Signs
of a relatively strong finish to 2017 were apparent in the last couple months
of the year. Overall retail sales for October rose 3.9% in value and 3.6% in
volume year on year, marking the eighth month of consecutive growth. Jewelry,
watches, clocks and valuable gifts were up 8.4%, continuing their solid
performance in recent months. Total sales for the first 10 months of the year
increased 1.2% compared with the same period in 2016.
The government attributed the
positive results to improved consumer sentiment and an uptick in inbound
tourism driven by the Golden Week holiday in early October. Thompson Cheng,
chairman of the Hong Kong Retail Management Association (HKRMA), was upbeat
about sales performance for the remainder of the year, saying association
members expected single-digit growth in November. He forecast an overall sales
increase of 2% to 3% for the full year.
Better
than 2016At
the high end of the market, the sentiment among industry leaders was good.
“Overall, the mood is positive, and we feel the worst is behind us,” said Simon
Zion of Dehres, which specializes in fancy shapes and colors. “Prices are
stabilizing, and that is always good for business.”
Calling 2016 the worst year
for business on record, Zion said the first seven to eight months of 2017 were
likewise “very challenging.” Still, he noted, the market picked up in October
and November, and there was an increase in orders and inquiries. “We are seeing
genuine interest in and demand for large high-quality white diamonds and large
high-quality fancy shapes and colors.”
‘The
right clientele and the right product’Arnaud
Bastien, president and chief executive of Graff Asia, echoed this positive
sentiment. “For us, 2017 has been a very busy year and overall a good year,” he
said. “Wealthy people still want to acquire something special.... Today, more
people are educated to want the best, and [they] understand it doesn’t come
cheap and are willing to pay the price.”
Graff expanded in Asia in
2017, opening new stores in Singapore, Korea and Japan, to help build brand
awareness and establish a local business, he explained. The move also aimed to
provide more opportunities for the company’s ultra-high-net-worth clientele to
purchase Graff jewelry as they traveled throughout the region. Graff focuses
predominantly on existing clients, and a strategy of small exclusive events is
working, Bastien stated.
“If you have the right clientele and the right
product, it works,” he said, adding that branding was important, but product
quality was critical.
Confident
in the year ahead
Bastien
was optimistic about the outlook for the industry in 2018, seeing no reason the
positive sales trend should not continue. “We are confident… we are doing the
right thing to stay at the top,” he said. “We recently bought...the Peace
Diamond at auction. We are making sure that we acquire those important stones.
We believe in high quality and invest ourselves.”
Zion was also upbeat about
the business prospects for the coming year, given the improved economic climate
and market conditions. “We are looking forward to a better year again in 2018,”
he said.
Both he and Bastien
highlighted the demand for top-quality white and colored diamonds and gemstones
at Hong Kong’s recent fine jewelry auctions. “There are always buyers for
top-end items,” Zion remarked.
Leading Hong Kong-based
jewelry retailer Chow Tai Fook also expects fiscal 2018 to be a turning point
for its business. In a filing to the Hong Kong Stock Exchange, company chairman
Henry Cheng reported that “although the recovery is gradual and mild, the
industry is expected to return to stable yet sustainable growth.”
Article from the Rapaport Magazine - January 2018. To subscribe click here.