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the gold market is experiencing both ice and fire.

on the one hand,gold prices soared. on september 14, the international spot gold price hit a record high.since march this year, the price of gold has risen by 20% in more than a month, almost reaching the increase of the whole year of last year. since then, the price of gold has been at a high level of 560 to 580 yuan per gram. the price of gold in gold shops fluctuates around 740 yuan per gram.

on the other hand,gold shops, however, were hit by a cold snap.the financial report of chow tai fook, a first-tier brand, showed that after closing 89 stores in the first quarter, it closed another 91 stores in the second quarter, a decrease of 180 stores in just half a year.on average, one store is closed per day.similarly, other brand jewelry companies are also having a hard time.

gold shops, why can't they handle the "huge wealth" brought by the skyrocketing gold prices?

gold jewelry that is not selling well

in a high-end shopping mall in hangzhou, a row of deserted gold shops is a concrete expression of this "cold wave".

on weekends, when the surrounding sports brands and fashion clothing stores are crowded with people, the sales clerks of this row of gold shops are all standing at the door, chatting together or greeting the customers passing by.

in high-end shopping malls, the gold shop is deserted. photo by tan xiaofeng

song cheng (pseudonym) is the person in charge of a franchise store of a certain brand, with two gold shops in jiaxing and hangzhou. he told reporters that in previous years, may day, mother's day and chinese valentine's day were all peak seasons for gold sales.when the market is good, it is common to sell tens or even hundreds of thousands of yuan in a day."in the past, sales in the half month before and after may day usually reached four to five million.but now i can only sell a fraction of it.less than 1 million." song cheng said.

according to the semi-annual report of chow tai fook, a hong kong-listed company, from april to june, chow tai fook's retail sales value decreased by 20% year-on-year, of which the mainland's retail sales value is expected to decrease by 18.6%, and hong kong, china, macau and other markets decreased by 28.8% year-on-year.from april to june this year, chow tai fook's jewelry stores in mainland china closed a net of 91 stores;in the first quarter of this year, chow tai fook's stores in the mainland market decreased by 89 stores, which means that in just half a year, chow tai fook's jewelry stores in the mainland have decreased by 180, with an average of one store closed per day.

luk fook group's operating data from april to june showed that its overall retail revenue fell 23% year-on-year, of which the retail revenue in hong kong and macau fell 31% year-on-year, and the mainland china market fell 3%.during the quarter, luk fook group saw a net decrease of 99 stores worldwide and a net decrease of 102 stores in mainland china.

as gold prices soar, has consumers' enthusiasm for buying gold really subsided?

according to statistics from the china gold association, in the first half of 2024, the consumption of gold bars and gold coins increased by 46.02% year-on-year.what has really faded is people's enthusiasm for gold jewelry.the data shows that in the first half of the year, the consumption of gold jewelry, which had been performing well in the past, fell by 26.68% year-on-year.

chow wing seng, chairman and general manager of chow sang sang group, also said at the shareholders' meeting held recently:the rapid rise in gold prices has restricted consumers' willingness to spend.sales performance this year was worse than expected.

"for gold jewelry, gold is the raw material. if the gold price only rises slightly, consumers buying jewelry can be said to be investing. but after rising to 700 yuan per gram, the price of gold jewelry has obviously exceeded consumers' expectations, and sales have plummeted." song cheng said that before the spring festival this year, consumers' enthusiasm for buying gold once reached a peak in recent years, and merchants were full of confidence at that time.

changes in choices under the storm

buying gold jewelry is consumption, while buying gold bars is investment.as gold prices soar,this ideological differentiation is becoming more and more obvious.at a certain brand gold shop in linping, hangzhou, a customer, ms. zhang, bought three gold bars at once, totaling 300 grams. the gold price on that day was 735 yuan per gram, and the gold bars were 646 yuan per gram. the three gold bars cost her a total of 193,800 yuan.

ms. zhang said that the reason she chose gold bars was because the price of gold continued to rise, and there seemed to be no better investment product than gold at the moment; and more importantly, gold bars have no processing fees, making them more cost-effective than buying gold jewelry.

as gold prices rise, investors prefer gold bars. photo provided by the interviewee

this reveals the dilemma facing gold shops today:compared with gold bars, gold coins, etc., the profit of gold jewelry is much higher.the reporter found that the gold price of most gold brands is 20% to 30% higher than the international gold price, and gold jewelry needs to be charged a processing fee on top of this. the processing fee of each gold brand is also different. the price of gold jewelry is generally 60 to 100 yuan higher per gram than the store's gold listing price. at a time when gold jewelry consumption is sluggish, the profits of gold shops have been greatly compressed.

another change in the gold market is that young people are rushing into the market to buy gold.

the 2022 china gold jewelry consumption industry consumption insight report shows that from 2016 to 2021, the proportion of gold purchases by generation z (usually young people born after 1995) has increased from 16% to 59%, making it the most potential gold jewelry consumer among all age groups. the 2023 jewelry industry trend white paper also shows thatamong the gold buyers, the majority are women aged 18 to 34 from first- and second-tier cities.their emergence has also quietly changed gold consumption, which has also exposed the shortcomings of traditional gold shops.

jin yafu group is a one-stop comprehensive precious metal service provider and a supplier to many domestic brand jewelers. the person in charge of jin yafu's hangzhou operation center said,most young people hold the mentality of balancing consumption and investment. they prefer lightweight products, such as gold bars and gold beans, which have low profit margins.each gold bean is 1 gram, with no labor cost, but the price is the same as the gold jewelry. although it is much higher than the market price, it is regarded by young people as a means of fighting inflation and forced savings.

at the same time,compared with buying gold in offline stores, young people prefer to buy gold online.recently, data released by dewu app showed that the gold jewelry category achieved a year-on-year growth of 300%. according to a dewu staff member, dealers of multiple gold jewelry brands such as jin dasheng will have sales of hundreds of millions of yuan on dewu in 2023, a year-on-year growth of more than 1,600%, and the gmv (gross merchandise volume) target will double in 2024.

at present, traditional gold brands have begun to develop online businesses in the face of a decline in offline business. for example, although zhou dasheng has only three people operating in dewu, it has achieved a sales growth of several hundred times by strengthening operations on valentine's day, 520, and chinese valentine's day. zhou liufu's "happy birthday gold coins" launched in dewu have also achieved hot sales, with cumulative sales exceeding 10,000 pieces.

according to the "2024 qixi festival gift consumption observation picture book" released by taobao, the transaction volume of gold products with value-preserving properties increased by 255% month-on-month. douyin also launched the "qixi festival sweet season" theme venue. platform data showed that from august 2 to august 8, the number of douyin group purchase orders related to jewelry vouchers increased by 238% year-on-year compared with the pre-holiday period last year.

according to data released by the china jewelry, jadeite jewelry association, from 2019 to 2023, the online retail sales of gold, silver and jewelry products increased from 153.4 billion yuan to 339.8 billion yuan, with a compound annual growth rate of 22.0%.

strategies for new and old merchants

do offline stores have no chance at all? not necessarily.

at present, gold brand merchants are paying more and more attention to market segmentation. they strengthen the youth strategy through technology upgrades, ip co-branding, cultural tracing, creative design and other means to realize market value.

recently,the release of black myth: wukong also brought a wave of popularity to gold. many brands took advantage of the opportunity to launch gold jewelry with related elements.for example, chow sang sang's "golden hoop" ring and mingpai jewelry's "goku knot" bracelet have become very popular. chao hongji focuses on young consumers, and a series of highly popular cartoon image ips such as sanrio, coolmi, doraemon, and crayon shin-chan are favored by young people.

the "wukong fever" has boosted the popularity of related gold jewelry. photo provided by the interviewee

in addition to cartoon ips, chinese style ips have also frequently appeared in gold jewelry in recent years. in a prominent position at the entrance of a chow tai fook store, co-branded gold jewelry from the forbidden city series is placed. its unique style attracts passers-by to take a look. the staff said that this is a co-branded model launched by chow tai fook and the palace museum this year. it is currently sold online and offline and is very popular with consumers.

in order to cater to different consumers, the craftsmanship and styles of gold products are constantly enriched. for example, fashionable gold products are made using ancient gold, 3d hard gold, wire drawing, sand blasting and other craftsmanship.

recently, the world gold council, together with eight retail brands including caibai jewelry and chao hongji, launched the "hard gold" innovative category. this category, made with advanced technology, improves the characteristics of traditional pure gold, which is both heavy and soft, and makes it easier to develop gold jewelry with complex craftsmanship and delicate structure. recently, this category has become more and more popular among young people.

some brands are targeting the high-end market for people who are not sensitive to prices. founded in 2009, laopu gold is considered a "youngster" in the industry. although it currently has only 33 stores, its average sales per store exceeded 100 million yuan in the first half of the year.

laopu gold also "takes an unconventional approach" in its products. it uses a variety of intangible cultural heritage gold-making techniques such as filigree inlay, enamel, and gold and silver inlay to make its products more refined. such products also make it stand out in the competition with traditional gold ornaments. take the signature product "rose window pendant" as an example. a 7.1-gram pure gold rose window inlaid with diamonds is priced at 10,460 yuan, which is as high as 1,471 yuan per gram. the clear positioning makes it have a relatively stable market performance when the gold price and mass consumption trends fluctuate violently.

judging from the efforts of major brands, a series of measures are not only aimed at the current fluctuations in gold prices, but are also looking to the longer-term future. however, it is undeniable that the surge in gold prices has indeed stimulated businesses to accelerate the pace of transformation and upgrading.

chao news written by tan xiaofeng