China, online sales grow, but revenge spending isn’t much

China, online sales grow, but revenge spending isn’t much

The positive note that comes from the People’s Republic is that online sales are increasing. The negative one is that brands cannot put too much faith in the shopping wants of Chinese consumers: revenge spending isn’t much. While the world is still influenced by the Coronavirus, the luxury industry is looking towards the East with hope, as the market there is open. But the signals aren’t all going in the same direction. Some time will pass before things go back to normal.

Good performance from the online segment

According to China’s National Statistics’ Office, online sales in 2020 grew by 5.9%: now worth circa 23.6% of turnover of total distribution. The effects can be seen in the fashion industry. As reported by ANSA, the Haining Leather Goods’ centre in Hangzhou (Zhejiang province) has seen a significant increase of online orders. Since 2018, the mall joined forces with Alibaba, foreseeing its growth potential. Now that physical retail is in crisis due to the slowdown from Covid-19, “up to 80% of all entrepreneurs sell their goods via direct streaming – they say – and the goods are often simply placed on the floor for daily deliveries”.

Revenge spending isn’t much

But brands shouldn’t get their hopes up. Filippo Fasulo, director of Centro Studi per l’Impresa della Fondazione Italia-Cina, to the Economics’ section of Corriere della Sera. By observing the distribution data for the first quarter of the year, he points out that many segments’s sales have dropped by double-digit amounts, (from the automotive to clothing, and furniture), with only food & beverage growing. “In Beijing as well, during this time, consumers worried about primary needs – he says – thus delaying the purchase of luxury goods to a later moment”. What about revenge shopping, which was mentioned and hoped for to move forward after the crisis? “Expectations on going back to normality and the recovery of revenues thanks to revenge spending – he says – will be a disappointment”. But according to Fasulo, operators should continue looking to the East, because that’s where the market will restart: “The majority of all research institutes reveal how Chinese consumers – he concludes – are the most optimistic in terms of a global recovery”.

 

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