SHANGHAI – October 25, 2022 – Singles Day continues to be the world’s biggest shopping event and this year the gross merchandise value (GMV) may reach the 1 trillion milestone. However, due to increased competition with several livestreamed shopping events, online retail festivals and continued weak consumer confidence from 2022’s Covid outbreaks and global macroeconomic turbulence, China retailers need to find a balance between promotions and long-term quality growth. Executive teams that embrace the “fight for loyalty” stage can build lasting and valuable differentiation for their business.
To get a fuller picture of retail trends ahead of Singles Day, for the third year, Bain & Company surveyed 3,000 consumers across a wide range of Chinese cities for the report: China’s Singles Day 2022: Loyalty’s a Better Goal than RMB 1 Trillion Sales.
“Singles Day, even with the changes in consumer behavior, Covid and impact of global macroeconomic conditions continues to be a priority for China retailers,” said Kelly Liu, head of the Greater China Retail practice, Bain & Company. “Singles Day and the 618 Festival still generated 12% of all online retail sales in China in 2021. However, the engagement is now being driven more by customer loyalty.”
The volume of participation in Singles Day 2022 looks to be muted due to the increasingly crowded retail sales calendar. For instance, of the shoppers who took part in Singles Day last year and plan to do so again this year, 34% said they were planning to spend less during Singles Day 2022 than they did in the 2021 event, taking both online and offline spending into account. Only 24% said they were planning to spend more—a markedly gloomier outlook than in 2021.
Consumers are also shopping increasingly across platforms – with 69% saying they plan to shop across three or more platforms up from 56% in 2021. Strikingly, 37% plan to use five or more platforms this time: more alarming evidence that many consumers see retailers’ Singles Day promotional offers as interchangeably generic. Traditionally Singles Day GMV growth was often driven by consumers in lower tier cities. However, this year we’ve seen that number decrease with only 8% of participants from lower tier cities participating for the first time down from 12% in 2021.
“China retailers have an opportunity to respond to the challenges found in Singles Day and the external environment,” said James Yang, partner in the Retail practice, Bain & Company. “By making the pivot from discounts to loyalty, retailers can win at Singles Day and gain engagement with consumers throughout the year.”
In the report, Bain reviewed the five retailers in China that have the highest NPS® / Net Promoter Score℠, our measure of customer loyalty. Promoters (consumers that had scored retailers nine or more out of 10), had a higher-than-average tendency to cite product quality, product range, and membership program as top-three reasons for their endorsement and had less emphasis than average on pricing.
With a continued adoption of loyalty metrics like NPS and the slower growth of GMV, Singles Day this year will build upon the trends started in 2021. Retail executives have an opportunity to build upon loyalty as a measure of success and leverage the event to differentiate value proposition and offer a standout omnichannel shopping experience.
“In planning for Singles Day, retailers are going to need to shift metric evaluations from pure dollars spent to engagement with consumers,” said Ralph Wu, associate partner at Bain & Company. “With this shift, Singles Day is one part of the year-round omnichannel shopping experience.”
Retailers should ask themselves a series of different questions that could identify ways to sharpen their loyalty strategy.
- How can we rethink the role of the shopping festival? What is our promotional strategy and which festivals fit that strategy best? How do we measure the effectiveness of our promotions? How can we better align our promotional activity and long-term, high-quality growth?
- How can we further differentiate our value proposition? Which customers do we target? How do we measure loyalty and high-quality growth? What differentiation do we have today that isn’t based on price? Do our investments in customer loyalty generate higher profits?
- How can we offer a standout omnichannel shopping experience? How can we better integrate offline and online offerings? Could partnerships take our omnichannel offering to the next level?
Singles Day will continue to be a priority day for China retailers, however as the event matures it becomes more of a component of a larger strategy that engages with consumers on an ongoing basis year-round across platforms.
Editor's Note: For more information or interview requests please contact: Dan Pinkney, Bain & Company, tel. +1 646 562 8102, email: firstname.lastname@example.org