Alibaba’s record sales on Singles' Day points to solid consumer spending
today Nov 12, 2018
Luxury goods stocks have been hammered in recent weeks by concerns about weakening demand in China, the market’s main engine of growth and worries about the knock-on effects of a looming trade war with the United States. But the real picture is much more mixed, Michael Evans, chairman of Alibaba, China’s biggest online retailer, told a conference on Monday.
“Clearly, the economy has slowed down for big ticket items such as fridges and cars, but cosmetics, accessories and fashion have seen continued growth,” said Evans, speaking at the New York Times International Luxury Conference in Hong Kong.
China accounts for around 35 percent of luxury goods consumption worldwide, a figure analysts expect will rise to 44 percent by 2024.
Evans was speaking hours after Alibaba, China’s biggest online bazaar, broke another record during its Singles' Day extravaganza on Sunday Nov. 11, with sales reaching $31 billion in one day, up from $25 billion last year.
Evans said 46 percent of Alibaba’s customers were people born after 1990 and 80 percent were born after 1980. “These are very young people who live their lives on their mobile phones and who are heavily influenced by key opinion leaders and social media,” Evans said. But “to sell $31 billion in a day means there is not much of a slowdown.”
Last month, Alibaba and Yoox-Net-A-Porter, which is now part of Cartier-owner Richemont, signed a partnership to launch two mobile applications for Net-A-Porter and Mr Porter online retailers for consumers in China.
China’s economic growth is projected to slow down slightly next year to 6.1 percent from 6.6 percent in 2018 with 65 percent of its growth generated by personal consumption, economists estimate.
“Consumers are tightening their purse strings,” Jing Ulrich, vice chairman of Asia Pacific for J.P. Morgan, told the conference. “Consumers have become choosier, they value authentic, heritage and authenticity when it comes to luxury products.”
Ulrich added that car sales had fallen in recent months in China partly because people were wondering if they should own a car, since they could just rent one when they needed one.
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