An employee sorts items at a jewelry shop in Taiyuan, capital of Shanxi province. (Photo by Zhang Yun/China News Service)
Traditional retailers must reorient their strategies to keep pace with the dramatic changes in China's gold consumption trends, which is being driven by millennials and online sales, top industry officials said on Thursday.
The World Gold Council said there has been a resurgence in the demand for the yellow metal in the country. Demand for gold bars and coins rose 57 percent year-on-year to 64.3 metric tons in the third quarter, while gold accessories saw a 13 percent growth to 159.3 tons.
China was also the biggest contributor to global gold demand during the quarter.
Wang Lixin, WGC's managing director for China, said he has seen two significant changes in the shopping trend in China－the growing number of young consumers and the increasing online sales.
"We have seen a transition in younger consumers for fashionable stuff, especially for 18-karat gold products," said Wang. "The online sector has also witnessed dramatic growth from the second quarter of the year.
He said jewelry consumption had been lagging other commodities in online sales in the past, but a change is slowly taking place.
"Some leading brands have reported a five to even 10-fold increase in their online sales compared to last year," he added. "It is at the starting point of about 10 percent of the sales but it's growing, and in the coming two years we will see higher percentage of internet sales and younger buyers in China."
John Reade, chief market strategist of the council, said millennials treat gold differently compared to their parents and grandparents.
"One of the trends particularly in China is that they like to buy products with more design elements and have developed a liking for 18-karat products rather than heavy and pure gold," he said.
The changing habits in what they shop and how they shop have forced manufacturers to reposition themselves to maintain growth, in terms of building up brand awareness, enhancing modern designs and opening up online revenue streams, John added.
The shift in taste has also pushed the industry to upgrade, as Wang said many Chinese jewelry producers have already adopted machines with computer controlled programs to design not only 18-karat gold, but also 24-karat gold products for better and more personal design.
"Coupled with ongoing urbanization and rising domestic demand powered by the Chinese government's measures to shift the economy to an internal consumption-driven model, the market potential in the Chinese mainland, particularly in lower-tier cities, continues to be attractive to jewelry retailers of all sizes," said Yang Lixin, director of the gemological training center for China's National Gem and Jewelry Technology Administrative Center.