China's Double 11 customers look for 'more bang for buck'

An AlixPartners survey says nearly two-thirds of Chinese consumers expect to increase spending this year on daily necessities, clothes and footwear, and homecare and lifestyle products in the biggest shopping event of the year in China. Last year’s revenge-spending trend seems to have waned as consumers prepare for a slowing economy.

They are likely to be more selective compared to last year, while 14% of almost 2,000 survey respondents plan to spend less, the annual survey finds. They attributed their reduced spending to lower optimism about the future (47%), desire to spend more sustainably and consume less (35%), and lower salary/income (33%).

“Value for money” has also become a key consideration for consumers chasing bigger markdowns in their shopping, as the broader global economy continues to weigh on consumer sentiment and retail sales: 39% of surveyed consumers have no plans to purchase luxury goods at all.

Consumers also said they had become accustomed to stockpiling because of the pandemic – likely influenced by the recent uptick in Covid-19 cases across various parts of China.

Livestreaming declines, with bargains beating loyalty

Livestreaming, one of the most dominant mediums for discount-shopping festivals in recent years, is seeing its popularity decline. Only 74% of surveyed consumers say they will participate in livestreaming this year, down from 97% last year. Among those who will still watch livestreaming, 44% report that negative news relating to livestreaming hosts has made them less engaged.

Nevertheless, livestreamed commerce is still attractive to most Chinese consumers, with the reasons for purchase being: to better understand product details (60%), to get exclusive discounts and free gifts (35%), and to enjoy the interactivity (32%). 

Consumers who are still tuning in are looking to buy a specific item, or understand how it performs. The most popular content on livestreams includes those showcasing the ability to pressure-test the quality of a product in a way that’s not possible with a traditional commercial.

In addition, consumers are more than willing to switch platform loyalties in their hunt for a good deal. While Taobao remains the leading livestreaming platform among 73% of people (down from 83% last year), Douyin is catching up with a 50% increase year-over-year. Currently, 58% plan to use the short-form video platform, up from 38% last year. Douyin penetration is also evenly spread out across the different age groups, city tiers, and income groups surveyed, indicating that it is growing in popularity across all segments.

Rational consumption drives bigger but simpler discounts

Based on their experience with Double 11 last year, almost half of surveyed customers (42%) consider better discounts/prices as the top area for improvement. At the same time, over one-third of them (35%) also want simpler promotions this year as they have become fatigued by the increasingly complicated promotional campaigns of recent years, common in most discount festivals in China.

The platforms have responded with some of the largest discount rates in recent years in an attempt to attract and satisfy the needs of the savvy shopper. Taobao is offering discounts of 50 RMB for every 300 RMB purchased across the platform (up from 30 RMB on every 200 RMB last year), and JD.com is offering a similar 50 RMB discount for every 299 RMB purchased.

Pricing and promotions target prudent consumers

With the consumer becoming increasingly conservative given the economic backdrop, there is a need for retailers to think about their strategies throughout the year, even after Double 11. How should brands utilise the exposure around discount festivals to engage the more conservative shopper? How does this impact the overall pricing strategy and how can one increase overall profitability in the light of this trend?

With loyalty becoming increasingly scarce in the age of the powerful and opinionated “me-centric” consumer, retailers cannot afford to be “everything for everyone”. AlixPartners advises brands to double down on target customers and figure out where their customers are shopping and exactly what products they’re looking to buy.

Spread out the marketing love - or consolidate your budget

Double 11 is likely to remain the key headline event for the foreseeable future in China, according to AlixPartners. But with consumers spreading their dollars across different discount festivals, retailers must prioritise as well. Which event lines up more with your brand and marketing calendar? Is it right to participate in every festival throughout the year or is focusing on one or two events a better plan? Where and when should the marketing team spend most of its energy and resources?

These are all questions that demand a close analysis of marketing goals and a thorough review of past sales and customer data.

Sourced from AlixPartners