Followed by India and the United States, China is currently the largest fine jewellery market in the world representing around 30 percent of global jewellery demand. The fast-changing luxury consumption market in China today is driving jewellers to truly understand consumer preferences, product diversifications and omnichannel strategies. A recent World Gold Council (WGC) report by the association’s trade engagement director Gerry Chen gives insights into the growth potential of the jewellery industry in China.
Jewellery demand from China hit a record high in 2013 thanks to the shifting tastes of young consumers from buying gold jewellery purely for its face value to wearing jewellery for expressing their identity, according to the report. The boom began to tail away in the subsequent years during which jewellers reoriented their product assortments, appealed more to younger consumers while strengthening their presence in the digital world. Their hard work paid off when jewellery demand bounced back for the first time since 2017. The report believes that the growth should continue if the industry continues to innovate and adapt to changing consumer tastes.
Two noteworthy trends were witnessed in terms of consumer preferences in China. First of all, regional preferences were obvious. In tier 1 cities, diamond and platinum jewellery is as popular as gold jewellery. In lower-tier cities, consumers tend to buy high-carat, heavy gold jewellery for wealth preservation considerations. Second, consumption preferences vary from one generation to another. Compared with their older generation who still prefer buying gold jewellery, millennials would spend more on technology or fashion instead.
Jewellers should take the findings seriously because “tier 1 cities and millennials are changing the shape of consumerism in China and trends that start among these consumer groups eventually filter through to the rest of the country”.
At present, according to the WGC report, consumers in tier 1 cities in China contribute around 40 percent of total national spending. The growth rate of spending by millennials is twice the speed of the older consumers’. When it comes to online purchases, the younger generation who were born after 1990 make over half of their purchases online, compared with the one-third for those born between 1970 and 1989.
Gold jewellery carrying lesser gold content with modern design appeals more to younger consumers. Visionary jewellers introduce more 22-karat or 18-karat (K-gold) designs which are considered more fashionable and affordable than their traditional 24-karat or pure gold counterparts. Innovative jewellers have introduced jewellery with intricate designs made in 3D hard gold which is four times harder than pure gold while containing just a third of the gold 24-karat has.
Researches show that the online-to-offline (O2O) business model is prevailing in the luxury sector. In the fine jewellery scenario, the WGC report says around one-third of gold jewellery purchases start online, with only four percent going on to completion there. It shows that consumers concern the security of online translations, and they want to touch and feel the jewellery before buying it. It is believed that physical stores will not give way to online shops in the near-to-medium future because of the practical roles bricks-and-mortar stores are taking, such as jewellery cleaning, maintenance and buy-back services.
However, the importance of online shops should not be downplayed. With the right product mix, jewellers may launch a variety of online shopping festivals to drive offline sales. The digital footprints left by online shoppers are valuable data for jewellers to understand customer behaviours.
To help sales in future, the report has identified three main aspects for jewellers’ attention. First of all, a brand that emotionally connects with consumers is essential. Product differentiation is the way to go. Younger consumers want jewellery that reflects their unique style and highlights their success.
Secondly, transparency is the order of the day. Product specifications must be properly disclosed. Showing consumers that the gold jewellery you are selling is ethically-made and the materials are responsibly-sourced.
Thirdly, jewellers can create more buying occasions for specific types of gold jewellery. For examples, 24-karat gold jewellery for Lunar New Year, weddings or births, K-gold pieces for graduations or self-purchase for younger generations, etc. (Photo courtesy: WGC)
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