China’s Singles’ Day Shopping Festival Sees Unexpected Surge in Consumer Spending
Despite a sluggish retail environment, China’s Singles’ Day shopping festival has exceeded expectations, with consumers splurging more than anticipated. The country’s equivalent of Black Friday, which kicked off on October 14, saw major e-commerce companies reporting robust growth in gross merchandise value (GMV).
A Shot in the Arm for Multinational Corporations
While many multinational corporations selling consumer products in China have been cautious, if not struggling, they are still reaping profits in the country. Although growth has slowed to low single digits, many companies are still doing well. Chris Reitermann, CEO of Ogilvy APAC and Greater China, notes that many brands probably had a better-than-expected performance, albeit on a low level.
Stimulus Measures Fuel Consumer Sentiment
The Chinese government’s recent stimulus measures, announced since late September, have contributed to a stock market rally and an uptick in consumer sentiment. Daniel Zipser, senior partner at McKinsey, observes that there are pockets of growth in categories like outdoors, pet care, and “blind box” toys, which have become increasingly popular.
Retail Sales Expected to Rise
China’s retail sales for October are expected to grow by 3.8% from last year, according to a Reuters poll. This would be an improvement from 3.2% growth in September. Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, estimates 16% growth in GMV for the shopping festival from last year, in what could be the strongest performance in years.
Consumers Open Their Wallets
Deborah Weinswig, founder and CEO of Coresight Research, notes that consumers have been saving up and are now spending more. Local brands, which are often lower-priced and able to go to market faster, are doing well. Meanwhile, higher-end brands like Lululemon are also performing strongly.
Rebound in Consumer Confidence Expected
Chris Reitermann expects a rebound in consumer confidence in the second half of next year, after additional stimulus is likely announced in the first half. With the Chinese government indicating more fiscal support could come in 2025, consumer spending is expected to pick up further.
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