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Hong Kong
By Mary Kavanagh
As retailers reported their worst first-quarter sales since 1999, jewelry stores announced ongoing losses and closures and diamond suppliers continued to cry out for business, another Hong Kong–based — yet global — jewelry business was planning its expansion. Plukka has evolved its business model continually since its launch in 2011, offering fine jewelry via online flash sales. There was its initial public offering (IPO) on the Australian Stock Exchange (ASX) in fall 2015, the opening of a new shop in London’s exclusive Burlington Arcade in February of this year and another in Hong Kong in May. And plans for additional brick-and-mortar stores are in progress. “Opening our first shop in Hong Kong in 2014 was very important, because it demonstrated to us the kind of brand recognition we get,” said Joanne Ooi, Plukka’s founder and creative director. “The original shop was intended to be a pop-up only, but it became permanent and now we’ve replaced it with this new store,” she added, noting it has been an iterative and learning process to get to where Plukka is today. Observation and analysis of consumer behavior and buying patterns highlighted that offline transactions were of a much higher value than those online and that consumers engaged more when Plukka launched individual designers. “Fast forward to where we are now. Exclusivity and creativity and representing the world’s most creative talent is paramount to succeeding — especially in today’s day and age,” Ooi said.
Plukka offers an attractive value proposition to independent designers. “We are the only multibrand fine jewelry retailer with retail operations in Asia, Europe and the U.S.,” Ooi said. ”We allow independent designers to leverage one collection of jewelry where all their work and capital is and offer them the most efficient and streamlined platform for accessing global retail markets.” One example is the recent global launch of Chelsy Davy, who created AYA, a line of fine jewelry inspired by Africa, where she was raised. AYA features gemstones and is available for sale online via Plukka and showcased at trunk shows in London in May and in Hong Kong in June. Plukka has not been immune to the tough economic conditions globally, yet seems to have weathered the storm better than the jewelry chains. Ooi attributed this to the uniqueness of Plukka’s offering. “All jewelry designers on the Plukka platform are unified by design excellence,” she said, noting that prices vary from $300 to above $150,000. “Price is not key; what matters is that the designs are compelling and original,” she said. The launch of the new Plukka shop in Hong Kong featured YEPREM jewelry from the Beirut-based jewelry house. The innovative, daring and beautiful designs featuring white diamonds sparked a buying frenzy and “crazy” sales. “We sold almost half of all our stock on the first day,” Ooi said. “The success of YEPREM shows that the power of design and creativity in creating white diamond jewelry is the future of the industry and of attractive margins. And it points out the importance of us at Plukka beefing up our own brand by selling white diamond jewelry with a high level of creativity.”
Plukka’s customers are predominantly women who buy for themselves. Even though the company is global in reach, Hong Kong is a very important market and buying habits in the city differ significantly from those in Europe and the U.S. “Hong Kong is super fast and decisive. We have women who come to buy something for $10,000 or $20,000 and they are in a rush,” Ooi said. “Budgets here are of a different magnitude for what we think is expensive and women here would wear a four-finger diamond ring that would cover their hand just to lunch,” she added, pointing out that U.S. customers tend to be more circumspect and buy pieces they can wear again and again rather than something to match an outfit. In contrast, jewelry retailers are in what Ooi referred to as ”the downward death spiral of commodity pricing,” where they are selling similar products and therefore subject to an infinite amount of price data comparison, both online and offline. This ultimately results in continually thinning margins for all involved. “It’s obvious to the entire industry that the only life preserver is to create value add through creativity and branding — we are the absolute forefront of that,” she added.
There are no signs of a significant recovery in the market anytime soon. Overall retail sales in March declined 9.8 percent in value with sales of jewelry, watches and valuable gifts declining 20.3 percent. Sally Ryder of Ryder Diamonds, who specializes in bespoke wedding jewelry, said that because of the specialized nature of her business, she is not impacted by the declining sales. Yet she noted she has never received so many calls on a daily basis from suppliers who are desperate to sell stock. Thomson Cheng, chairman of the Hong Kong Retail Management Association (HKRMA), said he expected full-year retail sales to show a drop of 6 percent to 7 percent.
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