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China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

AstheNovembershoppingfestivalnearsarevenue

milestone,retailersshouldlookbeyonddiscounting.

ByKellyLiu,JamesYang,MelanieSanders,andRalphWu

1

China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

AtaGlance

InBain’ssecondRetailHolidayNewsletterof2022,wepreviewtheworld’sbiggestshoppingevent,China’sSinglesDay,whichhadagrossmerchandisevalueofRMB952billionlastyear.

IgnoretheloomingRMB1trillionmilestone:OurSinglesDayshoppersurveyshowswhymanyretailersneedtoprioritizecustomerloyaltyoverfurtherdiscount-ledsalesgains.

Executiveteamscanstartbydevelopingloyaltyleverstailoredtotheirbusiness,whilefullyembracingtheomnichannelevolutionofshoppinginChina.

ItmaybecalledSinglesDay,buttheannualChineseshoppingextravaganzaonNovember11nowhasplentyofcompanyasitentersits14thyear.

Forinstance,Douyin,theTikToksisterappthat’shelpedtopopularizelivestreamedshoppinginChina,haslauncheditsownonlineretailfestivalsinJanuaryandAugust.Kuaishou,anothervideoplatform,hascreatedyetanothereventinJune.

WhenyouaddtheseandotherpromotionstoSinglesDay,celebratedbyAlibabasince2009andnowinvolvingahostofonlineandofflineretailers,andthe618festival,launchedbyJD.comin2004andheldeachJune,it’sunsurprisingthatretailersinChinaarefindingithardertogrowviatheirannualdiscountingsetpieces.

ThecrowdedretailcalendarisonereasonwhyourexpectationsforSinglesDaythisyearareagainmuted.

Beforethe2021event,wedidn’texpecttheusualstellarincreaseingrossmerchandisevalue(GMV),therevenuemetricthathasbeenthemainbenchmarkforChineseonlineshoppingfestivals.Thatcautionprovedcorrect:SinglesDayGMVincreasedby13%,thesmallestadvanceever—andjustafractionofthe35%compoundannualgrowthpostedbetween2014and2019.

Thisyear,Chineseretailersstillfacethechallengetheyhadin2021—ofspurringfreshgrowthfromaneventthatalreadydwarfsallotherretailfestivalsglobally.Buttheyalsohavetocontendwiththedamagetoconsumerconfidencewreakedby2022’sCovidoutbreaksandglobalmacroeconomicturbulence.

Forretailers,thisdoesn’tspelltheendoftheparty,though.It’sactuallyapositivenewphaseintheevolutionofthesectorinChina.

Havingbecomethesecond-biggestretailmarketglobally,withonlinepenetrationlevelsamongthehighestintheworld,Chineseretailhasenteredthe“fightforloyalty”stage.Now,itsfocushastoshiftfromheadlonggrowthtoretainingcustomersandbuildingprofitability—allthewhiletakingamoreintegratedapproachtoonlineandofflinechannels.Executiveteamsthatcangraspthisopportunitywillbuildlastingandvaluabledifferentiationfortheirbusiness.

2

410

314

254

177

123

81

318

285

154

China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

KeytrendsforSinglesDay2022

Eventhoughgrowthwasatahistoriclowduringthe2021SinglesDayfestival,salesalmosthitamilestone.Including10daysofpre-eventpromotions,grossmerchandisevalueflowingthroughonlineplatformsrosefromRMB840billionin2020toRMB952billion($136billion),tantalizinglyshortofRMB1trillion.

Couldthatsymbolicthresholdbebrokenthisyear?TheJune2022installmentofJD.com’s618event—thesecond-biggestChineseshoppingfestivalafterSinglesDay—suggeststhattherelativelymodestgrowthneededforthatfeatisfarfromguaranteed.GMVforthe618festivalanditsrun-uprosebylessthan1%,fromRMB579billiontoRMB583billion(seeFigure1).

TogetafullerpictureofretailtrendsaheadofSinglesDay,alsoknownasDouble11becauseofitsNovember11date,wesurveyed3,000consumersacrossawiderangeofChinesecities.Theinsightsfromtheseshoppersillustratesomeofthefestivalheadwindsinmoredetail.

Forinstance,oftheshopperswhotookpartinSinglesDaylastyearandplantodosoagainthisyear,34%saidtheywereplanningtospendlessduringSinglesDay2022thantheydidinthe2021event,takingbothonlineandofflinespendingintoaccount.Only24%saidtheywereplanningtospendmore—amarkedlygloomieroutlookthanin2021(seeFigure2).

Figure1:SinglesDaysalesgrowthhadbeenflatteningevenbefore2022broughtfreshCoviddisruptionandmacroeconomicvolatility

SinglesDaysalesaren’tcertaintotop

RMB1trillion…

SinglesDaygrossmerchandisevalue(BRMB)

952

840

2014

Year-over-yeargrowth

15161718192021

53%44%43%24%30%29%13%

…especiallygiventhe618event’sflatrevenuesinJune

618festivalgrossmerchandisevalue(BRMB)

579583

457

2017

Year-over-year

growth

18

85%

19

12%

20

44%

21

27%

22

1%

Notes:From2020,SinglesDayGMVcoversNovember1–11,notjustNovember11,withgrowthmeasuredagainstthesameextendedperiodintheprecedingyear;SinglesDayand618GMVexcludeslivestreamingplayers;618GMVincludespre-eventpromotionalactivity

Sources:Syntun;Bainanalysis

3

Decrease(34%)

Nochange(42%)

Increase(24%)

5ormore(12%)

4(15%)

3(29%)

2(31%)

1(14%)

China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

Figure2:SinglesDayshoppersplantospendlessduringthisyear’sfestivalandspreadtheirpurchasesacrossmoreretailers

SpendingintentionsofSinglesDayparticipants

Decrease(9%)

Nochange(40%)

Increase(51%)

2022

2021

NumberofretailplatformsSinglesDayparticipantsanticipateusing

5ormore(37%)

4(29%)

3(3%)

2(22%)

1(9%)

2021

2022

Notes:SinglesDayparticipantsdefinedasthosewhotookpartin2021andplantodosoagainthisyear;columnsmaynottotal100%duetorounding

Sources:Bain/Tolunaconsumersurvey,2021(n=2,977);Bainconsumersurvey,2022(n=3,000)

TheseSinglesDayparticipantsarealsoshowingamorepronouncedtendencytoshopacrossmultipleplatforms.Lastyear,56%saidtheywereplanningtoshoponthreeormoreplatformsduringDouble11.Thathasnowincreasedto69%.Strikingly,37%plantousefiveormoreplatformsthistime:morealarmingevidencethatmanyconsumersseeretailers’SinglesDaypromotionaloffersasinterchangeablygeneric.

Italsolookslikeit’sgettinghardertorecruitnewconsumersfromTier3,4,and5citiestotakepartinSinglesDayandmakeupfortherelativemarketsaturationinthebiggestandrichesturbanareasofChina.Inour2021survey,12%ofexpectedparticipantsfromtheselower-tiercitieswerefirst-timers.Inour2022survey,thatproportionhadcomedownto8%,suggestingthatthesupplyoflower-tierconvertsmightbedwindling.

Puttingpricingintoperspective

Retailerscan’taffordtoignoreSinglesDaypromotionalactivity(orthe618festival,forthatmatter).Afterall,thosetwomonstereventsgeneratedabout12%ofonlineretailsalesinChinain2021.Consumersaren’treadytogiveuptheirdeals:Acrossthebroadspectrumofonlineandofflineretailers,pricingcontinuestorankhighonthelistofreasonstheychooseagivenretailer.

Butwhenitcomestogenuinedifferentiationbetweenretailers,there’smuchmoretothestory.

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China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

Inourpre-SinglesDay2022survey,wedugdeeperintoattitudestowardthefiveretailersinChinathatrankhighestoncustomerloyalty,asmeasuredbyNetPromoterScoreSM.Weseparatedconsumersthathadgiventheseloyaltyleadersascoreof9ormoreoutof10(whichmakesthemapromoterofthatretailerinNPS?terms).Wethenaskedtheseshopperstoexplainwhytheyweresowillingtorecommendthatretailertoafriendorcolleague.Theyshowedahigher-than-averagetendencytociteproductquality,productrange,andmembershipprogramsastop-threereasonsfortheirendorsement.Conversely,theyplacedlessemphasisthanaverageonpricing(seeFigure3).

Clearly,whenitcomestobuildingastrong,long-termrelationshipwithshoppers,thereismoretosuccessthanjustofferingdeepdiscounts.Thatinsightcomesintoevensharperfocuswhenwecompareloyaltyleadersinonlineandofflineretailwiththeirdirectcompetitorsineachchannel.

Inouranalysis,thetwoonlineretailerswiththehighestNPSreallystandoutfromtheonlinecrowdonarangeofnon-price-relatedfactors(seeFigure4).Promotersofthoseretailersaredisproportionatelylikelytopraisetheauthenticityoftheproductsonsale(meaningtheyarenotfakes),therangeofproductsavailable,after-salessupport,theabilitytotestbeforepurchasing,anddeliveryspeed.

Similarly,thethreeofflineretailerswiththehighestNPSaredifferentiatedbytheirmembershipprograms,productquality,shoppingenvironments,andsalesassistants.Inbothonlineandofflineexamples,promotersoftheseloyaltyleadersshowabelow-averagetendencytocitepricingasabigfactorintheirendorsement.

Figure3:AttheretailersthatinspirethemostloyaltyinChina,pricinghasalower-than-averagesignificanceforshoppers,whileotherfactorstakeonmoreimportance

Howreasonsforrecommendingaretailerdifferathigh-loyaltyretailersvs.theindustrynorm

(percentagepoints)

6

4

2

0

–2

–4

Product

quality

Product

range

Membershipprogram

Testbefore

purchase

After-sales

support

Flexible

returns

Customized

recommendations

Pricing

Notes:Barsshowvariationintheshareofpromoterscitingeachreasonasatop-threefactorforrecommendingthatretailervs.theindustryaverage;high-loyaltyretailersdefinedastwoonlineretailersandthreeofflineretailerswiththehighestNetPromoterScoreSM;apromoterisacustomerwho,whenaskedhowlikelytheyaretorecommendabrand,replieswitha9or10onascaleof0–10

Source:Bainconsumersurvey,2022(n=3,000)

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China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

Figure4a:High-loyaltyonlineretailersstandoutontheauthenticityoftheirproducts,theirrange,andothernon-price-relatedfactors

Howreasonsforrecommendingaretailerdeviatefromtheindustrynorm

Value-addedelements

Functionalelements

FastAfter-salesTestbeforeRichCommunityCustomized

Product

range

Authentic

product

+7percentagepoints

Pricing

deliverysupportpurchasecontentinteractionrecommendations

+4

+3+4+4

High-loyalty

onlineretailers

–2

–3

–4

–4

+4

+4

+2

+2

Otheronline

players

–4

–3–3–4

–6

Notes:Barsshowvariationintheshareofpromoterscitingeachreasonasatop-threefactorforrecommendingthatretailervs.theindustryaverage;high-loyaltyretailersdefinedastwoonlineretailersandthreeofflineretailerswiththehighestNetPromoterScoreSM;apromoterisacustomerwho,whenaskedhowlikelytheyaretorecommendabrand,replieswitha9or10onascaleof0–10

Source:Bainconsumersurvey,2022(n=3,000)

Figure4b:High-loyaltyofflineretailersstandoutontheirmembershipprograms,productquality,andothernon-price-relatedfactors

Howreasonsforrecommendingaretailerdeviatefromtheindustrynorm

Value-addedelements

Functionalelements

Testbeforepurchase

Sales

assistants

Shoppingenvironment

Pricing

Floor

plan

Product

range

Product

quality

Flexible

returns

Membership

program

+7

+5percentage

points

+1

+1

+1

+0.2

High-loyalty

offlineretailers

0

–1

–2

+2

+1

+1

+1

+0.4

+0.1

–0.1

–0.4

–1

Otheroffline

players

Notes:Barsshowvariationintheshareofpromoterscitingeachreasonasatop-threefactorforrecommendingthatretailervs.theindustryaverage;high-loyaltyretailersdefinedastwoonlineretailersandthreeofflineretailerswiththehighestNetPromoterScoreSM;apromoterisacustomerwho,whenaskedhowlikelytheyaretorecommendabrand,replieswitha9or10onascaleof0–10

Source:Bainconsumersurvey,2022(n=3,000)

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China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

Theomnichannelfightforloyalty

So,howshouldretailersinChinarespondtothedecliningeffectivenessofshoppingfestivalsasameansofgeneratingprofitabletrafficfortheirwebsitesandphysicalstores?

Onetacticalresponseistobeselectiveaboutwhichfestivalstoparticipatein.Forthemust-havesthatmakethecut,retailersalsodon’tneedtotakepartacrosseverypointofinteractiontheynowhavewiththeircustomers.Forsomefestivals,retailersmightnotofferdiscountsacrossalltheirapps,forinstance,ortheymighttargetjustonesegmentofshoppers.

Manyretailersalsoneedtoreadjustthebalancebetweenpromotionsandlong-termqualitygrowth.Foronething,howdoesallthatrelentlessdiscountingfitwithhowtheywanttheirpricingtobeperceivedoverall?

Aboveall,though,there’sastrategicimperativetosharpendifferentiationasawayofdeepeningcustomerloyalty.

Loyaltywinnersarealreadyemerging,propellednotjustbytheirmembershipprogramsbutbyvariousotherstrengthsthatvaryfromcompanytocompany,includinguniqueproductsandhard-to-matchexperiences.Someonlineretailersarebankingonrichcontentandcommunityinteractiontoprovidethatstickyanddistinctiveconsumerpull.

Loyaltywinnersarealreadyemerging,propellednotjustbytheirmembershipprogramsbutbyvariousotherstrengthsthatvaryfromcompanytocompany,includinguniqueproductsandhard-to-matchexperiences.

Retailersneedacomprehensiveunderstandingoftheirtargetcustomerstofindtherightloyaltyleversfortheirbusiness.AlibabaisoneretailerthathasmadestrongprogressinshiftingfocusfromGMVtocustomerloyalty.Inthe12monthsendingJune30,2022,itmanagedtoretain98%ofcustomerswhospentmorethanRMB10,000overthepreviousyear.AsofJune30,2022,italsohad25millionmembersofits88VIPloyaltyprogram,whoonaveragespendmorethanRMB57,000eachyearwithAlibaba.Similarly,theaverageAlibabacustomershopsmorewidelywiththeretailerovertime,broadeningtheirpurchasesfrom7categoriesto19overfiveyears.

ThisprogressreflectsAlibaba’sinvestmentinasmoothandconsistentcustomerexperience,frompresaleservicetofulfillmenttoreturnsandotherpost-salesservices.Forinstance,ithasinvested

7

China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

indiversifiedcontentandmarketingtoolsformerchantstofosteruserengagementandhasalsoextendeditscross-bordere-commercefulfillmentinfrastructure(itnowhassixglobaldirectprocurementcenters).

ItsSinglesDayevent,knownofficiallyasthe11.11GlobalShoppingFestival,alsoshowcasesitsworkwithbrandstoidentifyandservenewconsumertrendsthroughsolutionssuchastheTmallInnovationCenterfornewproductdevelopment.Meanwhile,Alibaba’scombinedphysicalstorepresence,localservices,ande-commercehavepositioneditwelltodeepencustomerloyaltythroughamoreseamlessomnichannelexperience.

MetroChinaisanotherretailerthathasfoundtailoredopportunitiestoturnshoppersintopromoters.

Ithasbegunaprogramofstorerenovationsgearedtomaximizingaconsumer’sshoppingexperienceratherthanprioritizingeaseofoperation.Therevamp,partofabroaderpushoncustomer-ledexperienceredesign,hashelpedmakeMetroChina’sstoreatmosphereakeypointofdifferentiationthatcustomerssingleoutforpraise,bothintermsofthehelpfulnessofstaff(inareassuchasthepromotionofnewproducts)andtheeaseofnavigatingthestore.

AssortmentisalsoakeyloyaltyleverforMetroChina.Aswellasredoublingeffortstoharnessthefullpotentialofitsown-brandproducts,itistrimmingSKUsaspartofadrivetoimproveitsvalueproposition.

Acrosstheretailsector,executiveteamscan’taffordtoignoretheomnichannelnatureofshoppinginChina.Inourpre-SinglesDay2022consumersurvey,two-thirdsofrespondentssaidomnichannelshoppingwastheirdefaultmode.Theyalsoindicatedthattheyusedonlineandofflinechannelsforprettymuchthesameshoppingoccasions,underlininghowseamlesslythetwoareblending.

Acrosstheretailsector,executiveteamscan’taffordtoignoretheomnichannelnatureofshoppinginChina.Inourpre-SinglesDay2022consumersurvey,two-thirdsofrespondentssaidomnichannelshoppingwastheirdefaultmode.

Onanoperationallevel,retailersneedtobethinkinginanomnichannelwaywhenplanningtheirpromotionalactivityforSinglesDayandothercan’t-missshoppingfestivals.Butthere’sabiggeropportunityhere.OurresearchshowsthatpredominantlyphysicalretailersinChinacanboostcustomerloyaltybyincreasingtheironlinepenetration.That’sbecausetheiroffline-onlycustomerstendtoawardthemarelativelylowNetPromoterScore.Thegapbetweentheiroffline-onlyNPSandtheiroverallNPS(whichisboostedbyomnichannelshoppers)canbeasmuchas16points.

8

China’sSinglesDay2022:Loyalty’saBetterGoalthanRMB1TrillionSales

BeyondtheRMB1trillionquestion

InourpreviewofSinglesDay2021,wesaidretailersneededtostopfixatingongrossmerchandisevalueasameasureofsuccess(seetheBainBrief“ChinaRetail:ANewDefinitionofSinglesDaySuccess”).ThecontinuedmaturingofSinglesDayandotherfestivals,coupledwith2022’seconomicheadwinds,hasonlycompoundedourbeliefthatChina’sretailersneedaloyalty-ledmodelthattracksabroaderrangeofmetrics,includingNPS,customerretention,andcustomerlifetimevalue.

Withallthatinmind,itd