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Demand to grow but cost may dim jewelers' shine
By Louise Ho |
February 28, 2012, Tuesday
|
Print Edition
Print Edition
THE strong demand for jewelry from Chinese consumers may propel the market to surge 35 percent over the next five years but a report warned of rising operating costs in the industry that may dim the sparkle from the jewelers' expansion plans.
A report by business research and consulting firm Frost & Sullivan said yesterday that Chinese consumers will continue to have a solid demand for jewelry this year.
The report predicted "jewelry spending by Chinese consumers has a big room for growth" because on average the Chinese consumer spends about US$26 on jewelry, one-tenth that of the US and half of the global average.
But the report warned that high operating costs are taking the shine off and making companies cautious to expand over the next few years. For example, the China Chain Store and Franchise Association said jewelry retailers faced a rent hike of 30 percent on average last year.
As the market in the first and second-tier cities on the Chinese mainland has become saturated, jewelry firms are venturing into the third and fourth-tier cities. Local brands will face competition from big chain stores such as Shanghai Laofengxiang and Hong Kong-based Chow Sang Sang Jewelry, the report said.
"Small retail stores may be eliminated by the large chain stores," the report warned.
To diversify their sales channels, more jewelry retailers will develop online marketing. But it said online jewelry shopping is still not common among Chinese shoppers and may be popular in three to five years.
A report by business research and consulting firm Frost & Sullivan said yesterday that Chinese consumers will continue to have a solid demand for jewelry this year.
The report predicted "jewelry spending by Chinese consumers has a big room for growth" because on average the Chinese consumer spends about US$26 on jewelry, one-tenth that of the US and half of the global average.
But the report warned that high operating costs are taking the shine off and making companies cautious to expand over the next few years. For example, the China Chain Store and Franchise Association said jewelry retailers faced a rent hike of 30 percent on average last year.
As the market in the first and second-tier cities on the Chinese mainland has become saturated, jewelry firms are venturing into the third and fourth-tier cities. Local brands will face competition from big chain stores such as Shanghai Laofengxiang and Hong Kong-based Chow Sang Sang Jewelry, the report said.
"Small retail stores may be eliminated by the large chain stores," the report warned.
To diversify their sales channels, more jewelry retailers will develop online marketing. But it said online jewelry shopping is still not common among Chinese shoppers and may be popular in three to five years.
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