Opportunities and Challenges for Gem and Jewelry Business in Post-Covid-19 Era
Throughout 2021, global economy in general has been recovering since economic activities, which were suspended, in many countries started to resume, particularly in countries that outperformed others in extensively vaccinating their populations and reducing Covid-19 severity. Such achievement promoted confidence among consumers. Consequently, business sector noticeably escalated its production. Thus, it could be said that 2021 is the beginning of recovery and anticipation. Revisiting what happened during the crisis is not only managing problems at hand but also obtaining a guideline for future challenges.
Rebound Seen in Many Countries
Though many countries have begun to bounce back from economic consequences in 2021, the recovery has not been extensive. The recovery leans on 2 major countries—China and the US—which play a vital role in the world’s production growth. These two countries accounted for 25% and 20% of global production. Comparing developed countries and emerging countries, it is found that prior to the spreading of Covid-19, emerging countries generated 57% production, while developed countries contributed to 41%. However, the pandemic inflicted emerging countries much heavily than developed countries. Moreover, it also diminished production rates. According to Kearney, a global business impact analyzing firm, it has been anticipated that production rate of developed countries will reach 56.5% in 2023 whereas that of emerging countries will be at 39.8%. The other 3.7% will belong to other countries. High economic growth rates will be seen in Asia, Australia, the UK, France, and Italy.
Economic Growth Forecast by Region 2021-2023 (source: www.kearney.com)
Meanwhile, in business sector, Great Expectations: Global Executives Respond to Business Disruption, a survey report conducted by PwC, one of the world’s leading company in audit and business consulting, asked business executives of over 250 noted companies from various industries around the world (93% respondents working for companies with revenue exceeding USD 1 billion) regarding corporate growth and business recovery plan after the pandemic, or their strategic priorities in 2021 and beyond. As for revenue growth measures, the top 3 primary strategies were developing new business model (51%); revisiting company strategy (37%); and organically expanding into new business areas/or markets (28%). Top 3 cost-cutting measures were improving efficiency and driving cost savings (35%); accelerating digitization (22%); and restructuring current business portfolio (21%).
Strategic Priorities in 2021 and Beyond (source: www.strategyand.pwc.com)
In addition, leading business executives should concentrate on the following issues to reshape business for competitiveness in the digital era.
1. Business leaders should put priority on developing business model and revisiting company’s strategies.
2. Business should be operated with recognition on issues regarding environment, society, and governance (ESG), which have become more vital.
3. Raising expenditure on investment in digital technology must be based on transitioning from analog to digital format and building cyber safety and sales to boost business growth.
4. Investing in digital has to focus on developing new products and services, integrating digital systems and business models by emphasizing on company’s technology management and digital capability development.
Use Online Platforms to Broaden Business Opportunities
As traditional trade formats could not be operated as usual, online trading platforms and omni channels have become prominent factors keeping consumption vigorous despite lockdown or social distancing measures. Online trading has turned into the principal channel used by business sectors for marketing communication. Many businesses have shifted their competition to online markets. Thus, marketing engagement through the channels has become as arduous as traditional trading channels. An interesting example of entrepreneurs using online platforms to build their business is ENGELSINN.
ENGELSINN is a new German brand, which was established in April 2019. The brand was founded by only 4 founders who helped transforming a local online jewelry brand into a global brand. Creativities and various ideas were combined to build Ideate (Idea + Creative = Ideate), which is one of design thinking steps. Then they developed a model to create high-quality and stylish jewelry. With competent marketing strategies, the business was able to leap greatly during an uncertain time such as now. The German brand’s interesting strategies are as follows.
1. Precisely identifying target group: ENGELSINN found that people with a smartphone look at their device averagely around 200 times a day. 90% of Facebook users use the application 11-14 times a day. Therefore, we need to understand how to approach our customers. A team is responsible for inspecting and analyzing trend outlooks as well as customers’ characteristics and behaviors for complete understanding. After that an appropriate strategy is chosen for each market, for example, advertising and creating contents on Instagram to reach teenagers whereas marketing toward adult customers relies on Facebook, which is more popular among them.
2. Simple and enticing website content: Many brands, engaging in online marketing, usually post diversified contents to sell their products. Such approach is ineffective. We should tactfully entice customers instead of pushing them, create captivating contents to introduce the brand to customers, produce a user-friendly website to help customers understand what we present. Additionally, the brand also provides online advisors and experts to help customers with their problems and recommend the most suited products for them.
3. Carefully communicating brand’s overall image: When you engage in large-scale trading, which connects customers across the globe, an expert online content creator is needed to be able to link networks and businesses together. The implementation needs to be in a macro concept to build the brand’s positive image without being restricted under geological constraints or language differences. The brand has to present quality products so that customers will recommend it to their families and friends.
4. A strong team: ENGELSINN began with only 4 staff before expanding to 20 staff. Each of them possesses learning skills and professionalism to be able to take charge of design, production, shipping, and other important tasks. The brand’s competent job distribution contributes to its growths and customers’ satisfaction.
Additionally, small to large traders can use popular online jewelry markets as their storefronts. The followings are best online trading markets rankings of 2021.
Digital Generations: Future Consumption Drivers
Covid-19 pandemic paved way for online platforms’ rapid booming that they have become primary channels for traders to communicate differently from what it used to be. Furthermore, digital technology expansion has also boosted online shopping among millennials (born between 1980 and 1995) and Gen Z (born between 1996 and 2010) during the pandemic. The groups are the dominant users and main online purchasing powers. According to Alioze, a UK e-commerce platform, millennials accounted for 35% in luxury market. The rate will increase to 45% in 2025. Meanwhile, Gen Z consumers accounted for around 4%. The rate will reach 40% within the next 15 years. In 2025, millennials and Gen Z will account for 55% in luxury market. They will become the preeminent consumers who will drive the market’s growth and replace older generations, whose purchasing power for luxury products weaken.
However, factors influencing their jewelry shopping are slightly different. Millennials prefer quality goods with uniqueness, produced from ethical and environmentally friendly sources. On the other hand, Gen Z looks for reviews, compare products specifications, and prefer popular innovative products which are reasonably priced and precisely presented. The growth of these consumer groups has urged leading brands in the industry to focus on them much intensely.
This French luxury jewelry brand with a long history (established in 1874) is another brand that reformed its traditional image by fearlessly using a marketing strategy called Digital First. The strategy brought about its remarkable change enabling the brand to capture Chinese millennials and Gen Z. It is different from the brand’s typical campaigns in Europe and North America. Cartier opened its official store on Tmall and became a leading brand in online market with its live streaming via Taobao Live on Singles’ Day. The streaming gained over 800,000 viewers. Alizila, Alibaba’s online and digital trading news center, stated that Cartier’s youngest customers are in China. They consist of 65% millennials and 25% Gen Z. This is a result of the brand’s successful digital marketing by inducing teenage customers through famous celebrities, shopping formats and platforms popular among the group. Cyrille Vigneron, Cartier’s chief executive said, “…we should not try to make young products for young people at cheap prices. It’s not about that. You have to explain classics to a young generation in a modern way.”
The Danish giant jewelry company has planned its marketing strategy to drive sustainability and create long- term sustainable growth. Pandora has set to reach its 2022 goal of 6-8% growth in revenue annually. The company planned to increase production capacity in its manufacturing bases in Thailand and Vietnam by 60%, or additional 80 million pieces of production each year. It aims to become a favorite brand offering affordable products to expand customer bases to millennials and Gen Z. Pandora emphasizes primarily on key markets such as the US and China. The brand has determined to reduce greenhouse gas emissions by 50% within 2030, create gender equality in the organization, and accentuate using recycled materials as key materials in production. These issues are deeply concerned by these two groups.
The American brand is another leading global jewelry brand which has placed importance on millennial and Gen Z markets. The brand expanded its online channels to create awareness of the brand, so the groups have become more familiar with the brand. With online advertising tools and marketing through online influencers, Tiffany & Co. was able to reach the consumers. In its latest campaign, Beyoncé and Jay Z, an icon of streetwear fashion popular among Gen Z, are featured to boost recognition and capture the young generations. Furthermore, the brand has formed relationships with celebrities and musicians well-known among the groups to obtain further growth in strongly competitive online trading.
Beyoncé and Jay Z for Tiffany & Co’s About Love Campaign (Courtesy of www.prnewswire.com)
It is undeniable that the gem and jewelry industry could no longer rely on traditional trading anymore as online trading and digital technology have swiftly evolved and changes constantly occur in a quick pace. Thus, choosing suitable technology is essential. Moreover, growing number of digital natives who are becoming dominant buyers in online market has driven brands to shift their focus more toward marketing to the groups. However, the important thing is not abandoning other consumers but balancing between consumer who will be the key driving force and existing consumer bases. Since there is no such thing as “one size fits all”, there is no marketing strategy that works with every consumer group. Therefore, understanding customers’ behaviors, characteristics of each demographic, and marketing tools will help entrepreneurs who have been struggling (due to the pandemic) to be able to stand up again and progress firmly in the future.