4 Takeaways for Luxury Brands from China’s 2017 Singles Day Bonanza

    Luxury brands need to understand these four trends from this year's record-setting Singles Day shopping festival in China.
    Jack Ma stood with Hollywood star Nicole Kidman during the Singles Day "See Now Buy Now" fashion show. Photo: VCG
    Yiling PanAuthor
      Published   in Consumer

    China’s Singles Day, the one-day digital shopping frenzy on November 11, had another spectacular year. Major Chinese e-commerce players have delivered some mind-boggling sales figures. Alibaba Group broke its own record with a whopping 25 billion in sales, up from last year's 20 billion. Its main rival also recorded a staggering 19 billion in sales.

    The annual retail holiday, which started less than a decade ago, has quickly become the world’s largest online celebration of consumerism that attracts the attention of international brands and retailers like no other. Aside from the astonishing numbers, the festival has much to reveal about the state of Chinese society, ranging from online retail trends, technological developments, to consumer culture that luxury brands need to understand.

    Below, Jing Daily presents four post-Singles Day reflections based on our research of sales data of major e-commerce companies, media coverage, and online reactions, aiming to offer readers a comprehensive and critical lens of the event and highlight what luxury brands should learn from this year’s success.

    Alibaba Delivers a Live Presentation on “New Retail” Initiatives#

    It has been one year since Alibaba announced its “New Retail” business initiatives, which is a new retail strategy that attempts to fuse the online and brick-and-mortar sectors via the latest technology with the goal to create a seamless and interactive shopping experience for Chinese consumers. This year’s Singles Day just offered a real-time, detailed look into this retail vision and its effectiveness in boosting sales.

    Ahead of the event, more than 1,000 participating brands worked closely with Alibaba to convert their physical locations into “smart stores” by incorporating technologies such as virtual fitting rooms, virtual guides, augmented-reality backed mirrors, etc. The ability to connect online to offline empowered brands to develop a more interactive and engaging relationship with Chinese consumers and helped them collect data on customer behaviors and preferences for the future use. Consumers also had a much more pleasant and entertaining shopping experience compared to traditional retail settings, making them more willing to spend. According to Alibaba, Uniqlo saw its omnichannel GMV increase greatly.

    Alibaba’s “New Retail” model is highly relevant to the luxury industry though it has not been officially applied. In recent years, the role of brands' offline stores has transformed rapidly along with the changing demand of Chinese luxury consumers who value the quality of in-store experience more than ever. Alibaba’s “New Retail” model provides luxury brands with a chance to offer a better omnichannel and entertaining experience to visitors. Its implementation during this year's Singles Day allows them to better understand this strategy.

    Luxury Brands Capitalize on Singles Day Buzz#

    Singles Day has long been a venue for foreign fashion brands to test the waters of the Chinese market. According to Alibaba, some of the top performing players over the past few years came from fashion categories. This trend has largely continued in 2017. The sports brand Nike, for instance, became the first label (in less than 60 seconds) whose sales reached one billion yuan. Nike’s impressive performance was consistent with the country’s rising interest in the athleisure fashion trend, which some industry observers projected is set to overtake luxury market by 2020.

    This year’s event also saw China’s local fashion industry catch-up with foreign brands in terms of popularity and revenue growth. Alibaba’s data revealed that more than half of fashion brands, whose final sales exceeded one billion yuan, were domestic players. For example, Jiangyin-based Heilan Home became the most-purchased male apparel brand. The Chinese fashion brands most popular among female consumers were PEACEBIRD (from Ningbo), Ochirly (from Guangzhou), and Semir and Metersbonwe (both from Shanghai).

    On the other hand, we continued to observe a lack of presence of luxury labels this year. It was a much-expected move, as the nature of the event requires all participating brands to lower their price points to spur consumption. This largely conflicts with the logic of luxury business. However, as the significance of the Singles Day continues to grow, an increasing number of luxury brands have decided to beef up their presence on the digital and social media front. Luxury brands like Dolce & Gabbana, Michael Kors, and Shiatzy Chen released well-planned social media campaigns to promote certain products. This represents a smart move for luxury players to take advantage of the Singles Day buzz and the “ready-to-shop” mentality of Chinese consumers.

    Foreign Luxury E-tailers Tap the Selling Power of Fashion KOLs#

    However, luxury brands were not totally absent from this year’s sales thanks to a number of top-tier Chinese fashion bloggers like gogoboi and shiliupo, who sold discounted luxury goods on their WeChat mini-stores in collaboration with Western luxury e-commerce platforms like Farfetch, Reebonz, and Matchesfashion.

    Both bloggers curated a selection of luxury products for their followers to purchase. In their promotional posts sent out to fans ahead of the event, the discount rate of their offerings went up to 60 percent. According to gogoboi’s WeChat post, his Singles Day sales event was warmly welcomed by fans, with all available offers being sold out in less than five minutes.

    The launch of mini-programs by WeChat in January this year has driven many fashion bloggers to establish their own stores to speed up the process of converting followers to buyers. This year marks the first time for Chinese fashion KOLs, who are known for their massive selling power, to sell luxury goods directly on WeChat during Singles Day—a new trend that luxury brands in China should watch out for.

    Chinese Consumers Voice Environmental Concerns#

    Not all Singles Day achievements were laudable. In 2015, Green Peace called the event an “environmental disaster” and urged consumers to stop participating in it as “it’s intensifying the worst aspects of consumerism; environmental damage, unnecessary spending, wasteful behavior, and dissatisfaction for shoppers.”

    This year, an increasing number of Chinese consumers have started to realize that what comes after the stunning transaction volume is a vast amount of packages that are used to deliver their orders. Many of them criticized the environmental costs behind this extravagant event and discussed the issue openly on the country’s social media platforms like Weibo and WeChat.

    The rising awareness of the environmental impact of their shopping behaviors represents a change in consumer psychology in China that luxury brands need to take note of. According to Mintel Group, the need to be living and buying green is one of the main consumer trends to be expected next year in China. The study shows that ethical brands are favored by almost 60 percent of survey respondents and purchasing environmentally-friendly products can make them feel happy.

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