Key investment points:
As a universally recognized value symbol, the jewelry market has been enduring for a long time, and presents three development trends: diversified demand scenarios, diversified categories, and branding. Gold jewelry originated from scarcity and has evolved into a generally recognized value symbol. It has two main functions of highlighting identity and expressing emotion. There is a long-term and stable consumer market. Reviewing the development process of jewelry market, the demand scene extends from religious sacrifice and aristocratic exclusive to wedding and daily consumption in the mass market; The category has developed from jade and gem to other materials such as gold, silver and diamond; Both determine the expansion of market space. Major jewelry enterprises have gradually formed brands in the long-term development, bringing long-term stability and high viscosity. They have significant advantages in the competition for market share, and the trend of pattern headedness is obvious.
There is a large gap in the benchmarking of jewelry consumption per capita overseas, and the broadening of daily consumption scenarios brings new increment. Generally speaking, jewelry is an optional consumption industry, and the level of GDP is closely related to the level of per capita. Compared with overseas, the per capita jewelry consumption in Chinese mainland still has a big gap. From the perspective of specific driving factors, as the millennials become the main consumer, the daily consumption scene of Yueji continues to expand, providing new incremental space for the industry. In terms of sub categories, 1) gold: short-term gold price fluctuations affect investment demand, and the medium and long-term wedding penetration has reached saturation, but product innovation has widened the scene and increased the customer unit price, forming the second growth curve. 2) Inlay: there is still much room for the improvement of wedding demand, customer unit price and penetration rate; The cultivation of diamond has ushered in an outbreak and is in a golden period of development.
At present, the core strategy of Chinese brands is still offline channel expansion. The core competitiveness pursued by jewelry enterprises is branding. In essence, it is to build a long-term and stable barrier by reducing consumers’ choice cost and providing identity value. Due to different positioning of brands at all levels, there are differences in the ways of forming brands, generally showing the law of “the higher the end, the more marketing, the more the public, the more channels”. Chinese brands are mainly gold products, positioning the public. Due to the high degree of homogenization, it is difficult to form a premium. They mostly expand their brand influence through channel expansion. Compared with international brands, Chinese brands have not yet formed sufficient brand segmentation. Before that, opening stores is still the core strategy to seize the market share.
There is still room to double the concentration. The strong in the underground half of the horse race circle is HENGQIANG. The Hongkong market with similar benchmarks to Chinese mainland consumption habits and product mix, CR10 is close to 50%, mainland market is less than 25%, and concentration still has double space. The channel has a significant first mover advantage. The leading brands gradually form barriers in the process of early expansion, improve the brand strength, and then feed the channel expansion. The advantage of opening stores is more obvious than the brands with weak brand strength, forming a virtuous circle, and the strong is always strong. At present, China’s layout has been preliminarily completed, the blank market bonus is no longer, and has entered the second half. The head brands that enter earlier and have influence are easier to occupy the space of small and medium-sized brands.
Joining is a better way of expansion, which is more conducive to developing the sinking blue ocean market. For franchisees, the franchise jewelry retail store has an excellent business model, strong profitability and low risk, and the investment payback period is about 2.88 years. For the brand side, the franchise model essentially relies on the expansion of social resources, gives play to the leverage of internal limited resources, realizes large-scale and rapid expansion of stores, and greatly widens the management boundary. From a business perspective, store expansion is a necessary requirement for brands to seize the market share at this stage, and franchise is an important way to expand stores quickly. The penetration space and store opening space of low-level cities are larger than those of high-level cities. With the growth of the middle class, the continuous consumption upgrading is brought about, and the demographic dividend of low-level cities is released, which is the focus of the next attack. Due to the characteristics of low investment, short payback cycle, low operation difficulty and low risk, the alliance plus model is more suitable for the expansion of low-level cities.
Investment suggestion: the jewelry market has broad space and obvious headedness trend. The expansion of offline channels is still the main strategy at present. Based on the feedback effect of the first mover advantage and brand advantage of the channel on channel expansion, the company has formed channel barriers and brand strength, and has the potential to become a leader with brand premium strength. It is recommended to pay attention to Chow Tai Fook, Chow Tai Seng Jewellery Company Limited(002867) , Lao Feng Xiang Co.Ltd(600612) , Guangdong Chj Industry Co.Ltd(002345) , China National Gold Group Gold Jewellery Co.Ltd(600916) , Shanghai Yuyuan Tourist Mart (Group) Co.Ltd(600655) . Cultivating diamond is in a golden period of development. It is recommended to pay attention to upstream manufacturers North Industries Group Red Arrow Co.Ltd(000519) , Henan Huanghe Whirlwind Co.Ltd(600172) , Henan Liliang Diamond Co.Ltd(301071) , and production equipment providers Sinomach Precision Industry Co.Ltd(002046) . Give the industry a “recommended” rating.
Risk tip: repeated outbreaks lead to weak offline optional consumption; Demand growth is less than expected; Industry competition intensifies; Chinese mainland and Hongkong and overseas international market experience are quite comparable, and the relevant information and data are for reference only. The complexity of the international situation leads to the uncertainty of gold price fluctuation; The uncertain impact of consumption habits on the growth of diamond cultivation; The Chinese mainland’s concentration degree is uncertain.
