Editor’s Note
The luxury jewelry sector is undergoing significant shifts, as illustrated by Tiffany’s high-stakes negotiations with LVMH over its valuation and Pandora’s recent brand refresh. These developments highlight how heritage brands are navigating modern market pressures to reaffirm their value and identity.
The fate of jewelry brand Tiffany has reached a turning point.
Regarding the acquisition offer from LVMH, the latest news is that Tiffany believes the $14.5 billion bid undervalues its worth. As a high-end jewelry brand with a 183-year history, Tiffany has its own historical legacy and deserves a higher price.
Pandora also updated its 37-year-old brand logo in August, not only adjusting the font and the crown design of the letter “O” but also re-emphasizing the brand’s representative pink color in the logo background. This accessible luxury jewelry brand, which experienced high growth before falling into decline, is undoubtedly in a state of anxiety.
The global jewelry market size exceeds $300 billion. The rise of millennials, changing consumption concepts, and the pursuit of individuality have transformed jewelry from a ceremonial purchase to an everyday consumption item. To attract more young consumers, jewelry companies facing bottlenecks are all trying to find breakthroughs.
Jewelry markets in various regions can be divided into three categories: global high-end brands, local mid-range brands, and low-end generic brands.
Taking Tiffany, Pandora, and Chow Tai Fook as representatives, let’s examine the major trends in the jewelry industry.
Tiffany is positioned as high-end, while Pandora focuses on accessible luxury among global brands. Chow Tai Fook primarily serves the Chinese region and belongs to the local mid-to-high-end brand category. These three brands are each representative but have all faced slowing revenue growth or declining profits in recent market conditions.
Tiffany has struggled to maintain its industry-leading position consistently. Since 2015, its performance has declined. In the second quarter of 2019, its engagement jewelry sales fell by 4%, and designer jewelry sales dropped by 10%. Women in the 21st century increasingly favor self-rewarding, and the occasions for purchasing luxury jewelry products are no longer limited to weddings but can be for any reason and any occasion. This shift in market trends has forced Tiffany to undertake business reforms.
Pandora focuses on personalized jewelry and story marketing. It can be said that “its success and failure both lie in its charms.” After this series became its established image, the company became heavily reliant on such products.
In 2018, charms and bracelets accounted for 72% of its operating revenue, and its full-year comparable total revenue also slowed for the first time in four years in 2018. The frequency of launching new products seven times a year led to highly similar product styles, inevitably causing consumer aesthetic fatigue. Additionally, the design of charm bracelets is easily copied, making it difficult for Pandora to achieve a breakthrough in market share.
Chow Tai Fook, as a regional enterprise, is currently the world’s largest jewelry retailer by market capitalization. Positioned in the mid-to-high-end segment, its主打 gold jewelry is extremely popular in the Chinese market. Enhanced by traditional consumption concepts, gold has also become a capital-preserving investment product. According to the latest operational data, its retail value in the mainland China market still maintained 4% growth in the third quarter of 2019. Chow Tai Fook is currently gradually reducing its reliance on the local Hong Kong market and riding the wave to expand into mainland China.
The jewelry industry is transitioning from the traditional counter-based consumption stage focused on service and products to a market competition stage characterized by diverse categories and brand upgrades.
Tiffany is positioned as high-end, emphasizing its brand value. Although it has a global presence, its channels are mostly direct-operated, with only 321 retail stores worldwide, and its marketing expense ratio is also low.
In July 2018, Tiffany opened its first Style Studio new retail concept store in London, hoping to enhance interaction between customers and the brand through leisure and entertainment, creating a more approachable and youthful store image. It also opened a pop-up store on Tmall’s luxury platform, releasing new jewelry collections through an online platform for the first time. This year, the brand’s official WeChat public account launched a limited-time boutique store.
Whether it’s the opening of concept stores, cooperation with platform e-commerce, or holiday marketing through WeChat mini-programs, these are all new strategies by Tiffany, a century-old brand, in channels and marketing. The aim is to shed the baggage of its aloof image and get closer to young consumers.
Pandora has always been a representative of aggressive marketing. Through its “Moment” story concept, its investment in sales and advertising expenses is industry-leading. After encountering bottlenecks, it launched the “NOW” plan, attempting non-core categories and expanding new products like rings and necklaces. Simultaneously, it reduced acquisitions of franchise stores, continuously increased the number of concept stores and shop-in-shops, optimized channel management, and enhanced the company’s brand image.
Many industry insiders, including Pandora’s management, believe that Pandora’s period of high-speed growth based on the three core concepts of “accessible luxury, charms, and personalization” has passed. A new round of growth requires innovative products in design and concept that can sell well globally, which is quite challenging.
Although part of Chow Tai Fook’s success is due to the traditional Chinese fondness for gold jewelry, it also recognized market fluctuations early on. It established an e-commerce department as early as 2010. Coupled with a vast retail network of over 2,500 stores, it vigorously implements an omnichannel model.
In terms of products, Chow Tai Fook often engages in crossovers, such as collaborating with Luckin Coffee, Coca-Cola, and the Palace Museum to launch products, and implementing a C2M model through its D-ONE jewelry customization online platform. Recently, Chow Tai Fook also launched its second-generation unmanned vending machine, where consumers can directly open the cabinet door to try on items as long as their Alipay credit score meets the requirement.
Despite companies expanding their online businesses, for relatively expensive jewelry products, consumers often worry about product quality and authenticity when purchasing online. McKinsey’s “2020 Jewelry Industry Outlook” report mentions that although two-thirds of buyers occasionally browse brand official social media sites to learn about product information, they still trust physical store sales.
Major retailers are gradually recognizing the view that “where Chinese consumers are, brands should be there.” Currently, China’s per capita jewelry consumption is only $54.11, less than one-fifth of the United States’ during the same period. The growth potential of the Chinese jewelry market is enormous. In Chow Tai Fook’s 2018 fiscal year revenue, mainland China contributed 62.2%. However, first- and second-tier markets in China have become increasingly saturated in recent years.
With consumption upgrading and accelerated channel下沉, it is expected that lower-tier cities will become new profit growth areas for jewelry companies in the future.
Facing slowing growth, the Chow Tai Fook Group launched the “New Town Plan,” beginning to abandon the单一 direct-operated model and leveraging加盟商 to accelerate penetration into third-tier and below markets. High-end brands like Pandora, constrained by their positioning, mainly place hopes for market share in third- and fourth-tier cities on online development. However, considering that youth in small towns are also pursuing equality in lifestyle through quality consumption, accessible luxury series products are sufficiently attractive to young people in small towns seeking identity recognition.
Generation Z, as digital natives, dislike traditional marketing methods, cannot remain loyal to the same brand for long periods, and prefer to dig for information themselves to find trustworthy products, relying on word-of-mouth for消费决策. To interact with Generation Z consumers, brands can no longer maintain a lofty posture but should proactively find points of interest that resonate for content marketing and product innovation. For example, Chow Sang Sang’s collaboration with the popular mobile game “Onmyoji” to launch the Daruma bracelet sold out immediately upon release. Pandora’s upcoming Harry Potter and Frozen themed collaboration series also targets specific interest groups.
In addition, various brands are fully utilizing KOLs to attract young people’s attention. Tiffany maintains friendly cooperative relationships with domestic celebrities like Liu Haoran, who have tens of millions of fans. Pandora announced in its August brand重塑活动 that it would continue to strengthen celebrity marketing.
The jewelry market continues to grow, and the top position in market capitalization changes逐年. Whether it’s fickle women or fickle young people, capturing them is not easy.