Staff sorting express deliveries at the Zaozhuang branch in eastern China’s Shandong province on November 10, 2024.
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BEIJING – Consumers spent more than expected during China’s Singles’ Day shopping festival amid a cool retail environment, consulting firm executives told CNBC.
The country’s version of Black Friday began this year on October 14, more than a week earlier than in 2023, and ended on Monday. Major e-commerce companies previously reported gross merchandise sales, a long-term indicator of industry sales, but did not do so for the third year in a row due to weak consumer sentiment.
“I think for a lot of brands, it was probably a little bit better than expected, but at a lower level. No one would probably say we delivered a surprise,” Ogilvy APAC said. said Chris Leiterman, CEO of Greater China. . He is also the president of WPP China.
Many multinational companies that sell consumer products in China are becoming more cautious about the market, if not struggling, Leiterman said. But he noted that even if growth slows to low single digits rather than high double digits, many companies in the country will still be “very profitable.”
For this year’s Singles’ Day, Alibaba claimed “solid growth” in GMV and a “record number of active buyers,” while JD.com said the number of shoppers on its platform has increased year over year. He said it had increased by more than 20%.
The shopping season celebrating singles, also known as Double 11, comes as the Chinese government announced a series of economic stimulus measures starting in late September, accelerating the stock market’s rise.
Daniel Zipser, senior partner and Asia Pacific consumer and retail leader at McKinsey, said consumer sentiment “seems to have picked up” over the past six weeks. It’s hard to predict what that will mean going forward.”
Zipperser said Singles’ Day exceeded most brands’ expectations. But he said sales growth across the board is not so much about outdoor, pet care, and “blind box” toys (where consumers buy uniformly marked boxes for a chance to win new collectibles). He pointed out that there was some growth in categories such as
He said the blind box category has grown from $0 before COVID-19 to a more than $2 billion industry, reflecting the potential speed of consumer adoption in China. He pointed out that this is a growing category.
China’s retail sales are expected to rise 3.8% in October from a year ago, according to a Reuters poll. This is an improvement from September’s 3.2% growth.
“People are spending more this year,” Jacob Cook, co-founder and CEO of WPIC Marketing + Technologies, told CNBC on Tuesday. The company helps foreign brands such as Vitamix and IS Clinical sell online in China and other parts of Asia.
He estimated that the shopping festival’s GMV was up 16% from last year, perhaps its strongest performance in years. Cook added that brands don’t need to cut prices as much.
Research firm Shintun said on Tuesday that Alibaba’s Tmall, JD.com, and PDD’s sales during Singles’ Day rose 20.1% year-on-year to 1.11 trillion ($150 billion). announced an estimate that it would be
Investors will be able to learn more details about Chinese consumption later this week. JD.com is scheduled to report its quarterly results on Thursday, followed by Alibaba on Friday.
Deborah Weinswig, founder and CEO of Coresight Research, said Tuesday on CNBC’s “Squawk Box Asia” “We have seen consumers shopping at shopping festivals,” he said on Tuesday. . ”
He said the company’s weekly survey showed there had been some “difference” in consumer sentiment over the last month.
Expecting recovery in 2025
Consumer spending in China has been under pressure since the coronavirus pandemic as households grapple with economic uncertainty. Household assets are decreasing due to the real estate recession, and economic growth is slowing.
Reiterman said luxury and mid-market brands are “disappearing very quickly,” but luxury brands like Lululemon could do well. He noted that in general, local brands often have lower prices and can be brought to market faster.
He expects some recovery in consumer confidence in the second half of next year, with further stimulus likely to be announced in the first half of next year.
China’s Finance Ministry hinted last week that further fiscal support could come in 2025. China did not hand out cash to consumers during the pandemic, but this year it rolled out a trade-in program that subsidized some cars and home appliances. Purchased item.
—CNBC’s Sonia Heng contributed to this report.
