HONG KONG–Retail sales over Chinese New Year are expected to outpace last year’s growth, increasing 12 percent year over year, according to Fung Global Retail.
Lunar New Year, which begins Saturday, is a week-long public holiday in China and a key spending period for gift-giving. Last holiday, Chinese shoppers spent 745 billion renminbi (about $108.3 billion), up 11.2 percent from the year before.
In 2016, retail transactions over the new year amounted to 63 percent of National Day Golden Week’s sales, although a similar number are traveling over the two periods–5.76 million versus 6 million.
On the whole, Spring Festival shopping has traditionally been a stronghold for physical retailers due to less worry about late delivery, but online players will start to take more market share, Fung Global Retail stated in its report.
“We expect e-commerce players to gradually become a competitive threat to physical retailers for Spring Festival shopping, given their ability to satisfy longer tail demand for products at more competitive pricing and offer aggressive promotions,” it said.
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It also pointed out that many physical retailers will close or operate limited hours as their staff go home to be with their families. E-commerce players do have their own logistics headache to deal with but companies like Alibaba and JD.com have promised to deliver orders on time, with the former’s Tmall platform promising compensation in the case of any delays.
Meanwhile marketing agency WARC noted that brands in China are moving to incorporate augmented reality into their brand experiences. Alipay‘s newest twist on the red packet (a small envelope filled with cash that’s given during the holiday) allows users to “hide” it at a location of their choice and then share photo clues via social media for the recipient to find and scan.