Shanghai witnesses shopping frenzy during May Day holidays
China’s gigantic consumer market on steady recovery during May Day holidays
Published: May 05, 2020 06:08 PM

Customers wait in long zigzags at the New World City of Shanghai on Tuesday to redeem the coupons they harvested on e-commerce platform Pinduoduo. Photo: Chen Xia/GT

Young consumers made a 100-meter queue outside Shanghai's iconic New World City mall on Monday night, buying everything from lipstick to sneakers and cars, part of the city's shopping campaign in which more than 15.68 billion yuan ($2.22 billion) of consumer goods were sold within 24 hours.

With consumers satisfying pent-up demand and retailers handing out billions of coupons, rekindling China's gigantic consumption market is moving faster than expected, a bullish sign for the economy. 

But industry insiders said that a full return to normalcy may take time, as some consumers have seen their incomes fall or have lost their jobs, which affects their spending ability. 

New World City, a large mall in downtown Shanghai, was lively on Tuesday as shoppers checked out clothes, shoes and beauty products, and asked for more discounts and cosmetics samples at the counters.

On the first floor, customers waited in long zigzags to redeem coupons they harvested on e-commerce platform Pinduoduo. 

Xu Sang, marketing manager of the shopping mall, told the Global Times that on Monday night, the mall stayed open an extra 30 minutes until 10:30 pm as customers rushed in. The queue outside the store at 9 pm exceeded 100 meters at one point. 

Sales during the five-day holiday had reached about 80 million yuan as of Tuesday, compared with 16 million yuan during the Qingming Festival in April. It is estimated sales for the five-day holidays could hit 100 million yuan. 

"I have not seen so many people in the mall for a long time. The stores were temporarily closed at the height of the epidemic. We worried about consumer confidence during the holidays, but what happened was truly beyond our expectations," Shi Shi, another manager of New World City, told the Global Times.  

Shanghai kicked off the May 5 Shopping Festival, one of the largest-ever consumption-boosting campaigns, on 8 pm on Monday night. Within six minutes, more than 100 million yuan of goods were sold in Shanghai. 

Hundreds of malls, companies and e-commerce platforms, including New World City, Tesla, L'Oreal, Alibaba, Tencent, Suning and Pinduoduo participated in the gala, either by giving out coupons worth a total of 20 billion yuan or arranging special offerings for consumers. 

A 30-something Shanghai-based consumer surnamed Jin spent 7,000 yuan during the five-day holidays on a variety of goods, including skincare products, which she bought at an 80-percent discount.

 "Now I bought more than before the epidemic, even things I thought were too expensive before," Jin told the Global Times. 

Stores in New World City offered record discounts starting at 50 percent, the Global Times learned. An employee of a shoe store in the mall told the Global Times that traffic returned to pre-epidemic levels during the holidays. 

"Our daily sales doubled from the Qingming Festival, to 20,000 yuan to 30,000 yuan. The spring season has finally arrived," she said. 

Pinduoduo, which jointly launched the campaign with the mall, estimated that offline and online sales through the platform hit 300 million yuan from 8 pm to 12 pm on Monday. 

"The whole city is in a shopping frenzy. It took only about five hours for our sales on Tuesday, the first day of the event, to beat our best sales day this year in Shanghai," a spokesperson of Suning said. He added that sales through both online and physical stores owned by Suning grew 723 percent on Tuesday compared with Monday.

Across China, at least 68 cities issued billions of coupons to boost spending during the May Day holidays, according to media reports. A 1-yuan coupon could drive about 3.5 yuan in consumption on average, said a report issued by Alipay. 

Industry insiders stressed the urgency of a consumer revival. 

"Manufacturers and stores need consumers to buy their inventories so that they could keep the factory engines roaring to produce new gadgets. This is key in revitalizing the Chinese economy," Liu Dingding, a Beijing-based veteran industry observer, told the Global Times on Tuesday.

Liu said that the robust holiday consumption shows that the Chinese economy has bounced back from a three-month-long hiatus. "It provided a much-needed shot in the arm for confidence in the Chinese economy."

But observers noted that the shopping boom was being partly fueled by stimulus measures and subsidies, so it wasn't all genuine demand.

A 20-year-old consumer surnamed Guan, who bought several pairs of sneakers at a store in New World City, told the Global Times that she will still buy what she wants, but she plans to save more money in the post-epidemic period. "The pandemic will affect the incomes of some lower- and middle-class households, so growth in consumption may be steady but slower," Guan said.  

Liu noted that the spending power of migrant workers, and employees of small and medium-sized enterprises, may be suppressed. "We need to see the second half to gauge the vitality of China's economy," Liu said.   

First-quarter retail sales fell 19 percent year-on-year, according to data from the National Bureau of Statistics.