Chow Tai Fook Jewellery Group Ltd. (01929.HK), the world’s largest jewelry retailer by market value, aims to triple online sales every year as shoppers turn to the internet from bricks-and-mortar outlets.
The Hong Kong-based company wants its e-commerce business to account for 5 percent of overall revenue by 2018, up from less than 1 percent currently, managing director Kent Wong told the Hong Kong Economic Journal’s EJ Insight.
“Industry players need to make a lot of effort in innovation, not only in services and products but also in sales channels,” Wong said in an interview. “We will expand our investment in online sales, be it hardware, computers or broadband equipment, to meet customer traffic.”
E-commerce growth has been rosy since the jewelry retailer put up its first online outlet on Alibaba Group’s Tmall marketplace in 2010 and its official e-shop a year after.
“Every year we posted a two- to three-fold increase in online sales,” Wong said, expecting the growth rate to continue through the next five years.
For the year ended March 31, the company reported HK$57.4 billion (US$7.4 billion) in revenue, up 1.5 percent from HK$56.6 billion a year ago. Net profit fell 13.2 percent to HK$5.51 billion on higher advertising and rental expenses.
At present, the most popular Chow Tai Fook products online fall in the low end of a range at HK$1,000 per item, given that customers prefer to stop by physical shops for pricier jewelries.
“E-commerce, or e-trading, is no longer just about computers but also mobile phones. We see business opportunities here,” Wong said.
The company has tapped popular social media platforms such as WeChat and Sina Weibo in marketing and after-sales services, on top of the traditional channels of magazine advertisements and TV commercials.
As China’s new leadership pushes urbanization in inland and western areas, Chow Tai Fook has also focused its expansion on lower-tier cities where household income is growing.
Over the next two to three years, the company plans to open 60 percent of its new stores in tier-three and tier-four cities, Wong said. It has a target of 200 new outlets annually in the Greater China region.
Beijing’s campaign to boost consumption as a growth engine has softened the impact of its luxury curbs, he added.
As of end-March, Chow Tai Fook has 14 percent of its 1,640 mainland points of sales in first-tier cities, 48 percent in second-tier cities and 38 percent in lower-tier regions, according to its annual report.
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