Singles’ Day drew a lukewarm response from Chinese shoppers this year, the latest indication that consumers and retailers in the world’s biggest market are fearful of Xi Jinping’s zero-Covid policy and his crackdown on excess.
Jack Ma’s Alibaba Group has made November 11 the biggest retail event on the planet for years, using celebrities including American hip-hop producer Pharrell Williams and Australian actress Nicole Kidman to build hype.
This year, however, Alibaba did not release full sales results for the first time in the shopping festival’s history, but said on Saturday that the result was “in line” with 2021 performance, marking the end of years of rapid growth.
Jacob Cooke, chief executive of Beijing-based WPIC Marketing + Technologies, said the result showed Alibaba had “clearly shifted” from celebrating overconsumption.
“Part of that is economic headwinds, but at the same time the consumer market has matured and in the days of 30 percent growth . . . they’ve fallen far behind us,” Cook said, adding that “general welfare and antitrust impulses are also factors.”
According to consultancy Bain, Singles Day saw annual growth between 25 and 50 percent from 2014 to 2020. Last year, growth decreased to 13 percent.
Originally conceived as a celebration of being single among Chinese students and digitally spelled 11.11, Singles Day has been a boon for global luxury brands and buzz for the world’s largest consumer market.
But this year’s event has come at a bleak point for China’s economy.
Xi secured an unprecedented third five-year term last month, prompting fears of an erosion of market-oriented reforms that have underpinned China’s decades of growth. Since late 2020, the Chinese president’s “general prosperity” campaign has sought to bring billionaires including Ma on board, rein in private-sector monopolies, and eradicate a culture of excess and vice from China’s youth.
China’s 1.4 billion people are also under strict coronavirus surveillance as the Xi administration prioritizes eradicating Covid-19 outbreaks over economic growth. While Beijing eased some quarantine and contact tracing rules on Friday, fears of a city-wide lockdown persist as cases climb to their highest level in months.
He Dan, a 31-year-old hospitality worker in the central Chinese city of Changsha, estimated that his income and expenses have fallen by about a third since the start of the pandemic.
“I definitely spend less. . . “I can’t travel, so I’ve lost consulting jobs,” he said. “My feelings about the future? I want to curse. These stupid Covid policies.”
Shi Wei, 32, a management specialist at a multinational group in Beijing, is trying to save more and avoid spending because of the “uncertainties” associated with the pandemic.
“If you’re stuck at home and can’t go to work for a few months, no one knows what your job will be,” he said.
Still, WPIC’s Cooke said the shopping event remains the most important day of the year for many global brands, spending more than RM1 trillion ($140 billion). The slow growth rate was a sign of market maturity.
While Alibaba is under pressure, Cooke also noted the success of TikTok’s sister app Douyin, which has 700 million daily users, and high demand in the health and wellness, pets, outdoor and sports categories, which is “the way life goes in China.” reflects style changes”.
Chui Xue, Alibaba’s chief operating officer, said the result showed “the emergence of new consumption trends with huge untapped potential”.
“We have witnessed the resilience and vitality of China’s consumer sector,” he said.
HSBC analysts noted that while the consumption landscape varied widely across China’s cities – largely depending on the intensity of Covid-19 restrictions – nationwide consumer confidence levels fell to near record lows. Retail sales growth has been “well below” pre-pandemic levels in recent months.
Ting Lu, chief China economist at Nomura, warned that the road to reopening could be “slow, painful and bumpy”.
“The number of Covid cases may rise further after the recent surge, so de facto lockdowns may be tougher than de jure lockdowns, as local officials still believe their activities are defined by avoiding mass infections,” he said.
Even in 2023, “the release of pent-up demand may be moderate and remain below pre-Covid levels.”
Additional reporting by Qianer Liu and Eleanor Olcott in Hong Kong