Recently, the topic of "Chow Tai Fook Jewellery stores in Chinese mainland will be reduced by 180 in half a year" has aroused heated discussions. A reporter from Guangzhou Daily New Flower City visited the local business district and found that although the price of gold has continued to rise since the beginning of this year, gold jewelry has been "cold" in the consumer market.
Many people in the Chow Tai Fook Pavilion in the core business district of Tianhe are puzzled: gold jewelry is not popular now? When it comes to gold, it's actually a must-have for Cantonese people! In the eyes of Cantonese people who value tradition and etiquette, gold is not only an investment, but also an important dowry item.
According to the consumption situation in Guangdong announced by an e-commerce platform on Double 11 last year, from the perspective of turnover growth, gold earrings, beauty sewing agents, gold rings, washing and drying packages, and gold bracelets are the top 5 categories in Guangdong Province with turnover growth rates, with turnover growth rates of 317%, 314%, 213%, 111%, and 108% respectively. Retail performance declines Chow Tai Fook closed a total of 180 stores in Chinese mainland On July 23, Chow Tai Fook Jewellery Group released unaudited key operating data for the first quarter of fiscal 2025, during which the group's retail value decreased by 20% year-on-year. Among them, Chow Tai Fook had a net decrease of 91 stores in the mainland market in the quarter, compared with a net decrease of 89 stores in the previous quarter, for a total of 180 stores.
According to Chow Tai Fook's unaudited key operating data for the three months ended 30 June 2024, the Group's retail value decreased by 20% year-on-year during the period, of which the retail value in Chinese mainland decreased by 18.6% year-on-year, and the retail value in Hong Kong, Macau and other markets decreased by 28.8% year-on-year. These two markets accounted for approximately 87.8% and 12.2% of Chow Tai Fook's total retail value respectively. Commenting on the reasons for the decline in Q1 results, Chow Tai Fook said: "Gold prices hovering at high levels affected demand for gold jewellery during the quarter, which is an industry-wide phenomenon. Regarding the closure of many stores, Chow Tai Fook responded: "Store size is not the only consideration in our pursuit of sustainable growth, we must assess the situation and respond flexibly to market changes to create long-term value for our stakeholders, including improving capital efficiency and enhancing customer experience." The reporter also noticed that the gold jewelry brand that has frequently closed stores in recent years is not Chow Tai Fook alone. According to Luk Fook Group's report for the first quarter of the new fiscal year, its Luk Fook jewellery stores in the mainland market decreased by 108 net stores.
Luk Fook Jewellery store information map. Source: South+From constantly opening new stores to expanding to quickly and significantly closing stores in the short term, what are the "jewelry bigwigs" doing? According to analysts, the gold and jewellery industry is rapidly entering a stage of strategic renewal, and companies and brands will pay more attention to optimizing operational efficiency, from continuous store openings to sharp reductions in stores. Chow Tai Fook also responded to the Guangzhou Daily New Flower City reporter on the hot search incident of "Shenzhen factory shutdown and production stoppage, and part of the production capacity was relocated to the Shunde factory": The measures are all to respond to changes in the jewelry consumer market and adjust the allocation of enterprise resources. According to a senior source in the gold jewelry industry, the current sales of gold jewelry are declining, and the pressure on stores is very obvious.
Data map/Guangzhou Daily · New Flower City reporter: Wang Yan The price of gold jewelry "broke 7", but the customer flow of stores in the core business district of the city was "cold" "700 yuan a gram of gold, I can't afford it!" Recently, Miss Du, who has a marriage plan, said that her boyfriend originally said to give her 50,000 yuan to buy three golds, but because the gold price has been too expensive recently, her mother thought about taking her sister's three gold as a role when she got engaged, and then buy it when the gold price is cheaper in the future. In fact, the price of gold has soared since 2023. Since March this year, the price of gold has risen and fallen sharply like a "roller coaster". According to Oriental Wealth data, as of about 10:30 on July 17, the New York Mercantile Exchange (COMEX) gold futures contract closed at $2486.3 per ounce, setting a new gold price record. Data shows that since the beginning of this year, COMEX gold has risen by more than 15%. It is worth mentioning that while the international gold price soared, the domestic gold price also rose. On July 25, the reporter found that most of the gold prices of major gold brands broke through the "7 prefix". Among them, the gold price of Zhou Shengsheng is 725 yuan/gram, the gold price of Chow Tai Fook is 728 yuan/gram, the gold price of Lao Fengxiang is 728 yuan/gram, and the gold price of Liuliufu is 728 yuan/gram. It is understood that while the price of gold is "soaring", gold brands do not seem to have reaped the "dividends" of the soaring gold price, and the sales of gold stores are currently under pressure. According to data from the official website of the China Gold Association, in the first quarter of 2024, gold consumption in mainland China increased by 6% year-on-year, while gold jewelry consumption fell by 3%. On June 17, the National Bureau of Statistics released data on the total retail sales of consumer goods in May, showing that the consumption of gold, silver and jewelry fell by 11% year-on-year.
The art window of Chow Sang Sang's store to display products, a reporter from Guangzhou Daily New Flower City visited the core business district in Guangzhou and found that although the gold jewelry store has made significant upgrades in store design and service, the customer flow is visibly "less" to the naked eye. There are many consumers who have similar views to Ms. Du, and many consumers who are not just for weddings and other rigid needs are shy away from gold prices. The relevant person in charge of Zhou Shengsheng has publicly said, "Because the gold price has risen too rapidly this year, it has restricted consumers' willingness to spend." "The market price is volatile, and some consumer investors are still waiting for a better price, so our recent sales have indeed declined," a gold shop owner who operates gold jewelry in Liwan District told reporters, gold prices are open and transparent and real-time changes, and gold stores generally do not stock up in large quantities, but "make up for the amount of money", so the profit margin is not "rising" with the gold price. Expert analysis: the rise in gold prices, the increase in costs, and the decline in profit margins have an impact on the consumption of gold products in the short termIn fact, for well-known brands such as Chow Tai Fook, although its product quality and brand influence are strong, it is difficult to avoid market impact under high gold prices. "The price of gold is rising, the cost of enterprises is also rising, the selling price is higher, but the profit margin is declining." Zhu Zhigang, vice president and chief gold analyst of the Guangdong Gold Association, said that the operating costs of stores have increased, and consumers' willingness to buy has not increased simultaneously, which has led to a sharp decline in sales, Zhu Zhigang revealed that the next nationwide wave of store closures like Chow Tai Fook is expected to continue, and the sales of gold jewelry are estimated to decline between 20% and 40% in the short term, and the worse situation may fall by 60%. The relevant person in charge of Zhou Taisheng believes that the biggest challenge to gold consumption at present is that the price of gold remains high after the sharp rise, and consumers have a wait-and-see mood, which has an impact on the consumption of gold products in the short term. "Closing stores is not a long-term solution, opening high-quality new stores is the key to attracting high-sticky customers." The person in charge said.
Buying gold jewelry data map, source: Xinhua News Agency Young people love to buy gold as a way to manage their finances Consumption reminder: can not be simply regarded as a financial product In recent years, the trend of young people in financial management and savings is flourishing, and "young people love to buy gold" has attracted widespread attention. The post-90s and post-00s who post gold jewelry on social media platforms abound, and they even ridicule themselves - young people's behavior of buying gold is "blood awakening".
In people's inherent concept, gold is exclusive to the elderly, and most consumers are middle-aged and elderly people. However, in recent years, under the background of the prevalence of the national trend, many ancient gold using ancient gold casting techniques are sought after by young people. According to the data of the "2023 Jewelry Industry Trend White Paper", among the people who buy gold, women aged 18 to 34 and in first- and second-tier cities are the mainstay. Last year's Double 11, among the buyers of gold jewelry in the first week of JD.com, consumers aged 26 to 35 accounted for 57% of the turnover, an increase of nearly 15 times compared with the same period last year, and the turnover of gold jewelry for consumers under the age of 25 also increased by nearly 9 times year-on-year. However, the industry reminds that gold jewellery cannot be seen as a financial product alone. Pan Helin, a well-known economist and member of the Information and Communication Economy Expert Committee of the Ministry of Industry and Information Technology, told reporters in an interview that generally speaking, a commodity may have two destocking modes of price increase and price decline. "If gold is an investment, between the rise in the price of gold, it will attract more gold consumption. If gold is a consumer good, then a rise in the price of gold will reduce gold consumption. Pan and Lin pointed out that although the rise in gold prices at this stage has attracted gold investors, investors have a lot of financial investment tools, and they do not go to physical stores to buy physical gold, but buy gold through financial instruments or banking channels, which directly leads to a decline in gold jewelry sales in gold stores. In addition, consumers are becoming more and more rational at present, jewelry gold is not pure gold value, but also artistic value, and consumers for investment purposes do not need artistic value, so in terms of transaction costs, gold financial investment tools are lower. Observation: The reporter also found that although the recent rise in gold prices has had an impact on the choice of jewelry and gold consumers, some consumers who focus on fashion and beauty have switched to the "embrace" of inlaid products. It is understood that the "new favorites" that are popular with consumers include some jewelry with fashionable designs and relatively affordable prices, such as pearls, fashion colored gemstones, enamel and other inlay products, as well as some K gold fashion jewelry. Some merchants said that the sales of gold jewelry have indeed declined recently, but the sales of inlaid products have increased.
The gold inlay jewelry reporter learned that after the price of gold rises, consumers for the purpose of fashion matching will pay more attention to the design and material matching of gold jewelry, and are more willing to "pay for beauty". Taking a budget of 15,000 yuan as an example, if you buy it in a brand store, you can only buy a pure gold bracelet weighing about 20g if you count the manual cost.
Source: Guangzhou Daily