China Insight: Can Fashion Brands Return to Growth During the Chinese New Year?
According to the annual consumption data for 2024 released by the National Bureau of Statistics of China, in the past year Chinese consumers' consumption of nonessential categories such as footwear, clothing, textiles, cosmetics, skin care, gold, silver and jewelry has weakened significantly.
Facing this reality, fashion brands are betting on the year-end peak shopping season to boost growth. In December and January, which span Christmas, New Year's Day and the Lunar New Year, will holiday marketing strategies of brands and pent-up demand lead to a boom through a two-way interaction?
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Despite the national subsidy policy for the trade-in of consumer goods, which aimed to stimulate consumption and achieved a significant rebound in the growth rate in December, the demand for fashion was less than ideal. Data shows that total retail sales of consumer goods in December reached $620 billion, up 3.7 percent year-on-year. However, among this, sales of footwear, apparel and textiles amounted to only $22.4 billion, down 0.3 percent year-on-year; sales of gold, silver and jewelry were $4.26 billion, down 1 percent year-on-year, and sales of cosmetics, although up 0.8 percent year-on-year, were only $4.75 billion. The sales of these three major fashion categories underperformed compared to the overall retail market.
Against this backdrop, the 'Spring Festival economy' in January has undoubtedly become the focus for businesses to bet on growth.
In 2024, when online retail was relatively active, China's online retail sales reached $2.13 trillion, up 7.2 percent year-on-year. Specifically, during the Spring Festival, according to data from the Ministry of Commerce, the previous round of the 'National Online New Year's Shopping Festival' concluded with sales of $170 billion, a nearly 9 percent increase compared to the same period of the previous year, achieving a strong start for the year's online consumption. For this year, joining hands with the Cyberspace Administration of China, the Ministry of Industry and Information Technology and other departments, launched the 2025 Online New Year's Shopping Festival on Jan. 7. The current consumer stimulus strategies mainly focus on various types of discounts, promotions and the distribution of consumption vouchers.
On the platform side, Taobao has returned to the Spring Festival Gala with a $343.9 million red packet campaign, becoming the exclusive e-commerce interaction platform for the Year of the Snake's gala, with users able to receive up to $260. Alipay's 'Collecting Blessings' campaign has changed its previous rules, introducing popular models among young people, such as collecting IP cards and blind boxes. Douyin has launched the 'Spring Festival Fair' offering traffic support and preferential policies for products with both price and quality advantages. In addition, platforms such as RedNote, Kuaishou and Bilibili have introduced new and unique activities for the Year of the Snake's Spring Festival.
For brands, this year's Spring Festival is by no means just a golden period for achieving sales growth. In early December last year, China's submission of the project 'Spring Festival — The Social Practices of Chinese People Celebrating the Traditional New Year' was approved and inscribed on UNESCO's Representative List of the Intangible Cultural Heritage of Humanity. Therefore, as the first Spring Festival following the successful inscription, it carries profound traditional cultural and emotional bonds among Chinese people, such as nostalgia and family reunions. This will also turn it into an opportunity for brands, which are good at cultural storytelling, to have in-depth communications with consumers.
In addition, the increase in social activities and the concentrated demand for gift-giving during the Spring Festival have created an immense entry point for consumer traffic. Driven by both the 'Spring Festival economy' and the 'gift-giving economy,' this scenario is likely to trigger a new wave of social trends early in the New Year.
Platforms have successively launched gift-giving features. Tencent has introduced the WeChat Store Gift Marketing Solution. This solution not only assists brands in building the infrastructure of their WeChat shops but also strategically deploys traffic touchpoints, empowering brands to achieve counter-cyclical growth within the Tencent ecosystem. Both Taobao and JD.com have also launched gift-giving features. However, while Taobao's feature covers almost the entire product pool, JD.com's supports group gifting, allowing users to share gifts in groups and reciprocate after receiving a gift.
Currently, several A-share listed companies, including S'Young Group, Luolai Life Home Textiles and RonShin Culture, have launched or tested the 'gift-giving' function on the WeChat Store. Beauty brands like Hansu have promoted the New Year gifting market through WeChat Moments ads, influencer endorsements and private domain marketing. High-end brands such as La Mer, Pop Mart and Li-Ning have curated gift-worthy products in dedicated sections. L'Oréal has combined contract-based advertising traffic with the gift-giving function to stimulate consumers' gift-giving needs. By focusing on this golden marketing period of the New Year, these brands have gained the upper hand in the Tencent ecosystem.
The year 2024, marked by a significant slowdown in consumption growth, has come to an end. Boosting consumption and expanding domestic demand remain top priorities for the Chinese government in its economic agenda for 2025. Just one day after the Northern Chinese New Year's Eve — which fell on Jan. 22 this year— Wu Qing, the chairman of the China Securities Regulatory Commission, stated at a press conference held by the State Council Information Office that 'we cannot let important matters wait until the New Year.'
On that day, A-shares across the board rose, but they fell back the next day. Brokerage firms estimated that hundreds of millions of dollars in funds flowed into the capital market this time. The liquidity, stability, and wealth effect brought about by this influx of funds could potentially inject vitality into the consumer market at the turn of the year.
Whether it is the implementation of government policies or the increased efforts from business platforms and brands, this Spring Festival has become a crucial battleground for China's consumer market to stage a comeback in 2025. After all, the more diverse the strategy combinations, the stronger the market expectations, and the greater the impact of future performance on confidence.
Editor's Note: China Insight is a monthly column from WWD's sister publication WWD China looking at trends in that all-important market.
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