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In the world luxury goods market, Swarovski is undoubtedly a very famous brand. As the world's most famous artificial crystal giant, it has always played a very important role in the market. Recently, news came that Swarovski has increased prices across the board. Why has the price of artificial crystal increased so drastically?

1. Swarovski raises prices across the board?

According to a report by Dongfang Finance, a Swarovski salesperson said, "Swarovski has adjusted prices across the board, with an increase of 10%-40%." According to the pictures provided by the salesperson, the original price of the green-winged macaw ornament was 7,000 yuan, and the current price is 8,000 yuan, an increase of 14.3%; the original price of the school of fish ornament was 8,500 yuan, and the current price is 12,000 yuan, an increase of 41.2%; the original price of the parrot couple ornament was 13,000 yuan, and the current price is 16,000 yuan, an increase of 23%. Dongfang Finance randomly asked a staff member of a Swarovski store, and the other party said that the price adjustment was a unified price increase across the country, including classic models such as the beating heart and swan.

According to a previous report by Caijing.com, Swarovski's 2023 performance showed that the company grew steadily by 4% at a constant exchange rate, with sales reaching 1.832 billion euros and comparable sales increasing by 10%. The company's EBIT before restructuring costs turned positive for the first time since 2019. At the same time, thanks to increased cash flow, business growth, and reduced operating leverage, the company's net debt situation has also improved significantly.

In 2023, Swarovski's retail business grew by 4% year-on-year, and its B2B imitation crystal business grew by 5%. Offline channel sales grew by 5% year-on-year, online channel sales grew by 4% year-on-year, and Swarovski's official website sales grew by 11% year-on-year. Store profitability grew by 36% year-on-year.

It is reported that the company's strong performance in the fourth quarter became a key driver of its overall performance in 2023, with quarterly sales increasing to 9% and earnings before interest and taxes excluding restructuring costs reaching the highest level since the third quarter of 2018.

2. Why has the price of artificial crystal increased so drastically?

In recent years, price adjustments in the luxury goods industry have become a norm, and as a leader in the field of artificial crystals, Swarovski's price increase across the board has also attracted widespread attention from the market. However, against the backdrop of falling prices for natural gemstones such as diamonds, Swarovski's artificial crystal products have risen against the market trend. How should we view this?

First, in the past few years, luxury brands have raised product prices, which has become a common phenomenon. There are two main reasons for this: first, the tight global supply chain has led to rising production costs; second, in order to maintain its high-end positioning, brands need to strengthen their brand image through price adjustments. In this environment, Swarovski's price increase is not surprising. After all, for a brand known for its high quality and high design, maintaining a certain price level is an important means of maintaining its brand value.

Secondly, Swarovski's choice to raise prices can indeed bring some obvious benefits in the short term. On the one hand, price increases can directly increase the brand's profit level. When the price of a product increases and the cost is relatively stable, the profit from each product sold will increase. This has a direct positive impact on the company's financial situation and profitability. On the other hand, price increases can also help smooth out the pressure caused by previous cost increases. Fluctuations in raw material prices, increases in labor costs, and increases in transportation costs can all lead to increased costs for the company. By raising prices, Swarovski can make up for these cost increases to a certain extent and maintain the company's profit margins.

Third, however, in the current market environment, even natural gemstones such as diamonds are experiencing significant price cuts. As a traditional high-end product in the jewelry market, the price fluctuations of diamonds often reflect the supply and demand and market trends of the entire jewelry industry. The decline in diamond prices may be due to an increase in market supply, changes in consumer demand, or the impact of the economic situation. In contrast, artificial crystals are easier to manufacture and their costs are relatively easier to control. Against this background, Swarovski's price increase seems a bit ill-timed.

From the perspective of consumers, when they see that diamonds are falling in price while artificial crystals are rising in price, they may question and become dissatisfied with Swarovski's pricing strategy. They may think that Swarovski's products are less cost-effective and turn to other brands or products that are more price-competitive.

Take a classic Swarovski necklace as an example. If its price rises by 30% while the price of diamonds falls, consumers may feel that it is not worth buying and choose to buy other similar but more reasonably priced jewelry.

Fourth, Swarovski's core competitiveness lies in its unique design and high-quality products. For a long time, the brand has won the recognition of consumers through continuous design innovation and exquisite craftsmanship. However, design and creativity are time-limited. Once the brand loses its leading edge in design, it will be difficult to sustain the model of relying solely on price increases to maintain profitability. Therefore, while Swarovski is raising prices, it also needs to continue to invest in design and innovation to ensure the long-term competitiveness of the brand.