Fast jewelry? China's biggest jeweler eyes mass market

HONG KONG - The world's most valuable jewelry retailer Chow Tai Fook, which counts Cartier and Tiffany & Co as competitors, is on a quest to conquer the hearts of China's future big spenders. Its weapons of choice: Hello Kitty and Winnie the Pooh.

Superman and the Angry Birds team also feature in Chow Tai Fook Jewellery Group's range of fashionable, and affordable, pieces which the company hopes will win over the millions of Chinese who live outside major cities but who are reaping the benefits of a rapidly growing economy and who remain enamored by the gleam of gold.

"We are quite similar to the fast fashion way of business in that our products are only available for a limited period of time," Kent Wong, managing director of Chow Tai Fook, told Reuters.

"The stock-keeping units will have to respond promptly to the fast-changing tastes of customers, especially young customers, who can share information about trends very quickly on their smartphones," he added.

China, the world's second largest economy, is on track to overtake India as the world's biggest consumer of gold this year as falling prices encourage purchases for both personal use and investment.

Combine that penchant for gold with a population that is rapidly urbanizing, and becoming more affluent and trend-conscious in the process, and building customer loyalty as well as keeping up with fashion becomes key to the prospects of jewelry retailers.

About 100 million people are likely to move into cities over the next 17 years, according to ratings agency Moody's. China is already the second largest market for Zara-brand owner Inditex , the world's biggest fashion retailer.

"Just like fast fashion, fast jewelery is the right stuff to target at the youth and the products can also sell at a better margin when they are limited edition," said Renee Tai, a Hong-Kong based analyst at brokerage UOB-Kay Hian.

GOLD FOR THE MASSES

Chow Tai Fook's fashion jewelry, which costs between HK$200 and HK$2,000 ($26 and $260), is a far cry from the luxury offerings that have traditionally accounted for over 80 percent of sales, and which on average cost about 10 times as much.

But the shift to expand mass-market retail is already paying off. Chow Tai Fook saw its net profit rise by a forecast-beating 92.3 percent in the six months ended September, with same-store sales growing 33.2 percent.

Chow Tai Fook, which has a market value of nearly $16 billion, is not alone in targeting the masses.

Smaller rival Luk Fook Holdings International, with a market value of $2.4 billion, is looking at opening stores in busy railway stations to expand its reach in China and raise its profile in less developed cities and the vast hinterland.

Building brand loyalty also makes good business sense.

Repeat purchases by Chow Tai Fook's Hong Kong members contributed almost 17 percent to total revenue in Hong Kong and Macau for the six months ended September, while those from its China members made up nearly one-quarter of total sales in the mainland, company data shows.

"We are seeing a significant surge in retailers investing in loyalty programs in order to increase consumers' loyalty as it's getting harder and harder for retailers to drive growth by purely relying on their quick pace of expansion," said Brian Negley, vice president of consumer research firm Nielsen China.

IMAGE CONSCIOUS

But as it pushes into rapidly changing jewelry, Chow Tai Fook faces the challenge of retaining its reputation for exclusive, luxury items while also appealing to the masses.

The company, founded in 1929, aims to achieve this by selling some of its fast jewelry products online, where most customers are aged between 20 and 35.

Chow Tai Fook also maintains three distinct store layouts that cater to its clients - the high-end luxury consumers, the youth and the mass market, managing director Wong said.

Analysts say focusing on the younger generation is key.

"The company has to ensure this group of people gets familiar with the brand and they won't feel your products are out of date," said UOB-Kay Hian analyst Tai.

"They have to groom a new group of customers to support the brand and products."

source: www.abs-cbnnews.com

Looking for a new investment? Try jewelry

MANILA, Philippines - Jewelry as your investment? Its glitter, portability, and tangibility have made it an easy choice among those looking for investment vehicles for many years now.

Women, in particular, are attracted to the thought that a fashion accessory or a family heirloom can be an investment piece as well. The surge in gold prices in recent years has also led many to consider investments in gold jewelry.

Despite the wide acceptance of jewelry as a form of investment—bolstered by traditions where people use jewelry as a currency or wedding dowry—financial advisors urge caution in investing in jewelry. In fact, jewelry specialists advise people not to buy jewelry because they are investment pieces, but because they like these in the first place.

While jewelry is regarded as a safe store of value, experts point out that one needs a long investment horizon when dealing in valuable pieces of jewelry. Unlike other investment vehicles with quicker turnaround times, one cannot expect to make a fortune quickly by buying and selling jewelry.

The price of jewelry is also affected by a number of factors such as the price of gemstones and commodities, market preferences, quality and workmanship, among others.

“Buying important jewelry is not like investing in shares in the stock market. Jewelry and gemstones inspire emotions and are usually associated with special moments and events in people lives. Acquiring important jewelry, under professional guidance, allows the buyer to enjoy the object of desire while keeping an eye on investing, but it is definitely not a short term investment vehicle,” says Karen Cua-Lerma, president of Salcedo Auctions, an auction house that specializes in the sale of fine art, jewelry, decorative arts and collectible accessories by local and international artists and artisans.

Most luxury consumer products such as cars, gadgets and personal accessories, including commercialized jewelry pieces, drop in value the moment one walks out of the shop with them. On the other hand, important diamonds and gemstones keep their value. Not only are they durable, they are also one of the most concentrated form value known to man in terms of physical size, she adds.

However, not all types of jewelry increase in value at the same rate. While a perfect diamond can appreciate in value, a clunky, uninspired piece might not. Therefore, it is necessary to carefully study the factors that will determine whether your jewelry will keep its value or turn out to be a mere expensive adornment.

If you want to invest in jewelry, remember that it should be just one part of your financial portfolio, which should ideally be a balanced mix of long-term and short-term investments vehicles chosen to meet your security and wealth preservation goals. Investing in jewelry may be a diversification strategy to complement your investments in traditional vehicles that are more liquid and have a shorter investment horizon. However, it should not be your only investment vehicle.

Choosing the right pieces of jewelry to invest in is key. The source of the jewelry is critical. For those who would like to invest in jewelry, it is important to buy from a professional and trustworthy source. “ There are many sellers of jewelry but only a selection are knowledgeable and will offer you good value for money,” says Ms. Lerma.

Some things to remember before you start shopping:

To ensure the authenticity of diamonds and other gemstones you might purchase, request for a certificate from an internationally recognized gemological institute or laboratory.

Look at the workmanship and the quality of the gemstones, as these have a definite effect on the piece’s appreciation potential

Another element that may add to the value of jewelry include the name or the designer behind it. Vintage and period pieces of good quality may also fetch good prices.

Pieces by contemporary artists may have the potential to appreciate in value. If you find someone you really like, start to buy his or her work early on in the designer’s career.

Significant stones – for example, a diamond more than five carats in size – also have the potential to increase dramatically in value.

For guidance on the pricing of jewelry, approach reputable sources who can determine the approximate value of a jewelry piece based on its quality and rarity.

Similarly, if you are selling some pieces you might have inherited, and you need a buyer, you need a trusted source for buyers. Do your homework and contact reputable jewelers as well as auction houses to help you make an informed decision.

source: www.abs-cbnnews.com