China's Singles Day will be larger than ever, despite Covid-19

04 November 2020 Consultancy.asia

Covid-19 is hitting retail sales all over the world, although the world’s largest annual sales event – China’s Singles Day – appears on track for a spending spree. Bain & Company reports that consumers across China expect to increase their Singles Day spending this year. 

November 11th – 11/11 – is China’s Black Friday equivalent of a discount festival, only bigger. The day – ‘Singles Day’ or ‘Double 11’ – unofficially celebrates singledom or bachelorhood, and began in 2009 as a modest apparel sale on online retail platform Tmall. Today, it generates sales of more than $60 billion in 24 hours – twice of Amazon’s monthly sales figures.

Everything from household electronics to personal care and cosmetics now feature in the sale, which has been growing at a steady 35% per year over the last half a decade. Buyers are spread across China, not to mention another 100 countries. The festival is no longer just a sale, but a defining event in China’s retail landscape.

Singles Day is the world's largest retail event

“Singles Day has been a consistent forward-looking indicator of retail trends, as well as a guide to the heath and outlook of the market,” explained Jonathan Cheng, Bain & Company partner and co-author of the report. In fact, retailers in China used Singles Day 2019 to launch more than 1 million new products for their consumer base.

No doubt, many fates rest on an event of such significance, which makes Covid-19-induced uncertainty a tenuous time for many in China. Few need reminding that consumer activity has been far from healthy since the pandemic hit early this year. Brick & mortar stores went out of contention because of infection risks, while overall sales dampened in light of job cuts, income squeezes and general economic uncertainty.

According to Bain, retailers usually approach Singles Day with a few questions: What sales channels should be in focus? How to retain Singles Day customers for the rest of the year? In short, how to optimise investments in Singles Day capacity? This year, the additional question is: How will Covid-19 fit in with all of this?

Singles Day spending is likely to increase across China

The researchers have reassuring news. China has been among the fastest globally to contain the virus and reopen the economy. Already in April, McKinsey & Company reported that consumer confidence was regaining strength in China. Bain’s survey of more than 3,000 consumers shows that Singles Day will likely benefit from this resurgence.

Of course, there are the cautious ranks of consumer, with around 15-20% expecting to cut their spending this Singles Day. Nearly 40%, however, actually plan to up their spending this year, while the rest will likely stay at roughly the same spending level. As mentioned above, spending in previous years has been more than satisfactory.

Good news for retailers is that the consumer base appears to be growing. In recent years, Singles Day appeared to have peaked when it comes to bigger cities – Tier 1 and Tier 2 classification. At least among the avid buyers, there was not much room for growth. This year, the share of consumers planning to expand their Singles Day splurge is spread across cities from Tier 1 to Tier 5.

Online wins over offline at this year's Singles Day

Trends and preferences

For retailers choosing which sales channel to focus on, the answer is clear and obvious: Online. Among Covid-19’s wide ranging economic repercussions is a distinct transition away from brick & mortal retailers to online platforms. Everything from groceries to luxury goods became an online order rather than a visit to the store.

This year, brick & mortar sales are simply not worth the investment for retailers, who would be much better served building their online capacity to meet the unprecedented volumes. Indeed, the ecommerce boom across the world has actually put the delivery infrastructure under strain, causing significant delays.

Given that Singles Day is about retaining customers for the rest of the year, an investment in online retail infrastructure would be wise. “Online retailers and brand owners will need to develop differentiated propositions to be relevant for both lower-tier and higher-tier consumers,” explained Bain partner and report co-author Kanaiya Parekh.

Local, familiar and value brands will be in favour this Singles

For Parekh, the shift to online is not exactly out of the blue, it’s simply been accelerated by conditions under Covid-19. And its not just online sales; the same can be said for a number of other trends. An example is the choice between local and foreign brands – a battle that is won out by the former for the majority of Bain’s respondents.

Similarly, most consumers this Singles Day are likely to opt for something familiar – tried and tested – rather than going for a new brand just for the excitement. Of course, when it comes to individual items consumers prefer to try new things rather than buy repeats, although brand familiarity is key.

A clear preference has also emerged for value-based purchases rather than premium purchases. At the end of the day, the economy is far from healthy around the world, and consumers who are willing to spend money need to be sure of value and quality. At any rate, Singles Day this November is likely to see a boom in traffic according to Bain’s team of experts.


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