Managing Director, Hong Kong
Shanghai, China (October 28, 2019) - Singles’ Day (also known as Double 11 or 11.11) is expected to continue its strong growth trajectory. Consumers from tier 1 and tier 2 cities say they are preparing to spend 54% more this year despite the ongoing trade war and weak economic conditions, according to the new Singles’ Day Report from AlixPartners, the global consulting firm.
AlixPartners conducted an online survey of more than 2,000 consumers from all regions in China one month prior to the nationwide shopping festival, to assess consumer enthusiasm under economic uncertainties and to identify new trends in purchase decision-making.
Surveyed consumers from tier 1 and tier 2 cities said that they expect to spend an average of RMB6,265 this year, which is 54% higher than the amount (RMB4,059) they spent last year. The survey found that 57% of consumers estimate their spending will exceed RMB 5,000 this year, with 18% of those consumers estimating they will spend more than RMB10,000. The growth in estimated spending defies that a slowdown in China’s economic growth or the ongoing trade tension will disrupt consumer spending during the 2019 Singles’ Day sale.
Michael McCool, Managing Director of AlixPartners said, “This is truly a mainstream event. Consumers are no longer looking for out-of-style discount goods, but instead, they expect new, relevant, quality products at a low price and good service – and they want to be entertained. Businesses need to get in on the action if they are not already selling during Singles’ Day. The event has become a barometer of a brand’s presence in the market. For businesses already participating, they need to put out exciting and new items for sale; this is no longer a channel to clear your old inventory.”
Consumers expressed plans to make majority of their purchases (61%) from local brands during the Singles’ Day sale. Foreign brands, while not preferred per se, are expected to increase from 27% of market share last year to 30% this year as consumers continue to trade up in product quality, design and trustworthy manufacturing and sources. In addition, 78% of respondents, motivated by national loyalty, said they would reconsider purchasing American brands due to the trade war.
The survey highlighted that female consumers and older consumers are expected to be the largest spenders. According to the survey, female consumers plan to spend RMB6,671 during the Singles’ Day shopping festival, 15% higher than male consumers; and, consumers born between 1960-1969 (aged 50-59) emerged as the age group predicting to spend the most, despite having the lowest reported income.
Separately, logistical challenges of this massive event are putting off some consumers from participating this year. Though the e-commerce platforms and delivery companies have made improvements over the years, this year’s survey found that 8% of respondents plan to not participate in Singles’ Day sale 2019 — compared to 1% in 2018 — with their top concern being delayed delivery.
The overall top three categories consumers intend to spend on this year are clothes and fashion, shoes/sporting goods and cosmetics and beauty. However, consumption trends are greatly subject to demographic variation. For example, male consumers rank lifestyle electronics and white goods categories higher than the cosmetics and beauty category. In addition, groceries, food and packaged food is the top category for consumers born before 1960.
When it comes to reaching consumers, the survey findings suggest that in-platform banner ads and targeted coupons still work, but that new product launches and selling via live streaming heavily influence traffic and sales. Specifically, new product launches have become a key driver for attracting traffic and are even more valued than discount and O2O integration. In fact, 67% of consumers responded that a new product launch in conjunction with the Single’s Day sale is the most important criteria when selecting what product or brand to buy. Moreover, shopping via live streaming is gaining popularity, with 84% of consumers expecting to purchase some items via this method.
Jason Ong, Director of AlixPartners based in Shanghai said, “Retailers cannot afford to exclude any channels if they want to efficiently reach their target group, but businesses need to understand the nuances of promoting different products given the increasing array of sales tools being pushed on them by platforms. Investing blindly in new-fangled trends without understanding your consumer needs will result in low returns and weak sales. More importantly, it could mean a lost opportunity to maximize brand impact on this all-important national, and increasingly globalized event.”
For more survey findings, please download the full report here.
AlixPartners is a results-driven global consulting firm that specializes in helping businesses successfully address their most complex and critical challenges. Our clients include companies, corporate boards, law firms, investment banks, private equity firms, and others. Founded in 1981, AlixPartners is headquartered in New York, and has offices in more than 20 cities around the world.
Crystal Leung, AlixPartners
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Tong Li, Finsbury
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