- An analysis of data generated by Chinese shoppers during and after the lockdown reveals several new trends.
- Big shifts are taking place in what consumers are purchasing - and how.
Are Chinese consumers really indulging in 'revenge consumption' - a phrase coined by Chinese social media users to describe an anticipated flood of post-lockdown purchases - in the post-COVID era?
An analysis of data generated by JD.com's 618 Grand Promotion - the biggest mid-year shopping festival in China - is a good way to find out. Transaction volumes on JD.com on the first day of this event, which kicked off on 1 June, showed an increase of 74% year-on-year, demonstrating a strong recovery of consumer confidence.
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JD’s data and analysis of the first half of 2020 has revealed the following lasting trends, as people gradually adapt themselves to a new shopping normal in the post-COVID era:
1. A big step forwards in online shopping habits
COVID-19 broke out during Chinese New Year, when most shops were closed, and people immediately turned to online shopping to stockpile essentials. Thanks to the readiness of Chinese e-commerce ecosystems in terms of supply chain and logistics, these shopping needs were largely met during the lockdown period. On JD.com alone, more than 160,000 tons of staple items and daily necessities were delivered to customers’ doorsteps in time - helping to prevent a great toilet paper panic from occurring in offline stores.
In the first four months of this year, China’s total retail sales of consumer goods amounted to RMB10.68 trillion ($1.5 trillion), a decrease of 16.2% compared with the same period last year, while sales of online retail reached RMB2.56 trillion ($360 billion), an increase of 8.6%.
This shift from offline to online is significant and has continued after the lockdown, leading customer’s online shopping habits to leapfrog at least one or two years, especially in the grocery category. On the first day of the 618 Grand Promotion, JD Super, JD’s online supermarket, saw its sales increase by 100% while online sales of fresh groceries rose by 140%, compared with the same promotional day last year.
2. More family responsibilities for young consumers
It’s no surprise that young people are the main driver of lockdown shopping, as they are savvier about using online shopping apps. With the extended holiday keeping them at home longer than usual, young people have taken on more responsibilities. Data indicates that since the beginning of this year, more than 70% of consumers born after 1995 have shifted from "buying only for themselves" to “buying necessities for the whole family”.
Furthermore, when many young people returned from major cities to their homes in China's lower-tier cities, they helped their family members to engage with online shopping - and to some extent they have driven the penetration of brand, quality and authentic products into lower-tier city markets.
These trends became more pronounced during the 618 Grand Promotion period. According to data from JD Super, young people have moved into the kitchen; purchases of kitchen paper towels by young people, for example, has doubled compared with the same period last year. Awareness of the need to protect the family has also strengthened; the data shows a 34-fold increase in transaction volumes of disposable cleaning products and a 340% increase in purchases of sterilization products year-on-year.
3. Shopping frenzy led by livestream and community group buying
To manage social distancing, consumers are using digital to connect, entertain and shop, fuelling a surge in livestreaming by retailers and social e-commerce. These innovative ways to shop have helped bolster sales for both international brands and local businesses.
The travel restrictions and closures of brick-and-mortar stores have not dampened Chinese consumers’ passion for big international brands. Interacting with their favourite brands online, combined with celebrities and attractive offers for fear of price rises later on due to production disruption, is the biggest emerging trend in the post-COVID market - and consumers are saving on travel expenses, too. More and more international brands are jumping on this bandwagon. For example, on 19 March, Canadian fashion brand PORTS did a nine-hour livestream on JD Live, featuring young celebrities and the fashion editor of Elle magazine. Over 1.3 million customers visited the livestream and PORTS’ sales surpassed RMB10 million ($1.4 million) on that day.
On the local business side, livestream and social channels are playing an important role in supporting direct sales for farmers and local factories who have been hit hard by the pandemic. Consumers feel inclined to support them, and are also benefited by these new shopping formats. Under a community group-buying initiative on JD platform, consumers bought over 225 tons of agricultural produce from Wuhan - the first epicentre of COVID-19 - in less than two months. Mingzhu Dong, chairwomen of China’s home appliances brand Gree Electric, staged a livestream session on 15 May and made RMB703 million ($99 million) in sales.
4. Value for money, comfort and the new normal
As consumers become more cautious in making purchase decisions in the face of ongoing pandemic uncertainty, sales of customized products that are more directly tailored to consumers' needs are rising. Consumer-to-manufacturer (C2M) products, which are designed based on big data analysis of direct customer feedback, are increasingly popular, satisfying consumer demand and providing good value for money. are increasing popular. These products are designed based on insights gleaned from data generated by targeted consumers and are thus able to provide more customized functions at reasonable cost, resulting in better value for money.
Perhaps as a result of COVID-19, customers are looking to invest more in products and services that provide comfort at home. Data shows that besides books and exercise equipment, expensive home furnishings goods - such as latex mattresses, silk quilts, smart bathroom mirrors and electrically heated towel racks - are in high demand. In addition, demand for pet-related products and virtual support services - such as programmes that store pet profiles and preferences, and online pet hospitals - is also growing.
Although in many respects work and life have resumed in China, shopping data shows that people are shopping with the aim of adapting to the new normal. Here are a few examples: with mandatory mask-wearing in public spaces, sales of lipstick and other facial maintenance products have gone down, while sales of eye-related make-up products as a proportion of category sales have risen; mothers are continuing to buy large amounts of milk powder and diapers in June to ensure they have enough imported supplies for the longer term; and bicycles and electric motorcycles have experienced explosive growth in the post-COVID market.