considerable profits in China. During this year’s Single’s Day, Alibaba reported a rise in GMV and an increased number of active buyers. Similarly, JD.com saw over a 20% increase in the number of shoppers on their platform year-over-year.
This shopping season, which celebrates single individuals and is also known as Double 11, coincided with the series of stimulus measures announced by the Chinese government since late September, resulting in a stock market rally.
Daniel Zipser, a senior partner at McKinsey, noted an improvement in consumer sentiment over the last six weeks. He observed that this year’s Singles Day exceeded expectations for most brands. However, rather than seeing an overall rise in sales, Zipser pointed out pockets of growth in categories such as outdoor, pet care, and ‘blind box’ toys.
China’s retail sales for October are predicted to have increased by 3.8% from a year ago, which would mark an improvement from the 3.2% growth recorded in September.
Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, revealed that there was a surge in spending during this year’s shopping festival, estimating a 16% growth in GMV. He added that brands didn’t have to slash prices as much.
Investors are likely to gain more insights into China’s consumption this week with JD.com set to release its quarterly results on Thursday, followed by Alibaba on Friday.
China’s consumer spending has been under pressure since the Covid-19 pandemic, with households dealing with economic uncertainty. Amid a real estate slump and slowing economic growth, consumer confidence is expected to rebound in the second half of next year, following additional stimulus likely to be announced in the first half.
However, while mid-tier brands are disappearing rapidly, high-end brands such as Lululemon are faring well. Local brands, which are typically lower-priced and quicker to market, are also gaining traction.
