Shanghai's new internet celebrity landmark "Tian'an Qianshu" was officially opened on December 22, 2021, and the mall introduced more than 160 blockbuster brands, spanning fashion, food, life and culture and art, among which Chow Tai Fook "Pass" theme experience store, breaking the layout of the general traditional store, "safe" plus "rotary display" concept of special decoration, let people shine, exquisite jewelry on the conveyor belt rotation display, bring innovative shopping space and experience.
Chen Shichang, managing director of Chow Tai Fook Jewellery Group, said that in the first half of this year, the mainland market accelerated its expansion, the sinking strategy has achieved initial results, the recovery of the mainland market has exceeded expectations, and the high-quality growth brought by the company's smart retail is worth looking forward to.
Expected by 2025
There are more than 7,000 exhibition shops in the mainland market
Chow Tai Fook (01929, HK) recently announced its results for the first half of fiscal 2022, with total revenue of HK$44.19 billion (the same below), an increase of 79.1% year-on-year; retail and wholesale revenue up 47.7% and 144.6% year-on-year, operating profit of 4.47 billion, up 9.6% year-on-year; net profit attributable to the mother due to a year-on-year decrease of 6.3 percentage points year-on-year, and net profit attributable to the mother increased by 60.4% year-on-year to 3.58 billion. According to the new financial report, the total number of retail stores of Chow Tai Fook Jewellery Group has reached 5214, and it has actively implemented the strategy of promoting retail expansion, and during the reporting period, 624 Chow Tai Fook Jewelry retail outlets were opened in the mainland, of which more than half were located in the third and fourth tiers and other cities.
According to Chan Sai Cheong, the mainland market is expected to increase its number of branches by 1,000 throughout the year, and Chow Tai Fook will continue to exhibit stores according to this pace in the future, and it is expected to have more than 7,000 branches in the mainland market by 2025.
"In the past few years, Chow Tai Fook's self-operated stores have been around 70% and franchise stores have been around 30%; this year, franchise stores account for about 70% and self-operated stores account for about 30%."
"We want to lay a good foundation, and now we can expand with favorable conditions at the right time and place." Chen Shichang believes that "in the development of first-tier and second-tier cities, our coverage share is about 85%, while in fourth- and fifth-tier cities, the coverage rate is only less than 20%, and there is still a lot of space." We hope that through the wisdom and local resources of franchisees in third- and fourth-tier cities, combined with the experience of our brands, we can quickly occupy the market, penetrate into low-tier cities and county-level towns, and capture the huge consumption potential of the mainland market. ”
A report by Zhongtai International Securities pointed out that thanks to more effective fee control and the rapid expansion of mainland franchise channels, Chow Tai Fook Jewelry Group's main operating profit margin remained at about 10.1%, an increase of 0.1 percentage points from the previous quarter.
Zhongtai International Securities believes that the mainland is still the main growth driver of Chow Tai Fook, with revenue and operating profit accounting for 87.2% and 95.8% respectively. In FY22, Mainland revenue increased by 81.7% year-on-year to MOP38.55 billion, operating profit rose 5.7% year-on-year to MOP4.28 billion, and same-store sales rose 32.2% year-on-year, mainly due to the hot sale of Chow Tai Fook Heritage Collection (accounting for 43.3% of the retail value of gold jewellery and products, 7.7 percentage points higher than the same period last year) and the relative weakness in international gold prices to stimulate demand growth for products such as gold jewellery. Chow Tai Fook Jewellery Group dug deep into the development opportunities of lower-tier cities and added 624 new Chow Tai Fook Jewelry brand retail outlets during the period, of which 47.1% were concentrated in third-tier cities and below, and the retail value of third-tier and fourth-tier cities increased by 75.3% and 71.5% respectively year-on-year.
Digital dispensing hits the demands of young people
Innovative scenario-based product consumption experience
Chen Shichang further analyzed that in the past, Chow Tai Fook believed that it was simple and direct distribution to frontline branches and franchisees, so that they could experience orderly and efficient retail management. "Through Chow Tai Fook's systematic big data, we can analyze the age group of each of the more than 600 cities in the mainland, and the products that consumers love, so that we can accurately distribute the goods."
But after so many years, Chen Shichang found that today's young people are becoming more and more personalized and hope to have unique products.
"Including our employees, we want to be personalized, and some choose the best. Therefore, we still adopt digital distribution, while retaining 20% of the distribution for stores to choose independently. For example, in Wuhan's Chow Tai Fook Jewelry Industrial Park covering an area of about 600 acres to create an 'inner ecosystem', this year vacated four or five thousand square meters to make a showroom, this exhibition hall is 'very strange', not external, only for Chow Tai Fook internal personnel, of course, including franchisees and colleagues of direct stores, they can go to the scene to select goods and directly place orders, and the order can be delivered to the designated branch within a few days. Chen Shichang said.
"There is a product that we think is a 'marriage proposal artifact', because this is a product specially designed for marriage proposals that we have designed to understand the pain points of young people's needs. This product is 'Guard for a Lifetime'. Consumers use marriage proposals to be particularly romantic, we also specially designed a very beautiful music jewelry box for the product, open will sound a music full of sweetness and love "Engagement", and in the box lit up romantic fireworks, under the fireworks there are proposed dolls rotating. Chen Shichang introduced.
The newly launched guardian life series of new products, using "heart-shaped" diamonds, built with "hearts", fully express the hope that both men and women can keep their commitments and guard their lives, redefining the classic marriage proposal diamond ring. Coupled with the 17916 series represented by the 22k gold that broke through the limitations of the traditional K gold material in recent years, the Peace Angel series that integrates enamel glaze into platinum, the inheritance series that leads the jewelry national tide with ancient gold, and the old series of heaven and earth that introduces the Yanguang projection patent... Chow Tai Fook continues to innovate, and has more vitality and vitality in product design, category innovation and technological innovation.
Chow Tai Fook has a complete range of diamond products with a full range of distinctive diamond products, highlighting the undoubted brand diamond strength, and in 2021, it has reached a strategic cooperation plan with the Natural Diamond Council to work with Chinese consumers to show the charm of natural diamonds and jointly create a "natural diamond dream". It is worth mentioning that Chow Tai Fook T MARK Diamond, using the "Nano Engraving Patent Technology" exclusively developed by Chow Tai Fook, is independently encoded to record the journey of the diamond from the rough to the fingertips, as if the tunnel of love witnesses the love story, spying on the beautiful light of time.
Chen Shichang pointed out, "At present, there are many artificial diamonds on the market or moissan diamonds to fake the real, but consumers can tell through the T MARK mark that it is natural, so that customers can trace the diamond from procurement to diamond jewelry." And this imprint can only be seen through a microscope of 150 times. Years later, you can still trace the diamond journey and the story of your love with a glance. At present, T MARK products account for almost 23% of the retail value of our diamond products, and we will still focus on T MARK in the future. ”
According to the financial report, in the first half of fiscal 2022, Chow Tai Fook's same-store sales growth in the mainland and Hong Kong and Macau maintained positive growth. Same-store sales on the mainland increased by 32.2%. Same-store sales surged by about 80% during the period, supported by improved local consumption in Hong Kong and rebounded in Macau visitors' consumption.
During the Period, Chow Tai Fook vigorously promoted the smart retail strategy and made every effort to strengthen omni-channel integration to enhance the customer experience. In the first half of this fiscal year, the average selling price of products purchased through Cloud Merchant 365 was about 1.8 times higher than that of Chow Tai Fook's public domain e-commerce platform. Diamond products customized through the jewelry digital customization platform D‐ONE have accounted for 4.3% of the overall retail value of diamonds in the Mainland during the period, and their average selling prices have continued to increase, which is about twice the average selling price of similar stores in mainland jewelry settings. E-commerce and retail technology applications in the Mainland accounted for 4.9% and 4.1% of the Mainland's retail value respectively, contributing a combined 9.0% of the Mainland's retail value.
The financial report also shows that Cloud Power (smart retail) continues to achieve positive results, with mainland smart retail value from e-commerce and other retail technology applications increasing by 159.8% year-on-year, accounting for 9.0% of retail value, of which ASP from cloud business 365 and cloud counter is about three times that of e-commerce platforms.
Chen Shichang explains: "We have accelerated the interconnection with consumers through Cloud Business 365, Cloud Counter, D-ONE, smart Tray. For example, in D-ONE, if the consumer has his own design ideas, we can help him tailor-made and deliver as soon as 24 hours. You can freely match, how big the diamond is, K gold, platinum, gold can be selected by yourself. This model allows us to lead the industry forward faster, and I believe consumers prefer innovative digital experiences, so that's why we had a very good growth in the first half of the year. ”
As a Hong Kong listed company, environmental protection and low carbon are also one of Chow Tai Fook's business development concepts, which the company has begun to promote decades ago. Chen Shichang said that for example, do not use materials that harm the social environment, encourage consumers to use electronic invoices, and donate the saved costs to green environmental protection agencies; in addition, every year, Zhou Taifu encourages and organizes employees to do social welfare, advocates and leads VIPs to plant trees in Alxa.
In the face of the hardships of the special period, Chow Tai Fook has made great strides and achieved good results today, but behind this gratifying answer sheet, Chow Tai Fook's original intention has always been more valuable, Chen Shichang said: "Every piece of art jewelry we do with our hearts, give back to consumers with sincere service, and use our experience to improve the level of our entire jewelry industry." It is precisely by adhering to these "three things" that Chow Tai Fook remains alive under the challenge.
The unremitting original intention of "sincerity, eternity" will also drive Chow Tai Fook to a new level again and again, with the sense of mission of high-quality domestic brands, to create legendary stories in the industry and even the world.
(This article does not constitute any investment advice, and the content of information disclosure is subject to the company's announcement.) Investors operate accordingly at their own risk. ）