Singles’ Day sales in China could reach 1 trillion yuan

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

This year’s bonanza, which ended Friday and is led by internet titans Alibaba and JD.com, is likely to be no exception: Analysts expect it to accumulate 1 trillion yuan ($140.8 billion) in first time sales.

Singles Day often eclipses two of the world’s most popular sales events – Black Friday and Cyber ​​Monday – combined. The festival, also known as “Double 11”, is tied to China’s unofficial anti-Valentine’s Day holiday, which celebrates people who are not in romantic relationships. The date — 11.11 — was chosen since it was written, it appears as four unique numbers.

But the projection would represent only a small increase – about 5% – from the 952.3 billion yuan ($134.2 billion) recorded in 2021. This marks a historic slowdown in growth.

Experts have flagged two main factors behind the loss of momentum this year: competition is up and consumer confidence is down.

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

Xiaofeng Wang, principal analyst at research firm Forrester, told the CNN Business who believes Singles Day sales will pass the trillion yuan mark this week.

However, “it is simply impossible to sustain high growth year on year,” she said. “Companies know that it is not a sustainable strategy. That’s why they want to focus on customer experience and customer loyalty.”

A “darker view”

Sales growth had already been slowing down in recent years.

In 2021, the Singles Day count is up 13%, “the smallest advance ever,” according to an analysis by Bain & Company.

Deborah Weinswig, CEO and founder of Coresight Research, a global research and consulting firm specializing in retail and technology, said it is difficult to compare annual growth as the event period has changed.

“When Alibaba initially released 11.11, the sales period was 24 hours,” she noted. Now, the event can span around two weeks or more, depending on each retailer.

Weinswig added that suppliers were also facing a number of hurdles this time around, linked to the wider economy.

“Given China’s poor retail sales this year, declining consumer confidence, relentless zero Covid policy and uncertain macroeconomic environment, 11.11 festival growth may slow as consumers are more cautious about making discretionary purchases.” , said Weinswig to CNN Business 🇧🇷

“Additionally, increased government regulation of the tech and live broadcast industries could hurt sales growth this year.”
According to a survey by Bain, 34% of customers who returned from Singles Day last year said they planned to spend less.

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

Bain experts added that while they could also see the festival crossing 1 trillion yuan in sales, “the relatively modest growth required for this feat is far from guaranteed.”

An evolving industry

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

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

On this Singles Day, consumers are also affected by “shopping festival fatigue” due to an increase in online sales events that have led customers to “stock up throughout the year” rather than saving for large one-time purchases, from according to Kelly. Liu, the head of Bain’s Greater China retail practice, based in Shanghai.

Even so, the event will continue to be important for retailers, Liu added.

Wang, an analyst at Forrester, said companies are responding to increased competition. Alibaba, for example, extended a window for customers to claim a “lowest price guarantee” by offering free shipping on returns, she noted.

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

Singles Day “is not going anywhere,” concluded James Yang, a partner at Bain in Hong Kong.

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