Opinion: why Chow Tai Fook Jewellery’s new strategy of selling cheap needs to be bolder to put upstart Pandora back in its box
Taking a leaf out of Danish rival Pandora’s book, Hong Kong chain to target younger buyers with less expensive jewellery sold though new Monologue chain, but HK$2,250 price point may still be too high
Chow Tai Fook Jewellery got rich surfing the wave of China’s consumer boom. With luxury spending stagnating, it’s switching to chasing shoppers’ yuan downmarket.
The new strategy? Cheap.
The company will target younger buyers with cheaper, more fashion-oriented products costing about 2,000 yuan (HK$2,250) on average and sold through a new store chain named Monologue. That’s about one-third of the prices at the company’s flagship Chow Tai Fook-branded stores, managing director Kent Wong says.
If that strategy and the cartoon character-themed pendants it hopes to sell to younger Chinese look familiar, it’s because they are. Pandora, the Danish maker of charm bracelets and other low-priced silver trinkets, has been targeting a very similar demographic – and its sales in China are booming.
Revenue in the country more than doubled in the third quarter from a year earlier, and increased 40 per cent at stores open at least 12 months. That’s an astonishing outcome when set next to Chow Tai Fook, which has seen such same-store sales decline in nine of the past 11 quarters.
And Pandora is barely getting started: its first store on Alibaba Group’s TMall site only opened in October, and its store numbers in China are forecast to double from the current 81 outlets by the end of 2018.