More than three-quarters or 77% of consumers are planning to spend less or maintain spending on Singles Day this year, according to Bain & Company's fourth edition of the Singles Day report which includes an annual survey of 3,000 consumers across a wide range of Chinese cities.
The muted outlook is unsurprising as macroeconomic headwinds are causing consumers to be more value-conscious, but also worth noting is the sheer size and gradual maturing of the shopping festival which first launched in 2009. Singles Day has progressively been emulated by rival events in an increasingly crowded retail calendar.
"Interestingly, this level of caution is comparable to consumer sentiment last year where 76% of shoppers surveyed mentioned reducing or maintaining their Singles Day spend. There seems to be an element of structural slowdown about the event linked to its longevity and scale. This year's survey dug deeper into general spending intentions beyond Singles Day, and 71% of respondents told us they would cut or maintain retail spending through 2023."said James Yang，Partner at Bain & Company based in Hong Kong.
The underlying trend in 2023 is a flight to value. A significant proportion of respondents （35%） said that they were waiting for better promotions to make their money go further, while 18% were eyeing bulk deals. However, an even bigger proportion （48%） of consumers said they were opting for cheaper brands or switching to private label products.
The flight to value is having a polarized effect across product categories. Shoppers are spending on necessities such as tissue, handwash, instant noodles and pet food, while also trading down and buying less in discretionary or big-ticket categories such as home appliances and furniture. Yet at the same time, they are also still seeking small indulgences in areas such as dining out and travel.
Unsurprisingly when comparing spending habits across cities and age cohorts, consumers from the lower income brackets and those from lower tier cities were most prone to feeling the squeeze, particularly the boomers, Gen Z, and Gen X cohorts. The value-conscious mentality was also prominent in Gen Z shoppers in the bigger cities and higher income brackets, who have not built up the spending power of their older peers.
Similar trends were observed in Southeast Asia as revealed in a Bain survey of 9,000 consumers in the region in mid-2023. Around 72% of the respondents (mainly lower income and younger households) said they would cut or maintain spending in 2023. Consumers are also taking the same actions such as buying on promotions, switching to cheaper brands, bulk purchases etc., to reduce spending. However, more shoppers rely on promotion （23%） than switching to cheaper brands （17%） in Southeast Asia. Similar category spending polarization is also observed despite some regional differences. Vacation spending is one of the most affected categories in Southeast Asia while Chinese consumers are still seeking indulgences through travel.
The report also found that Chinese shoppers are also willing to devote their attention to more novel platforms that blur the boundaries between entertainment and retail, particularly in livestreaming/short video e-commerce platforms.
The rise of livestreaming—which typically consists of an influencer promoting one or more products in an entertaining broadcast that also facilitates purchases by viewers—was already visible on Singles Day last year. In fact, the gross merchandise value (GMV) from Singles Day livestreaming/short video more than doubled in 2022 from 2021 and retailers are poised to offer more ways to access the interactive shopping technology this time round.
Livestreaming/short video e-commerce is also on the rise in other markets and Southeast Asia has been regarded as the region with the highest potential outside China. As one of the key players in livestreaming/short video e-commerce, TikTok Shop has experienced exponential growth. Back in August this year, Momentum Works projected that TikTok Shop's share in the Southeast Asian e-commerce market would surge from 4.4% in 2022 to 13.2% in 2023. However, the recent ban on TikTok Shop in Indonesia and regulatory scrutiny in Vietnam could undermine the future of livestreaming/short video e-commerce in Southeast Asia.
Interestingly in China, the rapid growth in livestreaming/short video penetration is not yet matched by average spending per livestreaming/short video customer, which significantly lags traditional e-commerce platforms. The shortfall tallies with concern around customer service. For instance, shoppers who signaled that they would cut spending on key livestreaming/short video platforms on this year's Singles Day cited slow delivery, poor app design, and unsatisfying return policies.
"A winning formula in China will combine everyday value with inspiration, amusement, or diversion. It is important to bear in mind that there are multiple routes to these twin destinations. For instance, standing out for value-conscious shoppers might involve expanding a private label offering or providing unbeatable value.There is little doubt that the bar has been raised for both value- and content-led retailing in China and it is imperative that retailers respond rapidly."said Melanie Sanders,Partner and Head of Asia Pacific Retail practice, based in Melbourne.