HONG KONG (AP) — Chinese shoppers have enjoyed deep discounts, new products and payment plans as online merchants seek to rekindle their sluggish appetite for spending during China’s first major online shopping festival after the end of zero-COVID policies.
For the first time, e-commerce retailer JD.com has not released the results of its 618 shopping festival, which ended on Sunday, making it difficult to know exactly how much was spent. A bigger shopping festival, Single’s Day, held on November 11 every year, brings in billions of dollars.
Analysts said most consumers have become more price-conscious and reluctant to spend given the sluggish economy.
“Chinese consumer confidence remains weak due to a mix of geopolitics, continued weakness from COVID-19 and Chinese domestic politics,” said Shaun Rein, founder and managing director of China Market Research Group in Shanghai.
Rein said that overall, consumers likely spent less in 618 because online retailers were already making deep cuts due to the pandemic, so the deals on offer weren’t much of an improvement.
“For months, Chinese consumers have been price-conscious, searching for deals and bargaining across most product categories,” Rein said.
Retail sales – a key indicator of consumption – missed growth forecasts in May, rising 12.7% from a year earlier and slowing from an 18.4% jump in April, according to the National Bureau of Statistics.
Chinese leaders have been trying for years to shift the economy from one driven by construction and other investment to one driven by consumer spending that is the lifeblood of the United States and other advanced economies. .
But with the recovery from the pandemic disruptions already faltering, shoppers have yet to resume spending as freely as in the past.
To attract customers and boost spending, e-commerce platforms have invested billions of yuan in incentives and subsidies for customers and merchants.
In March, JD.com launched a “10 billion yuan subsidy” program to compete with rival Pinduoduo, known for its low-cost products. The CEO of Alibaba’s e-commerce business unit, Trudy Dai, also pledged “huge and historic” investments to attract users to its platforms.
Despite weak overall consumption, categories such as cosmetics and luxury goods saw stronger sales gains. Many luxury brands took part in the online festival, according to Jacob Cooke, CEO of e-commerce consultancy WPIC.
“The return of luxury online is a big trend, as it’s the category that’s been hit very hard by COVID-19,” Cooke said. “Some brands could see their sales up to 10 times higher than last year.”
Chinese media reported that those ready to jump in did so, with early results showing strong sales of high-end brands such as Bulgari and Celine. Other high-end brands like Max Mara, Valentino and Maison Margiela saw their sales increase 20 times over the previous year, according to JD.com data at the start of the festival.
Sales of Burberry, Chloe and Miu Miu in the first 30 minutes of the 618 festival in late May surpassed their total sales at the shopping festival a year earlier, according to data from Tmall.
This year, more luxury brands participated as they sought to boost sales in China after their first decline in five years under China’s strict ‘zero-COVID’ policies and lockdowns that hammered spending Retail.
Some brands, such as Moncler and Lemaire, participated for the first time on Tmall.
Many have also taken the opportunity to launch new products online, with some offering rare discounts and other incentives such as interest-free payment in installments over 12 months. On Tmall, Coach has reduced some of its handbags by 75%, and Jimmy Choo has also sold its signature Romy heels for 50% off.
Large items like air conditioners and electric vehicles also performed well. Midea and Haier, which are known for their home appliances, saw their sales exceed 100 million yuan ($13.97 million) within minutes on JD.com when the festival started.