By Casey Hall
SHANGHAI (Reuters) – As Alibaba Group wraps up the world’s biggest online shopping festival on Friday, the operative word seems to be flat – potentially flat sales and flat in tone with the Chinese e-commerce giant not even holding its usual gala show.
The Singles Day shopping festival, which despite its name has evolved into a multi-week event, is a key barometer of Chinese retail demand. Consumer sentiment is, however, at a low ebb – hit hard by China’s stringent COVID curbs and a sharply slowing economy.
Alibaba has also sought for more than a year to play down hype surrounding the event as President Xi Jinping increasingly emphasises “common prosperity” – a push that seeks to eliminate growing wealth inequities and clamp down on what the Communist Party sees as excessive behaviours.
While Alibaba has said its Tmall marketplace would offer more than 17 million products, 3 million more than last year and that a record-matching 290,000 brands are participating, the festival is set to have its weakest sales growth ever.
A Bain & Co survey ahead of the event found just 24% of respondents planned to spend more this year. In a separate report, U.S. firm Yipit Data said transactions on Alibaba’s Tmall during the Oct. 24-31 presales period, during which shoppers can put down deposits on items, were flat from last year.
Citi analysts said this week they were conservatively forecasting gross merchandise value (GMV) for the event to range between 545 billion yuan and 560 billion yuan ($75-77 billion), growth of 0.9% to 3.6%.
“While promotional campaigns have kicked off with decent buzz on consumer demand over the past week, we are cautious; spending sentiment is likely to remain soft,” Citi’s Alicia Yap wrote, citing disruptions to economic activity due to COVID curbs and rising job insecurity.
That compares with an 8.5% rise in GMV last year and a 26% jump in 2020. Before 2020, the festival was a one-day event.
But Citi predicts rival e-commerce giant JD.com, which also holds a Singles Day shopping event, to fare somewhat better as it is strong in consumer electronics and home appliance offerings which are expected to remain popular.
JD’s GMV growth is likely to slow to between 4.6% and 8.9% compared to 28.6% last year, it said.
This year is the first time that Alibaba won’t host either a celebrity gala show, which in the past has featured appearances from Mariah Carey and Taylor Swift, or an event on Nov. 11 that culminates in a countdown to the final GMV tally.
The cancellations were due to COVID curbs, it said, although similar events have been held online in the past two years.
Singles Day has also had contend with the absence of one its two live-streaming mega sales gurus, Viya, who has been offline since being fined for tax evasion. Alibaba also decided not to feature the other, Li Jiaqi, in its marketing for its event.
Brands told Reuters they were being realistic about this year’s prospects.
“The platform has definitely tried to cool down the expectations from brands,” said Mauro Maggioni, Asia Pacific chief executive at high-end sneaker brand Golden Goose.
Alibaba has said loyal and VIP customers will be key to the event this year and that it is also focusing on developing merchants’ loyalty programmes. Alibaba’s membership program has more than 25 million members who spend an average of 57,000 yuan ($8,000) annually on its platforms.
“Alibaba has tried to make (the event) less about just dropping prices,” said Mark Tanner, chief executive of Shanghai-based consultancy, China Skinny.
“But it seems most consumers, particularly in the current environment, just want cheaper goods.”
($1 = 7.2431 Chinese yuan)
(Reporting by Casey Hall; Editing by Brenda Goh and Edwina Gibbs)