China’s COVID-hit shoppers focus on value as retail blitz wraps up

compras en China

‘Prudent’ spending during ‘618’ festival expected to top last year’s event

An advertisement for China’s «618» online shopping festival outside a shopping mall in Beijing. The blitz is the country’s second-biggest retail event after the end-of-year Singles’ Day.

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HONG KONG — China’s second-biggest shopping festival of the year wraps up Saturday, offering a crucial glimpse into the mood of shoppers in an economy dented by widespread COVID-19 lockdowns.

While transactions during the «618» festival may still come in higher than last year’s estimated 578 billion yuan ($86 billion), consumers nervous about the future are becoming more thrifty in their buying patterns.

«It’s not that they are going to buy luxury goods, but instead they’re choosing items that will provide long-term value for their life or work,» Liu Hui, director of online shopping platform JD.com’s consumption and industry development research institute, told reporters Thursday. «They’re adding their favorite items to shopping carts one to three months before 618 kicks off, and then keeping watch on price trends and comparing a product’s performance and reviews.»

Demand for daily necessities spiked earlier this year as major Chinese cities, including commercial hub Shanghai, were put into lockdown while the country battled its worst virus outbreak since early in the pandemic.

But logistics snarls eased after the government loosened some virus restrictions and allowed factories to reopen.

Shoppers are now turning their focus to home decorations as well as televisions, refrigerators and other appliances, including items that can be delivered and installed at their homes.

Chinese consumers have become more prudent in their spending and put a higher priority on value and quality, according to a report this month by consultancy Accenture which surveyed 10,000 respondents between the ages of 18 and 65.

Some 60% of respondents were doing in-depth research and comparing prices across shopping websites before opening their wallets, it found.

China’s online shopping festivals typically feature big discounts for items sold on e-commerce group Alibaba’s Tmall as well as rival platforms operated by JD. Com and Pinduoduo.

Many shoppers hold off buying until they can see what’s on offer during these retail blitzes, but some are jittery about spending anything at all.

Shanghai marketing manager Lily Zhang dropped about 8,000 yuan during Singles’ Day in November, China’s biggest shopping festival of the year.

«But I feel really insecure after the Shanghai lockdown because I don’t know if I will lose my job,» Zhang told Nikkei Asia. «So I won’t dare buy anything other than daily necessities for now.»

Sales during the three-week 618 festival — started by JD.com and named after the date it wraps up — could rise by 20% over last year’s level, but that spending may eat into results for the end-of-year Singles’ Day, said EY Greater China Consulting Business Transformation Leader Sharry Wu.

«All major e-commerce platforms are doing their very best to meet consumer demand,» she said. «Compared to last year, we see more platforms doubling down on their promotional strategies by focusing on the food and beverage, home appliances, health and sports categories, which correspond to consumers’ strong demand.»

In a bid to lure shoppers, China’s e-commerce players ramped up pre-festival campaigns with Tmall and JD.com offering 50 yuan off any purchase of 300 yuan or more, better than last year’s discount.

Alibaba, however, has been hurt by the loss of several major influencers who peddled products online to their tens of millions of followers — crucial during shopping festivals.

This month, China’s top online sales host Li Jiaqi disappeared from the Alibaba-owned Taobao platform after he featured a tank-shaped dessert on the eve of the anniversary of the 1989 Tiananmen crackdown when the military killed pro-democracy protesters in Beijing — a taboo subject in mainland China.

Last year, Viya, known as the Queen of Livestreaming, was pulled from her booming sales platform after getting hit with a whopping fine for tax evasion.

Viya’s disappearance was a blow for companies like Shanghai-based chemicals makers Jahwa, which relies on Alibaba for up to 70% of its e-commerce sales.

So the company is shifting focus to mid-tier influencers with plans to hire in-house livestreamers in the future, according to a research note by CITI analysts.

But as this year’s festival wraps up, China’s retail sales were down 6.7% on-year in May after an 11% drop in April, so the broader outlook for consumer demand was lackluster, said Jacky Lai, CEO and co-founder of online B2B wholesale marketplace Peeba.

«Discounts and promotions are far less appealing than in previous years, meaning there is less incentive to spend,» he added. «This year’s minor promotions are less likely to sway consumers’ purchasing behavior.»


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