China’s Golden Week Holiday Reveals Shift in Consumer Spending Habits
China’s recent Golden Week holiday, which commemorates the founding of the People’s Republic of China, has shed light on a significant shift in consumer spending habits. According to a Goldman Sachs analysis, domestic trips during the holiday saw a 2% decrease in spending per person compared to pre-pandemic levels. This decline is an improvement from the 10% gap seen during spring holidays, but still indicates weak domestic demand and consumption downgrading.
The holiday, which ended on Monday, saw a surge in bookings for experiences such as concerts and exhibitions, with daily growth in orders increasing by over 80%. However, a lack of blockbuster movies resulted in a drop in box office earnings. Consumers were also more spontaneous, with nearly 30% of travelers booking travel on the same day or one day in advance, a 6 percentage point increase from last year.
Experts say that consumers are becoming more cautious with their spending, opting for more affordable options and prioritizing experiences over material goods. “People are much more interested in spending on things they can talk about, things they can post about, rather than just the big ticket items,” said Kenneth Chow, principal at Oliver Wyman.
The holiday also saw a recovery in spending tied to trade-in policies for appliances, with retail sales rising by 9% and sales of home appliances surging by 149.1%. Overseas transactions by China’s Alipay users also surged by 60% during the first four days of the holiday, with Malaysia, Korea, Thailand, Hong Kong, and Singapore being the top destinations for Chinese tourists.
The shift in consumer spending habits has significant implications for brands, including luxury ones, which need to adapt to changing consumer preferences. “When people are becoming much more sophisticated, the proposition has to change, and whoever is able to adapt to that new trend first will be able to win,” said Chow.
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