The Chinese Lunar New Year holiday has always played a crucial role in driving consumption. According to data from the Ministry of Commerce1, from New Year's Eve to the sixth day of the first lunar month (February 11 to 17, 2021), retail and catering companies achieved combined sales of 821 billion yuan, a year-on-year increase of 28.7% from 2020 and 4.9% from 2019.
The robust consumer spending pointed to resilience in the Chinese economy and opportunities in the Chinese market. This year, as the government advocated “stay put” to prevent the spread of the COVID-19, the week-long holiday witnessed some new consumption trends.
The pursuit of quality and health
As consumers are becoming more rational and picky, products with cost-effectiveness and practical functions have become a key consideration for New Year's consumption. Consumers no longer go for "the most expensive", but prefer "better quality".
For example, according to online data, the total consumption of medium and high-end food ingredients for New Year's Eve dinner on Meicai.cn (an online catering supplier) increased significantly during the holiday, with the consumption of high-quality protein such as meat, eggs, and poultry rising by 15%, and high-quality beef and mutton increasing by more than 20%.
Alibaba’s Spring Festival Consumption Report2 also showed that imported cherries and wines represented the trend towards premiumization during the Chinese New Year. More than half of imported wine consumers came from third- and fourth-tier cities and below, implying people’s increasing aspiration for a quality life.
Besides, Chinese people pay more attention to health. Health foods such as organic grains, green vegetables, protein powder, probiotics, and health products gift boxes were popular during the holiday. According to JD, the most popular gift boxes for the Spring Festival were ginseng, dairy and nutrition products. Taobao data also showed that the New Year's Eve dinner calories had dropped for three consecutive years. This year’s faddish dinner menu had a 29% decrease in calories compared to last year.
More engagement of digital-savvy young people
Affected by the “Stay put” policy and the online shopping trend fueled by the epidemic, the age of the leading consumer groups for New Year’s goods this year has declined. More young consumers involved in the New Year consumption tide. According to Baidu's "2021 New Year Goods Search Big Data", those born in the 1990s and 2000s accounted for 44% of the age groups that paid attention to New Year goods, hitting a record high. Also, Tmall data showed that the proportion of "post-90s" orders exceeded 60% during the New Year Goods Festival.
Buying New Year’s goods is no longer the custom of the older generation. The new generation born after the 1990s and 2000s savored various new consumption options during the traditional holiday.
For example, as this year’s Spring Festival met Valentine's Day, lipsticks, makeup kits, SK-II facial lotion, electric toothbrushes, and beauty instruments became the hottest Valentine's Day gifts on Tmall.
Besides, On Tmall, the sales of pet clothing, New Year's Eve dinner for pets, and pet leash increased by more than 100%. The number of people buying fruit wine doubled over the same period past year, led by urban female between the ages of 20 and 35.
Omni-channel is irreversible
The COVID-19 epidemic has accelerated the process of online and offline integration of the FMCG retail industry.
On the one hand, online consumption continued to gather steam during the Spring Festival period. China's online sales exceeded 122 billion yuan, with online catering sales surging 135% compared with the Spring Festival holiday last year because more Chinese have stayed put and ordered ready-to-eat meals through e-commerce or online food delivery platforms.3
E-commerce giants leveraged live-streaming to boost growth, and O2O platforms and community group purchases also delivered a remarkable performance. The number of online New Year’s Eve dinner packages on Ele.me has nearly tripled year-on-year.2
Fresh Hema launched more than 2,000 New Year goods nationwide. From the Chinese New Year's eve to the fourth day of the first lunar month (February 11-15), Hema users' catering consumption increased by 150% year-on-year.
Offline shopping malls also took on substantial urban passenger flows. Alipay transactions in popular shopping areas across the country grew by an average of 108%.4 The consumer number and consumption amount in 65 Intime department stores nationwide increased by 46% and nearly 20% year-on-year.
During the holiday, Hainan's offshore duty-free shops received over 200,000 customers and registered sales of 1.5 billion yuan, double the figure from the Spring Festival holiday in 2019.
