Policies update, with Consumption Trends in National Day Holiday

A package of incremental policies promotes the continuous improvement of the economy from five aspects

Policy-led consumer confidence rebound, diversified and emotional consumption trends are highlighted

Internet usage has slightly decreased to an average of 29 hours per month in June 2024, from 29.1 hours a year ago. The fastest-growing categories are life and travel services, with growth rates of 14.4% and 12.0% respectively. During this year's National Day holiday, domestic tourism reached 765 million trips, a comparable increase of 5.9% over the same period last year and 7.9% over 2019. Daily passenger volume increased by 11.1% for aviation, 10.0% for waterways, 6.3% for railways, and 3.7% for highways. Notably, as car ownership (including electric cars) increases, consumers prefer self-driving due to its flexibility, with a daily increase of 55.8% during the 2024 National Day holiday period compared to 2019, with a highest growth rate among all travel methods. Additionally, ‘neighbor-city-visiting’ between cities have become more frequent.

Different from the special force-style tourism mentality of the previous two years, as the tourism market returns to normal (the recovery of the supply chain of tickets and hotels on the industry supply side), the consumers' mentality of ‘snatching’ has decreased. More consumers therefore have a more obvious demand for ‘experience’ their decision-making chain is shorter, and consumption becomes more casual, shifting from planning a happy trip to having a trip to make oneself happy. Data from Ctrip shows that the daily order growth of performance-related orders during the National Day holiday exceeded 80%; the average advance booking days dropped from 6.8 days in 2023 to 6 days in 2024; data from Qunar shows that in the first-two days during the holiday, temporary bookings for hotels in popular cities on the platforms during increased by 40% year-on-year.

This more casual attitude that places greater emphasis on pleasing oneself can also be seen in consumers' daily consumption. Their awareness has become saturated, especially as the endless iteration of new brands and products intensifies market competition, leading to a decline in brand recognition and usage.

As consumer confidence recovers, there‘s a shift towards consumption that stimulates positive emotions, such as brands offering better experiences and value for money with quality. Domestic brands, with their flexible marketing and shorter decision-making chains, are less impacted by this saturation. Despite some advantages, international brands face challenges in penetrating lower-tier markets and flexibility in marketing decisions, causing some to experience declining performance in the domestic market this year. In mid-September this year, sales data of local beauty and skincare brands (Proya, Comfy, Kans, Marubi, Runben) and sportswear (Anta) have shown improvement. Despite some advantages （such as the top of mind share of international brands in 2024 increased by 3% compared to 2022), international brands face challenges in penetrating lower-tier markets and flexibility in marketing decisions, causing some to experience declining performance in the domestic market this year.

Overall, travel cost is growing faster than the number of trips, indicating higher per capita spending during the National Day holiday. Data from the Ministry of Culture and Tourism shows a 6.3% increase in total domestic tourist spending, outpacing the 5.9% growth in trips, and a 7.9% rise compared to 2019.

Apart from increased long-distance travel costs, spending on dining and cultural entertainment has risen due to higher demand for experiences. Travel and online platforms are more integrated, benefiting from improved county infrastructure (development of tourist attractions, rich supply of products, renovation and upgrading of supporting facilities such as hotels) and transportation convenience (high-speed rail lines and self-driving). This allows consumers to follow online recommendations, taste local foods, and experience cultural activities. For instance, the collaboration of Black Myth: WuKong with Shanxi's cultural tourism led to a 58.3% year-on-year increase in the number of tourists in the first four days of the National Day holiday, and a 44.3% year-on-year increase in cumulative ticket revenue. 

Douyin data shows group purchases related to traditional cultural experiences have more than doubled compared to last year. County tourism was favored by high-tier market consumers during the National Day holiday, with daily orders increasing by 40% YoY. Promotional content from places like Henan Shanzhou Underground Courtyard and Quanzhou Xunpu Village has become a driving force for offline trips.

Looking at the composition of travel consumers, data from Qunar shows a 50% increase in first-time flight purchases from over 600 lower-tier cities compared to 2023. First-time purchases of international flight tickets increased by more than 70%. This is due to improvements in infrastructure and supply increases, such as new airports, additional flight routes, and dedicated lines to nearby high-tier city airports. Also, consumers in lower-tier markets have higher per capita non-housing consumption amounts, meaning they have more disposable income for entertainment and experiences, showing higher consumption vitality in recent years. Sam's Club, for instance, initially focused on metropolises, has seen rapid expansion in new first-tier cities (Suzhou, Hangzhou, Wuhan, Chengdu, Chongqing, Changsha, etc.) and other markets (Dongguan, Shaoxing, Jinjiang, Wenzhou, Jiaxing, Quanzhou, etc.). Walmart stated in its Q2 earnings call this year that in China, strong membership trends and Sam's Club continue to drive double-digit sales growth.

Population mobility is driving instant and experiential consumption habits. Meituan data shows a 41.2% year-on-year increase in on-site consumption during the first six days of the National Day holiday, with a 69.6% increase in daily tourist spending. First-five-day’s night snack consumption increased by 44.8 percentage points compared to 2023. On Ele.me, deliveries from convenience stores to hotels doubled year-on-year, mainly emergency supplies. More consumers are group buying food, tickets, and entertainment on Douyin. This suggests a demand for unique experiences and convenient purchasing methods, accelerating local businesses' digitalization and the penetration of platforms into local life. It also indicates a narrowing window for brands to benefit from lower-tier markets.

Although some consumers in lower-tier markets come from high-tier cities or are young people returning to their hometowns (whose consumption habits and preferences are often more familiar to big brands and marketers), the real long-term consumption power comes from those who have lived there for a long time. However, due to differences in lifestyle, consumption concepts, aesthetics, etc., both horizontally (compared with other low-tier cities) and vertically (compared with high-tier cities), the market has high complexity. For brands, on one hand, they need to consider what kind of content can better display their brand tone to meet the emotional needs of consumers in these markets, such as meeting the quality demands for a better life. On the other hand, they need to consider the media channels and supply chain management of the brand, including online information leading to offline consumption, stable market pricing systems, cooperation with upstream and downstream industry chains, to truly achieve right route-to-market and wide coverage.

During the National Day holiday, the volume of international flights from China to Singapore, Malaysia, and other places has fully recovered, surpassing the same period in 2019. The overall increase in flight numbers has also led to short-haul outbound flight prices returning to a rational range, with ticket prices for short routes like Singapore, Malaysia, and Thailand now on par with 2019. Consumers from high-tier cities travel further and for longer periods, while consumers from lower-tiers mainly choose short-haul destinations, with daily outbound tour orders growing faster: Ctrip data shows that orders from fourth and fifth-tier city consumers have increased by 1 and 3 times respectively year-on-year, while Tongcheng Travel shows that outbound flight bookings from over 20 western cities have more than doubled year-on-year.

As consumers resume outbound travel and more energetic buyers with disposable income go abroad for consumption, it can be inferred that more consumers may go abroad to buy luxury goods in the future. However, this does not mean that luxury brands do not need to market domestically. In terms of the number of purchase decision chains, consumers who buy luxury goods abroad are even more dependent on information on media: digital media, such as recommendation platforms (Xiaohongshu, What's Worth Buying, etc.), pre-rolls in long videos, brand official websites and private domains, OTTs, etc., as well as outdoor media, such as long-distance transportation, residential office building ad spots, all have a higher influence on these consumers.

From the perspective of duty-free shop purchases, the passenger flow during the National Day holiday remained basically the same, with the number of passengers transported during the holiday period in 2024 increasing by 0.4% compared to 2023. However, the total duty-free sales amount in 2024 decreased by 41.0% compared to 2023, from 1.33 billion yuan to 785 million yuan, and per capita consumption slightly decreased by 5%, with this year's per capita consumption being 7124 yuan.

With the official implementation of the ‘Notice on Improving the Policy of Duty-Free Shops in the City’, in addition to the existing 6 duty-free shops in Beijing, Shanghai, Qingdao, Dalian, Xiamen, and Sanya, the existing 13 foreign exchange commodity duty-free shops will be transformed into in-city duty-free shops, and in-city duty-free shops will also be set up in another 8 cities. 

However, the new regulation stipulates that consumers must purchase in advance in the city, pick up goods at the port of departure and carry them out of the country at one time, which means that the policy encourages more portable consumer goods. This has a new impact on the brand's thinking about duty-free product’ route-to-market strategy.

During the National Day holiday, business districts in various cities have become key areas for consumers to visit. On one hand, this is due to various types of catering and entertainment vouchers issued by local governments, policies of trade-ins, and discount activities during National Day holiday carried out by shopping malls, which motivate both local consumers and tourists to consume. On the other hand, it is the ‘tourism+’ strategy of local business districts, such as combining with late-night tourism, which has resulted in a significant increase in customer flow, with the consumer flow during late-night period increasing by 25.4% compared to 2023 on a comparable basis. Business districts in key cities attract a large number of consumers to experience with more complete commercial and service infrastructure. More than 100 malls nationwide have achieved growth in both customer flow and sales.

A series of real estate financial measures have been accelerated and the implementation of the home appliance trade-in policy in various places has stimulated consumer demand, which was released intensively during the National Day holiday. Data from the Ministry of Commerce shows that in the first three days of the holiday, 1.05 million consumers nationwide purchased 1.55 million units of 8 categories of trade-in home appliances, with sales reaching 7.36 billion yuan. In terms of consumer goods categories, the top three home appliance categories are air conditioners, refrigerators, and computers. It is worth noting that some local governments have also included non-8 major categories of home appliances in the subsidy scope, such as dishwashers, smart toilets, projectors, water dispensers, etc. With the real estate transaction market warming up again, the home appliance and home decoration/ furniture market needs to timely layout the marketing market according to consumer's enthusiasm for buying houses and local government policies.

From the ways of shopping perspective, local governments have ultimately chosen to subsidize both online and offline channels, connecting e-commerce platforms, shopping malls with online payment applications: Data released by Suning shows that during the National Day holiday, Suning's in-store trade-in orders increased by 132% year-on-year, and the functional upgrade of large home appliances continued to accelerate.

With the integration of online and offline business models running smoothly, and in a situation where it is difficult to retain traffic online and platforms are tearing down walls between each other, brands need to be aware that the upcoming Double Eleven may see a wave of new traffic in offline consumption scenarios. Moreover, under the policy of continuously encouraging the expansion of effective domestic demand, brands should always pay attention to policy trends and maintain high flexibility in marketing.