The small streets of the county town are crowded with gold shops

Text |Value Planet Cheng Jia.

Edit |Tang Fei.

In order to get more growth opportunities, major chain brands must undertake more ** jewelry consumption demand through store expansion. This also led to the situation where gold stores were piled up to open stores, Chow Sang sang was facing Chow Tai Fook, and the next-door neighbor was ...... Chow Tai Sheng

And the spearhead behind this ** war all points to one word - sinking.

Every time I pass by the gold store, I am attracted by the magnificent decoration and the glittering gold jewelry in the display case, and I can't help but enter the store to have a look. Chen Ting, from a fourth-tier city on the coast of South China, talked about her ** shopping experience to Value Planet, "I couldn't help it this year, and I bought several transfer beads for hundreds of 1,000 yuan." ”

Chen Ting's enthusiasm for buying gold has not been extinguished by the gold price that has continued for a period of time, and she still does not deliberately avoid the gold store with wide open doors when shopping. Over time, Chen Ting found that at the moment when the business of physical stores was difficult, many shops on the main commercial street had changed hands, only gold stores, old stores were strong, and new stores were opened.

If she hadn't seen it with her own eyes, Chen Ting would hardly have imagined that in fourth- and fifth-tier cities where the average salary of residents is mostly 3,000 yuan a month, gold shops selling 600 yuan of grams** will "bloom everywhere".

Chow Tai Fook, China**, Saturday Fook, Luk Fook Jewellery ......Any ** chain store brand on the market that can be named, Chen Ting can find it in the business district of her hometown, a fourth-tier city. "There is more than one, densely packed with gold shops, and there are ten small gold shops on one street, to say the least. Chen Ting said.

It is not new that there are gold stores in the sinking market, but what is rare is the rapid expansion of the ** chain brand. However, with the frantic expansion of gold stores, the space that can be accommodated in offline jewelry retail is shrinking dramatically, resulting in an overcrowded number of stores, which inevitably starts a close fight.

If you don't have 5 million, don't think about opening a gold storeThe C position in the business district of the sinking market is often a "gold store".

Through a floor-to-ceiling glass window, a piece of exquisite ** jewelry shines brightly, and the ornamentation is excellent. ** enamel tiara inlaid with gems, a full set of gold bowls and chopsticks made by ancient techniques, and ...... ornaments made of pure gold "Tiger Descending the Mountain".Exquisite craftsmanship and hundreds of thousands of **, attracting the attention of passers-by.

On the main commercial street of Chen Ting's city, a Chinese ** chain store occupies two storefront positions, and even the advertising space on the second floor is also occupied to display the advertisement of "China's first investment gold bar". And next to this China's ** gold store, it is also a brand chain gold store.

Lu Yi, who just returned to his hometown in Hunan in October, also found that the only large shopping mall in his hometown has been piled up, "There were many clothing stores on the first floor of this shopping mall, and this time I went back to see that they were all ** jewelry stores next to each other, and there were six or seven ** chain brands in the shopping mall, and on the main street in the city center, the shops with the best customer flow were almost all selling ** jewelry stores." ”

In the case of many offline business formats, gold stores in counties across the country have sprung up like mushrooms after a rain. The main reason behind this is the desire for market and sales.

At present, the leading brands in the jewelry industry on the market mainly rely on laying channels and increasing the number of stores to make profits. For example, Zhou Dasheng, Lao Fengxiang, Mengjinyuan and other leading brands have opened up to join, and their franchisees account for more than 90%, and the proportion of franchisees from Shandong is as high as 98%.

However, the threshold for joining a ** chain brand is still "unattainable" for ordinary people.

The franchise fee is not expensive, only 100,000 yuan. Compared with the restaurant, the decoration of the store is more exquisite because of the larger area, and the cost is 1 million yuan. The largest investment is the purchase of goods, which are all **, so it starts with a few million yuan casually. Lu Yi recalled to Value Planet the amount of investment he learned last month about the amount of investment required to join a Chow Tai Fook, and bluntly said, "If you can't take out 5 million liquid assets, don't even think about opening a chain gold store." ”

According to Lu Yi, because at the beginning of the year, she opened a restaurant in Beijing closed, so in the past six months she has been deliberately looking for new venture capital opportunities, after seeing that whether it is in Beijing or her hometown, there are gold stores everywhere, the idea of opening a gold store naturally appeared in Lu Yi's mind, "I have also followed the trend in recent years to buy a lot of ** jewelry, investment gold bars have also tried." I just thought that since there are so many consumers, ** still retains its value, and opening a gold store can at least make a steady profit. ”

However, the high upfront investment in opening a gold store still discouraged Lu Yi. "A friend also introduced me to the 'Shuibei model' and suggested that I invest 50 to 1 million yuan to open a small wholesale gold store by myself. But I don't know anything about jewelry, and I can't do porcelain work without diamonds. ”

In the end, Lu Yi still gave up the idea of investing in a gold store. But this did not stop other investors, and the phenomenon of gold stores piling up intensified.

The county has become the main increase in consumptionFor the first chain brand, the "sinking" strategy seems to be intentional and has long been implemented.

In recent years, with the gradual saturation of the first- and second-tier cities' ** jewelry market, major ** chain brands have set their sights on the third- and fourth-tier cities. Accelerate the expansion of stores through franchise and provincial generation, in order to seek development in the new market space.

A report issued in 2019 by Huajing Industry Research Institute pointed out that the ** jewelry franchise model is the mainstay, and the head enterprises have significant advantages. The domestic first-class jewelry industry category business model to.

The first and second lines are self-operated, and the third and fourth lines are mainly franchised, and the head enterprises have significant advantages in franchisee resources and brand recognition. The third and fourth tier space is huge, and the current increase in ** jewelry is mainly in the third and fourth tier cities.

Take the strategic layout of the sinking market of the domestic leader Chow Tai Fook as an example. In 2018, Chow Tai Fook launched the "New Town Plan" to open up franchisee cooperation and open stores in third-tier cities and below in mainland China. By 2019, Chow Tai Fook launched the "provincial generation" policy to expand its business territory through provincial representatives and franchisees.

At the FY2022 briefing, Chow Tai Fook Executive Director Cheng Chi-man said that the Group will continue to promote the "New Town Plan" in the Mainland, and continue to expand the third-tier and lower-tier markets in the Mainland through cooperation with provincial representatives and franchisees from all over the world.

With the advancement of the sinking strategy, the contribution of sinking stores is getting higher and higher. In FY2023, the retail value of Chow Tai Fook's first-tier cities fell by 08%, but the third-tier cities increased by 73%, while fourth-tier cities increased by 117%。Data for the first half of fiscal year 2024 shows that fourth-tier cities are 9The year-on-year growth rate of 5% of retail value exceeded that of third-tier cities by 58%, close to 11 in second-tier cities1%。

In the sinking market, it is not only Chow Tai Fook. Lao Fengxiang sank into the third- and fourth-tier markets through franchising many years ago. It is reported that at present, Lao Fengxiang's channel strategy is "three-dimensional management", which is divided into five marketing models: self-operated silver building, joint venture stores, general distribution, distributors and specialty stores.

At the same time, Lao Fengxiang also emphasized in the financial report, "Adhere to market development, continue to promote channel sinking, refine and refine the market, and continuously improve market coverage and market share." ”

In 2022, Chow Tai Sang launched its new sub-brand "Chow Tai Sang Classic", which is a classic store with "** as the main and diamond as the best", and its store investment is smaller than that of a comprehensive store, and the store can be opened for 2 million yuan. Through the construction of classic stores, the "sinking" effect is achieved, the depth of channel coverage is increased, and the scale of stores in the fourth and fifth tier areas is expanded.

Luk Fook Jewellery revealed that it plans to net increase 300 stores in the mainland market in FY2023, mainly concentrated in:

Fourth- and fifth-tier cities.

Behind the "sinking" is the incremental market that the giants value.

According to Frost & Sullivan data, between 2017 and 2022, the compound annual growth rate of jewelry in China's first-tier cities and second-tier cities** was 67% and 83%；And thanks to.

Consumption in third- and fourth-tier cities has been upgraded, and consumers' per capita consumption of jewelry will reach 617 in 20225 yuan, the compound growth rate of third-, fourth-, and low-tier cities reached 110% and 115%。

In addition, industry insiders told the value planet that with the upgrading of consumption in third- and fourth-tier cities and the improvement of residents' purchasing power, the market size of the first chain brand will be further expanded, "the sinking market is mostly franchised stores, for brands, through the franchise model, the brand can quickly expand the market, seize market share, and also improve the brand's visibility and competitiveness." ”

Close hand-to-hand combat, who can stand out?With the acceleration of the expansion of chain brand channels, the market concentration has also increased significantly.

Huafu's "Industry Analysis Report" believes that China's ** industry has developed from the stage of product penetration improvement to the stage of brand concentration. In 2022, the number of stores of Chow Tai Sheng, Yuyuan Co., Ltd., Lao Fengxiang and other brands will reach 7,404, and Chow Tai Fook's data for fiscal year 2023 will reach 7,404.

The rapid growth of the number of stores of these brands is mostly due to the contribution of the sinking market.

But if you want to come out on top in this battle for sinking, you must face the challenges of the market itself.

Due to the uncertainty itself, in the sinking market, this uncertainty is further amplified, after all, in this market, consumer demand, market environment, etc. are different from the market in first- and second-tier cities.

According to the "China's ** Jewelry Retail Market Insight Report" in the post-epidemic era, the proportion of consumers who buy ** jewelry for their own use in 2020 will be the highest at 321%, followed by marriage demand, accounting for 281%。The proportion of consumers who give or invest in ** jewelry as a gift is 1896% and 1064%。

Therefore, from the perspective of the national first-class consumer market, "self-pleasing demand" and "marriage demand" are still in the mainstream position.

However, the trend of "pleasing oneself" in recent years has not been reflected more in the sinking market, where jewellery consumption is still driven by "wedding demand". And in many areas, ** is still the "hard currency" in the marriage process, from "three golds" to "hardware", there are different traditions and customs in various places.

In addition to engagement, marriage, childbirth, full moon, birthday, education, housewarming and other major nodes between relatives and friends will move around frequently, whether it is for commemoration or for the original intention of gifts, **jewelry and **ornaments are relatively high-end gifts.

On the other hand, the problem brought about by the gathering of the lower city is that the sinking market will also face a situation of "more monks and less porridge" in the future. According to the China Jewelry & Jade Jewelry Industry Association, as of the end of 2020, the number of ** jewelry retail stores in the country was about 810,000, it is estimated that the ceiling of the country's ** jewelry retail stores is about 120,000, in other words, this market can accommodate 390,000 stores. With the increasing number of branded chain gold stores and private gold stores, the remaining stock space of less than 40,000 stores will definitely be squeezed.

There is not much space left in the market, and in order to compete for more customers, brands have the kind of "hand-to-hand combat" described at the beginning.

As for the future trend of the industry and who can stand out from it, it is not yet known, but for brands, it is enough to benefit from the sinking strategy and have a significant increase in the brand's market share.

Chen Ting and Lu Yi are pseudonyms.