China’s Singles Day sales could top 1 trillion yuan even as economy cools

Hong Kong
CNN Business

China’s Singles Day, the biggest in the world annual shopping event, is known for regularly breaking sales records.

This year’s boom, which ends Friday and is led by Internet titans Alibaba ( BABA ) and ( JD ), is unlikely to be an exception: Analysts expect it to collect 1 trillion yuan ($140.8 billion) in sales for the first time.

Singles Day usually overshadows two of the world’s most popular sales events: Black Friday and Cyber ​​Monday combined. The festival, also known as “Double 11”, is linked to China’s unofficial Valentine’s Day holiday that celebrates people who are not in romantic relationships. The date — 11.11 — was chosen because it was written, it appears as four, or simple.

But the expected count would represent only a small increase, about 5 percent, from the 952.3 billion yuan ($134.2 billion) raised last year. This already marked a historic slowdown in growth.

Experts have pointed to two main factors behind the loss of momentum this year: competition has increased and consumer confidence is down.

The focus, they said, has shifted from generating massive sales to keeping customers happy, especially in an uncertain environment.

Xiaofeng Wang, senior analyst at research firm Forrester, said CNN Business who believed Singles Day sales would surpass the trillion yuan mark this week.

However, “it is impossible to maintain high growth year after year,” he said. “Finally, [companies] I know it’s not a sustainable strategy. That’s why they want to focus on customer experience and customer loyalty.”

Sales growth had already slowed in recent years.

In 2021, the Singles Day count increased by 13%, “the smallest advance in history,” according to an analysis by Bain & Company.

Deborah Weinswig, CEO and founder of Coresight Research, a global research and advisory firm specializing in retail and technology, said it was difficult to compare year-over-year growth as the time frame of the event had changed.

“When Alibaba initially launched on 11/11, the sales period was 24 hours,” he noted. Now, the event can last up to two weeks or more, depending on each retailer.

Weinswig added that vendors also faced a host of obstacles this time around, tied to the broader economy.

“Given China’s weak retail sales this year, declining consumer confidence, the relentless zero-Covid policy and the uncertain macroeconomic environment, the growth of the 11.11 festival could slow down as consumers are more cautious about making discretionary purchases,” Weinswig told CNN Business.

“Additionally, increased government regulation of the technology and live streaming industries could hurt sales growth this year.”

According to a Bain survey, 34% of customers returning from Singles Day last year said they planned to spend less.

“Only 24% said they planned to spend more, a markedly darker view than in 2021,” the consultancy noted.

The Bain experts added that while they too could see the festival surpassing 1 trillion yuan in sales, “the relatively modest growth required for such a feat is far from guaranteed.”

China is experiencing historic economic challenges as it continues to grapple with the impact of a strict “zero Covid” policy and a declining global economy.

As a result, consumers have been pulling away. Last month, data showed Chinese retail sales rose 2.5% in September, significantly below the 5.4% jump recorded in August.

This Singles Day, consumers are also being hit by ‘festival shopping fatigue’, with an increase in online sales events leading customers to ‘stock up all year round’ in instead of saving for large, one-off purchases, according to Kelly. Liu, the Shanghai-based head of Bain’s Greater China retail practice.

Still, the event will remain important for retailers, Liu added.

Wang, the Forrester analyst, said companies were responding to increased competition. Alibaba, for example, has extended a window for customers to claim a “lowest price guarantee,” while offering free shipping for returns, he noted.

Liu also said some retailers had “started shipping early to avoid congestion” caused by Covid-related supply chain issues.

Singles Day “isn’t going anywhere,” concluded Hong Kong-based Bain partner James Yang.

“However, in terms of its sales share, it is likely to decline,” he added. “This is not necessarily negative; it points to a market that is maturing with an evolving consumer base.”

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