Hong Kong — Online merchants treated Chinese shoppers with deep discounts, new products and payment plans to revive their sluggish appetite for spending during China’s first major online shopping festival after the end of zero-COVID policies. Did.
For the first time, e-commerce retailer JD.com did not release the results of its 618 shopping festival, which ended on Sunday, making it difficult to know how much was spent. Singles Day, a huge shopping festival held every year on November 11, generates billions of dollars.
Analysts say given the sluggish economy, most consumers have become more price conscious and reluctant to spend.
“Chinese consumer confidence remains weak due to a mix of geopolitics, COVID-19 and continued weakness from domestic Chinese politics,” said Shawn Rein, founder and managing director of China Market Research Group in Shanghai.
Overall, consumers are likely to spend less during 618 because online retailers were already offering heavy discounts due to the pandemic, so the deals on offer didn’t improve much, Rein said.
“For months, Chinese consumers have been price-conscious, looking for deals and trading up across most product categories,” Rein said.
Retail sales – a key indicator of consumption – did not forecast growth in May, rising 12.7% from a year earlier and slowing from an 18.4% jump in April, according to the National Bureau of Statistics.
China’s leaders have been trying for years to shift the economy from one driven by manufacturing and other investment to one driven by consumer spending that is the lifeblood of the US and other advanced economies.
But with recovery from disruptions due to the pandemic already faltering, shoppers have resumed spending as freely as before.
To lure customers and increase spending, e-commerce platforms are investing billions of yuan in incentives and subsidies for customers and merchants.
In March, JD.com launched a “10 billion yuan subsidy” program to compete with rival Pinduoduo, known for its low-priced goods. Trudy Dai, CEO of Alibaba’s e-commerce business unit, has also promised a “huge, historic” investment to attract users to its platform.
Despite lower overall consumption, categories such as cosmetics and luxury goods saw large gains in sales. According to Jacob Cook, CEO of e-commerce consultancy WPIC, several luxury brands participated in the online festival.
“Luxury coming back online is a big trend, as this is the category that has been most impacted by COVID-19,” Cook said. “Some brands may see a 10x increase in sales compared to last year.”
Chinese media reports that those willing to make the leap did so, with early results showing strong sales for high-end brands such as Bulgari and Celine. Other upscale brands such as Max Mara, Valentino and Maison Margiela saw a 20-fold increase in sales from the year before, according to data from JD.com at the start of the festival.
According to Tmall data, sales of Burberry, Chloe and Miu Miu in the first 30 minutes of the 618 festival in late May exceeded their total sales during the shopping festival a year earlier.
More luxury brands sought to boost sales in China this year after a decline for the first time in five years amid China’s strict “zero-Covid” policies and a lockdown that hit retail spending.
Some brands, such as Moncler and Lemaire, participated in Tmall for the first time.
Many also took the opportunity to launch new products online, some offering rare discounts and other incentives such as interest-free payment in installments over 12 months. On Tmall, Coach is offering 75% off some of its handbags, and Jimmy Choo is also selling its signature Romy heels for 50% off.
Big ticket items like air conditioners and electric vehicles also performed well. Sales of Midea and Haier, known for their home appliances, exceeded 100 million yuan ($13.97 million) on JD.com in minutes when the festival first began.
