Gold price-related hashtags have consistently held a place on the Hot Search list on Weibo, China’s Twitter equivalent. Topics such as “Is it time to buy now gold has dropped 20 RMB per gram?” (#金条一克跌20元现在入手合适吗#) and “Gold price increase again” (#黄金回涨#) reached number 6 and number 18 on the list with 64.03 million and 11.45 million views, respectively. This climate has heavily impacted jewellers, especially traditional gold shops, such as Chow Tai Fook.
Chow Tai Fook, established in 1929, is a Hong Kong-based gold shop and jewellery brand. With the continued surge in gold prices in the past two years, gold shops like Chow Tai Fook have shifted from benefitting from everyone stocking up on gold before the price continues to increase, to further debating whether to raise their own prices again. In fact, topics such as “Chow Tai Fook price to rise again” often appears on the Hot Search list as well. Since last year, the brand has been suffering a decline in sales. Q3 FY2024 (October to December 2024) saw Chow Tai Fook’s sales drop 14.2% year-on-year (YoY), with Hong Kong and Macau down 13%, while in the Mainland it plummeted 20.4% YoY.
While other traditional gold shops face similar difficulties, Chow Tai Fook’s main competition comes from two unlikely places, Laopu Gold and Shuibei market in Shenzhen. Laopu, with its roots in “traditional goldsmithing” craftsmanship that justifies its premium (and high-profit margin) to many consumers, is close to reaching a luxury status. Meanwhile, Shuibei thrives on slightly lower gold prices and crafting costs. Similarly, “goldsmithing” workshops and artisans are now gaining attention from price-sensitive young consumers.
For Chow Tai Fook, and others like it, differentiation is key. Chow Tai Fook is already exploring upward brand extension with its luxury concept stores “Jewelria” in Hong Kong, Shanghai, Wuhan and Shenzhen, etc. Collaborating with a globally renowned designer for the store interior, as well as introducing designer jewellery pieces, the gold shop is rebranding its new line as a fine jewellery brand. With more IP collaborations across its main line, the brand is working towards differentiating from other gold shops, including Laopu and Shuibei.
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