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Consumer sentiment for 11.11 remains strong despite slowing economy, report says

This year marks the 10th anniversary of the 11.11 global shopping festival. Chinese consumers are expected to buy more on the day amid the backdrop of a slowing Chinese economy, according to a report produced by global consulting firm Oliver Wyman.

The survey revealed that 51% of Chinese consumers will spend more on 11.11 compared to the previous year. However, the shopping festival’s pace of growth may be moderating as consumer spending is only expected to increase by 9% on average.

Also, 30% of respondents said they will spend less this year. This is primarily due to a perception of less attractive to discounts and the sense that there are now many other promotional events to choose from throughout the year. The trend is particularly pronounced among China’s Millenials (38%).

“On the surface, it is reassuring to see that there continues to be annual growth in overall sales for 11.11. However, if you scratch deeper then you realise that the days of breakneck growth by tapping new audiences in China cannot continue. Increasing per head spending will become increasingly vital,” said Jacques Penhirin, partner and head of Greater China at Oliver Wyman.

Apart from 11.11 itself,  a growing proportion of sales are being locked up well in advance. A week ahead of this year’s event, 40% of total spending has already been pre-ordered, already higher than the 33% seen in 2017, and is expected to rise further as the event approaches.

The report also said consumers are planning to spend as much as 40% of their overall total spending offline, suggesting high potential for the New Retail model of online-to-offline (O2O), though the reality may be even higher. The impact of offline channels varies considerably across city tiers – consumers in Tier 1 cities are keen (81%) but in Tier 3 cities this falls to little more than half (57%). Most consumers (61%) expect to spend RMB 300-2000 through offline events.

Imported goods make up a prominent proportion of sales, with the survey finding that 57% of consumers expect to buy overseas goods. While the penetration is higher in Tier 1 cities (76%), the proportion of overall purchases is consistent across city tiers, making up around a third (32%) of expected spending. The top categories are beauty (55%), personal care (44%) and apparel (37%).

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