Analysts say consumption falls even with deep discounts during China’s major shopping festival

Chinese consumers snapped up billions of dollars worth of items during China’s first major online shopping festival after weathering the pandemic as merchants slashed prices, but analysts say Consumer confidence is still weak.

Chinese merchants offered steep discounts to customers during the 618 shopping festival, which takes place on major Chinese shopping platforms from late May to June 18, in hopes of boosting sales. in the context of a weaker-than-expected recovery in consumption.

Major shopping festivals, like e-commerce retailers by JD.com 618 and Alibaba singles dayis often a measure of consumption in China, and Chinese e-commerce platforms often participate by offering discounts and incentives to consumers.

Analysts say consumption remains weak this year as China emerges from the pandemic, even as platforms including JD.com, Tmall, Taobao and Pinduoduo provide billions of dollars in subsidies.

“Chinese consumer confidence remains weak due to a combination of geopolitics, the weakening interlinked from Covid-19 and China’s domestic politics”.

Rein said that consumers are less likely to spend more in 618 as merchants have been slashing prices for years because of the pandemic and deals aren’t much better than in previous months.

In March, JD.com launched a “10 billion yuan subsidy” program to compete with rival Pinduoduo, which is famous for its cheap goods. The CEO of Alibaba’s e-commerce business, Trudy Dai, has also previously pledged to make “huge, historic” investments to attract users to his platform.

“For months, Chinese consumers have been price conscious, looking for deals and discounts on almost every product category,” Rein said.

This year, JD.com didn’t disclose its total sales for the 618 event for the first time, despite saying in a blog post that the epic 2023 shopping event had “beyond expectations, set a new record”.

Neither did last year alibaba JD.com also did not release final numbers for Singles’ Day in November, amid muted festive activities during the Covid-19 pandemic and expected growth rates to slow.

JD.com said in a blog post that during the 618 shopping festival, consumers bought 10 times the number of products eligible for the “10 billion yuan subsidy” program compared with the month Father.

According to Jacob Cooke, CEO of e-commerce consulting firm WPIC, despite the low overall consumption, categories such as cosmetics and luxury goods saw a stronger increase in sales than previous quarter.

For this year’s 618 event, more luxury brands joined the fray as they sought to boost sales in China after the sector shrank in 2022 for the first time in five years amid rising sales. China’s strict “Covid-free” policy and lockdowns have hampered retail spending.

Brands like Moncler and Lemaire join 618 on Tmall for the first time.

Many luxury brands also take the opportunity to launch new products online, including some rare discounts and other offers such as interest-free installments for 12 months.

According to Tmall data, the sales of brands such as Burberry, Chloe and Miu Miu in the first 30 minutes of the 618 festival in late May exceeded the total sales during the shopping festival a year ago. .

“Luxury goods coming back online is a big trend, because that’s the category that’s been hit hard by Covid-19,” Cooke said. “Some brands could see a 10x increase in sales from last year.”