Has China’s Anti-Consumerism Movement Hurt This Year’s Singles Day Sales?

Takeaways: Amid a slumping economy, both Alibaba and JD.com doubled down on promotions for this year’s Singles' Day shopping festival by extending the sales window to 11 days. State media outlets, including Renmin Daily and Xinhua News Agency, have backed an anti-consumerism sentiment that has been growing in China. Brands might want to worry more about “festival fatigue” due to the never-ending stream of e-commerce festivals rather than hardline anti-consumerism movements. For Luolima, a Taobao livestreamer who works with maternity brands, this is the third year she has participated in the Singles' Day (or "Double 11”) shopping festival, and she has never been busier. “Last night, we didn't finish up until around 2 AM,” she said, while at a media briefing on the day of the world’s biggest shopping day. “Many of my colleagues, including myself, chose to just sleep in the livestream room to be ready to go in the morning.” It is an intense work schedule that has lasted over two months this year. She has to put in more work for this edition because the 2020 Singles' Day shopping festival spanned 11 days (November 1 -11) instead of just one, and presales started as early as October 21. In a year that saw China’s economic growth hit a 44-year low, tech giant Alibaba doubled down on promotions by prolonging the sales window for their shopping festival. Its largest contender, JD.com, followed suit. But in the meantime, an anti-consumerism sentiment, which had been brewing even before COVID-19, is reaching new heights this year. This sentiment has the power to influence a generation of young people that has strong spending power and is a top target for luxury brands in China. “[Anti-consumerism] is destined to arrive, and it will have an increasingly larger impact in the future,” said Feng Shi, a senior trend researcher at the qualitative consumer insights agency Youthology. “Young people in China know more about consumption and consumerism compared to previous generations, among which few people care about such topics. This generation can easily resonate with others’ reflections and objections.” Here, Jing Daily takes a closer look at the sources of this phenomenon and the scale of its impact on Double 11 and shopping festivals going forward. The intensifying battle between shopping and anti-consumerism During this Double 11, NetEase Strictly Select (an online retailer owned by the internet company NetEase) released a short film parodying luxury ads like Gucci Perfume, Patek Philippe, Rimowa, and Adidas to encourage netizens to buy the brand’s label-less products. When questioned about the concept behind this video, a spokesperson for the company said, “We are simply trying to say that we have eliminated high premiums for consumers so that they can enjoy pragmatic products.” The film was then redistributed by Chinese state media Xinhua News Agency and other local media on Weibo in an attempt to cool off luxury shopping at the festival. By November 11, two hashtags #ConceptOfConsumptionOfModernYoungsters (#当代青年人的消费观#) and #ConsumeNotConsumerism (#要消费不要消费主义#) have collectively been viewed 164 million times. Historically, Chinese society seems to equate luxury goods with the idea of consumerism. Since Chinese President Xi Jinping took office in 2012, his banning of official extravagances and anti-corruption initiatives have directly affected luxury sales. For example, this year, after he stated that citizens should "cultivate thrifty habits, object to food waste,” state media was quick to jump on ‘mukbang,’ which is a type of online eating shows that originated in South Korea. In-depth news stories on the social consequences of overly-accessible internet lending and stressful work conditions for couriers have also sparked spurts of national anger this year. For the duration of Double 11 this year, China’s State Post Bureau estimated that the logistics industry would process 5780 million packages, a 47-percent increase compared to the same period last year. These numbers have made environmentalists furious, as some of whom indicate that the current level of awareness is inadequate to drive changes. “There's a growing number of conscious people year after year, both ex-pats and Chinese, who agree that the environmental impact of Double 11 is serious and that it is their responsibility to not fall for these ‘gimmicks,’” said Nitin Dani, the director of the nonprofit environmental organization Green Initiatives, who has lived in China for the last decade. “However, as much as this group or number is increasing, I have to admit it's not enough.” The sales numbers tell us all, and even though people say they are conscious, they are not spending less. Between November 1-11, China’s two biggest e-commerce players, Tmall and JD.com, together took in $115.1 billion in gross merchandise value. Previously, as the nation was beginning to recover from COVID-19, the two platforms collectively took in $146.3 billion in GMV at the June 18 shopping festival. Conscious spending is on the rise 28-year-old Wei Ling opened over 60 packages this Double 11. A project manager at an internet company in Beijing, some of the pricer products she bought this year are Helena Rubinstein serum for herself and a Coach bag for her mother’s birthday in three months. Wei doesn’t think participating in Double 11 means that she’s blinded by promotions. “Double 11 is a good time to stock up for many categories,” she said. “I believe that many people are just like me, and they are consciously purchasing the products they want.” Her shopping basket has carried products ranging from clothes, skincare, and cosmetics products to gifts for parents and relatives, among other items. “I started preparing in late October, but I wouldn’t say that I was 100 percent rational this year,” she admitted, adding that compared to the previous Double 11, she purchased twice as many things because of adequate preparation time. “I was perhaps 95-percent rational.” Wei’s conscious behavior happened to resonate with research findings by the global consultancy McKinsey, published in March under the title Cautiously optimistic: Chinese consumer behavior post-COVID-19. It says that consumers — especially young ones — are becoming more prudent, and over 60 percent of young consumers intend to plan more of their consumption and reduce their impulse spending. Conscious spending is “the principle of our strategy,” said Liu Bo, vice president of Alibaba Group and general manager of Tmall Marketing and Operations, to Jing Daily when asked about the rise of the anti-consumerism sentiments. “With our deep understanding of China’s mass consumers, we are hoping to lead conscious consumption that suits their spending power and lifestyle habits.” He also noted that the company only expects people to purchase what they want. According to Michael Norris, the research and strategy manager at AgencyChina, brands might need to worry more about consumer fatigue due to “the seemingly never-ending stream of e-commerce festivals” instead of hardline anti-consumerism. Such notable festivals include two Valentine’s events (one Chinese and one Western), Women’s Day, Double 5, June 18, Double 11, and the upcoming Double 12. Coach, which reported that it became the first brand on Tmall’s Luxury Pavillion to earn more than 100 million yuan (around $15 million) at this year’s Double 11, just announced that it would also participate in Double 12. Norris, who has observed some sense of fatigue from consumers via the company’s client research studies, said that there is some overlap between shopping fatigue and conscious spending in a post-COVID-19 environment. “With everything that's happened this year, ordinary consumers are trimming some of their discretionary expenditure, and e-commerce platforms are running more frequent sales events to encourage consumers to spend,” he noted. “I think it's a sentiment brands need to be conscious about.” It may not be something that luxury brands have to worry about immediately. But brands should always be aware of the undercurrents of consumer sentiment, which can influence those with higher spending power. “We have seen a fair chunk of the affluent consumers [who claim a monthly salary of over 30,000 yuan] we work with make do with a lot of last year's outfits, where they normally may spend big on a new seasonal wardrobe,” Norris added. “That type of behavioral change should make a few brands sit up and take notice.”

Has China’s Anti-Consumerism Movement Hurt This Year’s Singles Day Sales?

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Published November 15, 2020

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Has China’s Anti-Consumerism Movement Hurt This Year’s Singles Day Sales?