Singles' Day Sales in China Could Surpass 1 Trillion Yuan Even as Economy Cools |  CNN Business

Singles’ Day Sales in China Could Surpass 1 Trillion Yuan Even as Economy Cools | CNN Business

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CNN Business

Singles Day in China, the largest in the world annual trade event, is known for regularly breaking sales records.

This year’s windfall, which ends Friday and is led by internet titans Alibaba (BABA) and (JD), is likely to be no exception: first time.

Singles Day typically eclipses 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 anti-Valentine’s Day holiday, which celebrates people who are not in romantic relationships. The date – 11.11 – was chosen because written, it appears in the form of four ones, or singles.

But the expected tally would represent only a small rise – about 5% – on the 952.3 billion yuan ($134.2 billion) raked in last year. This already marked a historic slowdown in growth.

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

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

Xiaofeng Wang, principal analyst at research firm Forrester, said CNN Business that she believed Singles’ Day sales would cross the trillion yuan mark this week.

However, “sustaining high year-over-year growth is simply impossible,” she said. “Ultimately, [companies] know that this is not a sustainable strategy. That’s why they want to focus on customer experience and customer retention.

Sales growth had already slowed in recent years.

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

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

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

Weinswig added that sellers also faced a host of hurdles this time around, related to the broader economy.

“Given weak retail sales in China this year, declining consumer confidence, relentless zero Covid policy and uncertain macroeconomic environment, the growth of the 11.11 festival may slow as the consumers are more cautious about 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 significantly bleaker outlook than in 2021,” the consultancy noted.

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

China faces historic economic challenges as it continues to grapple with the impact of a strict ‘zero Covid’ policy and a faltering global economy.

As a result, consumers recoiled. Data last month showed Chinese retail sales rose 2.5% in September, a significant decline from the 5.4% jump recorded in August.

On this Singles’ Day, consumers are also being hit by ‘shopping festival fatigue’, due to an increase in online shopping events which has led customers to ‘stock up all year round’ rather than saving up for big, one-time purchases, according to Kelly. Liu, the head of Bain’s China retail practice, based in Shanghai.

Even so, the event will remain important for retailers, Liu added.

Wang, the Forrester analyst, said companies are reacting to the spike in competition. Alibaba, for example, has extended a window for customers to claim a “lowest price guarantee,” while offering free shipping for returns, she noted.

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

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

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

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