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World's top jeweller diversifies with new brands targeting niches
[HONG KONG] Chow Tai Fook Jewellery Group Ltd plans to embark on its biggest effort in decades to add new brands as the world's largest jeweler seeks to diversify its aging staple of customers.
The company will look to acquire competing brands or create new ones, managing director Kent Wong said in an interview in Hong Kong. Chow Tai Fook will also bolster the reach of its namesake brand by adding stores in lower-tier Chinese cities as it looks to grow beyond the top urban centres there, he said.
Almost nine decades after its founding, the Chinese jewellery retailer's flagship brand wants to shift from an older generation of shoppers to attract hip, millennial customers. Chow Tai Fook has introduced two marques in the past two years to widen its appeal among the young and their popularity has given the company confidence to explore possibilities beyond its core brand, Mr Wong said.
"It's a new age of Chinese customers. They are open-minded, well educated and electronic-savvy, and they travel around the world - it's different from decades ago," Mr Wong said Tuesday. "That's why Chow Tai Fook needs more brands, more culture, more design-driven products."
The move will be a part of a wider restructuring that will take place in the financial year starting April. Teams will be deployed to help the jeweller target customers from different age and income groups by bringing diversification in product designs, he said.
Chow Tai Fook in 2016 launched Monologue and last year introduced the wedding-themed Soinlove. As much as 70 per cent of the sales for these two marques come from online channels, compared with about six per cent for the flagship brand, Mr Wong said. That shows the company's strategy to target the young is spot on, Mr Wong said.
"Investing in new brands is our sustainability strategy," said Mr Wong.
The company plans to open 500 to 1,000 new stores in mainland China within five years in lower-tier cities and rural areas, depending on market conditions, said Mr Wong. That will take the proportion of the flagship brand's stores in those areas to half of the total, from about 35 per cent currently, he said.
The jewellery retailer in November said the next financial year will be a "turning point for our business given the nascent jewellery market recovery." Chow Tai Fook's profit climbed for a second straight six-month period signalling the continued recovery in demand for luxury goods in China after a two-year slump that was ushered in with a corruption crackdown.
Sales at its stores are picking up and more customers are also purchasing its products online as the world's second-largest economy is on track for its first full-year acceleration since 2010.
China's improving economy and policy environment will give consumers the confidence to more aggressively spend, Mr Wong said.
"We are optimistic for the new year, even though we have a high base already," he said.