Consumer Confidence Remains Resilient for Singles Day Despite Slowing Chinese Economy

Nov 8, 2018

Oliver Wyman survey reveals half of Chinese consumers expect to buy more on Singles Day in 2018, though growth slows with average 9 percent increase in spending

SHANGHAI — As Singles Day marks its 10th year amid the backdrop of a slowing Chinese economy, a new survey conducted by global consulting firm Oliver Wyman reveals that consumer sentiment remains strong, with 51 percent of Chinese consumers expecting to spend more on Singles Day in 2018 compared to the year before. However, the shopping festival’s pace of growth may be moderating, with consumer spending only expected to increase by 9 percent on average.

The survey also found that fatigue might be setting in among some consumers, with 30 percent of respondents expecting to spend less this year. This is primarily due to a perception of less attractive discounts and the sense that there are now many other promotional events to choose from throughout the year. The trend is particularly pronounced among China’s future consumers, the millennial generation (38 percent).

“Although confidence remains resilient, Chinese consumers are being more selective compared to a year ago, keeping their spending in check as they search for deeper discounts and more unique events or offerings,” says Jacques Penhirin, Partner and Head of Greater China at Oliver Wyman. “On the surface, it is reassuring to see that there continues to be annual growth in overall sales for Singles Day. However, if you scratch deeper then you realise that the days of breakneck growth by tapping new audiences in China cannot continue. Increasing per head spending will become increasingly vital.”

Imported goods make up a prominent proportion of sales, with the survey finding that 57 percent of consumers expect to buy overseas goods. While the penetration is higher in Tier 1 cities (76 percent), the proportion of overall purchases is consistent across city tiers, making up around a third (32 percent) of expected spending. The top categories are beauty (55 percent), personal care (44 percent) and apparel (37 percent).

Despite the focus on Singles Day itself, a growing proportion of sales are being locked up well in advance. A week ahead of this year’s event, 40 percent of total spending has already been pre-ordered, already higher than the 33 percent seen in 2017, and is expected to rise further as the event approaches.

More interestingly, consumers plan to spend as much as 40% of their overall total spending offline, suggesting high potential for the New Retail model of online-to-offline (O2O), though the reality may be even higher. However, the impact of offline channels varies considerably across city tiers – consumers in Tier 1 cities are keen (81 percent) but in Tier 3 cities this falls to little more than half (57 percent). Most consumers (61 percent) expect to spend RMB 300-2000 through offline events.

Pedro Yip, Partner, Greater China at Oliver Wyman notes, “After a decade that has seen it revolutionise the e-commerce sector, Singles Day has inspired fierce competition from other online retail platforms. Now, tech giants like Alibaba, Tencent and JD.com are heavily investing and competing head to head in the offline battleground. Making best use of integrating these channels will be key to maintaining future growth.”

 

About the survey

 

The online questionnaire was fielded in China in November 2018. Oliver Wyman surveyed 2,000 individuals from tier 1 to 4 cities including Beijing, Guangzhou, Shanghai, Wuhan, other cities in Szechuan, etc. asking them about their shopping habits during the Singles Day period. Of these, the 2,000 surveyed online shoppers consisted of 64 percent female consumers and 36 percent male consumers, with 30 percent having a monthly income between RMB$5,000 and RMB$10,000.

About Oliver Wyman

Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across nearly 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. The firm has more than 5,000 professionals around the world who help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter @OliverWyman.