China’s Singles Day, the world’s biggestannual shopping event, is known for regularly smashing sales records.
This year’s bonanza, which wraps up on Friday and is led by internet titans Alibaba
(BABA) and JD.com
(JD), will likely be no exception: Analysts expect it to rack up 1 trillion yuan ($140.8 billion) in sales for the first time.
Singles Day usually eclipses two of the world’s most popular sales events — Black Friday and Cyber Monday — combined. The festival, also known as “Double 11,” is pegged to China’s unofficial, anti-Valentine’s Day holiday that celebrates people not in romantic relationships. The date — 11.11 — was chosen since written out, it appears as four ones, or singles.
But the projected tally would represent just a small uptick — about 5% — on the 952.3 billion yuan ($134.2 billion) notched up last year. That already marked a historic slowdown in growth.
Experts have flagged two major factors behind the loss of momentumthis year: Competition is up, and consumer confidence is down.
The focus, they said, has shifted from generating massive sales to keeping customers happy, particularly in an uncertain environment.
Xiaofeng Wang, a principal analyst at research firm Forrester, toldCNN Businessthat she believed Singles Day sales would cross the trillion-yuan mark this week.
However, “it’s just impossible to sustain high growth year by year,” she said.”Eventually, [companies] know it’s not a sustainable strategy. That’s why they want to focus on customer experience and customer loyalty.”
Sales growth had already been slowing in recent years.
In 2021, the tally for Singles Day rose 13%, “the smallest advance ever,” according to an analysis by Bain & Company.
Deborah Weinswig, CEO and founder of Coresight Research, a global advisory and research firm specializing in retail and technology, said it was tough to compare annual growth as the time frame of the event had changed.
“When Alibaba initially launched 11.11, the sales period lasted 24 hours,” she noted. Now, the event can stretch out to roughly two weeks or more, depending on each retailer.
Weinswig added that vendors were also facing a slew of hurdles this time, tied to the broader economy.
“Given China’s weak retail sales this year, declining consumer confidence, unrelenting zero-Covid policy, and the uncertain macroeconomic environment, 11.11 festival growth could slow, as consumers are more cautious about making discretionary purchases,” Weinswig told CNN Business.
“Additionally, increasing government regulation of the tech and live-streaming industries could hurt sales growth this year.”
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According to a Bain survey, 34% of customers returning from Singles Day last year said they planned to spend less.
“Only 24% said they were planning to spend more — a markedly gloomier outlook than in 2021,” the consultancy noted.
Bain experts added that while they, too, could see the festival crossing 1 trillion yuan in sales, “the relatively modest growth needed for that feat is far from guaranteed.”
China is undergoing historic economic challenges as it continues to grapple with the impact of a stringent “zero Covid” policy and a faltering global economy.
As a result, consumers have been pulling back. Last month, data showed that Chinese retail sales rose 2.5% in September, significantly down from the 5.4% jump recorded in August.
This Singles Day, consumers are also affected by “shopping festival fatigue,” due to an increase in online sale events that has led customers to “stock up throughout the year” rather than saving up for large, one-time purchases, according to Kelly Liu, the Shanghai-based head of Bain’s Greater China retail practice.
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Even so, the event will remain important for retailers, Liu added.
Wang, the Forrester analyst, said that companies were responding to the spike in competition. Alibaba, for instance, has extended a window for customers to claim a “lowest-price guarantee,” while offering free shipping for returns, she noted.
Liu also said that some retailers had “started shipping early to avoid congestion” caused by Covid-related supply chain snags.
Singles Day “isn’t going anywhere,” concluded James Yang, a Hong Kong-based partner at Bain.
“However, in terms of its share of sales, this will likely decline,” he added. “This isn’t necessarily negative; it points towards a market that is maturing with an evolving consumer base.”