15 Feb 2017
Malaysian Jewellers See Off Global Brands with Bespoke, Online Sales
Despite feeling the pinch from the on-going global downturn, many exhibitors at the Malaysia International Jewellery Festival remained buoyed by high-end sales, social-media success and the failure of incursions by global jewellery brands.
For the jewellers who attended the recent four-day Malaysia International Jewellery Festival in Kuala Lumpur, the industry outlook remains positive despite the global downturn. Overall, sales are seen as having declined as the slowdown in the global economy has resulted in consumers remaining wary when it comes to spending on luxury items.
The growing popularity of branded jewellery and high levels of competition in a largely fragmented marketplace are also seen as having contributed to falling profitability. Regardless of this, though, most exhibitors remained optimistic, taking comfort from the promise shown by online marketing channels and the continued belief among many wealthy buyers that fine jewellery still represents a sound long-term investment.
Typical of this upbeat sentiment was Claudio Gota, a Sales Manager with Orital Srl, an Italian vendor based in the gold-manufacturing district of Valenza, an area world-renowned for its high-value artisanal jewellery. Speaking from his own company's experience, he said: "Sales are currently down almost everywhere. Our sales in the Asian markets, though, are much better than in the European ones."
A key difference when compared with the more developed markets is that purchasers in Southeast Asia tend to be notably younger. While they may not be quite the glitterati that jewellers usually rely on to hoard fine jewellery, there is a silver lining.
Highlighting this, Khov Sok Long, a Cambodia-based jeweller, said: "Unfortunately, millennials have less savings than their grandparents and parents when they were of a similar age, while student loans, higher rents and the ever-more competitive job market doesn't help. Despite this, as the number of high-net-worth individuals and middle-class consumers are both growing rapidly across the region, our future remains bright."
According to Jewellery in Malaysia, a September 2016 report by Euromonitor, greater exposure to international jewellery companies is making Malaysian consumers far more brand-conscious. In line with this, Tiffany & Co, Pandora and Thomas Sabo are projected to grow in terms of both their number of physical stores and their overall level of sales across Malaysia.
Acknowledging this, Dameli Murat, a designer for Malaysia-based Safir Jewellery, said: "Malaysian consumers tend to favour international brands over local, independent ones. As overseas brands have a higher perceived value here, vendors from Italy and Dubai are able to charge premium prices, even though many of them source and craft their products in Asia."
Those jewellers with a good reputation and a wealthy and loyal client base, though, seem less worried about the rise of branded jewellery. Seeing himself very much in this camp was Shabarat Sidiq, founder of Aarasz, an Indian specialist in globally exported handcrafted jewellery.
Outlining what he sees as a distinct polarisation in the market, he said: "There are buyers who prefer antiques and heirloom pieces and there are those who like wearing items made by big-name international brands. While the latter currently derive a sense of having upgraded their lifestyles by purchasing branded goods, their taste will evolve over time. In the meantime, there will always be the former kind of buyers."
Broadly agreeing, Andrew Teong, Head of Sales for Chiang Heng, a local jewellery firm, said: "Although brands such as Pandora are popular with many Malaysians, people here still want to spend with local independent jewellers."
Taking an understandably different view, Paolo Meloni, a member of the Orital sales team, said: "Despite intense competition from jewellers in China, India and Turkey, Italian items remain synonymous with quality and value. Many Malaysians understand that we're genuinely passionate about quality and that this is reflected in our craftsmanship."
Amid the general slowdown in both local and overseas-sourced purchases, some consolation has come from the rapid growth in online sales. Overall, in 2016, internet retailing was the fastest-growing distribution channel for jewellery in Malaysia, with a 16% rise in value, according to Euromonitor.
Although some vendors are still not actively selling online, others remained convinced of the effectiveness of social-media platforms when it comes to boosting sales. The optimism of many such companies stems from the success of their online marketing initiatives over the past 12 months, as well as their expectation that this particular channel will only continue to grow in significance for the foreseeable future.
One clear convert to the e-commerce cause was Safir Jewellery's Murat. Assessing the impact of adopting the digital route to market on his own business, he said: "It was only this year that we started marketing online via Facebook and Instagram and it has already helped our sales considerably."
One local company, Azar Gems, had taken to social media to link its pink sapphire-and-diamond earrings with breast cancer awareness. Explaining the thinking, Maha Assad Azar, the Co-owner of the Company, said: "Our online sales have been increasing steadily as our number of followers grows. We now regularly post product and lifestyle images for our 13,500 Instagram followers and vary our updates for our 12,000 Facebook fans in order to keep them engaged."
Outlining a similar experience, Chiang Heng's Teong, said: "Our 82,000 Facebook fans enjoy seeing promotions and discounts. Although I can't state exact figures, posting jewellery pictures on Instagram has kept our latest offers at the forefront of our followers' minds, clearly helping to boost our sales over the past year."
Not all vendors, however, are quite so sure as to the effectiveness of online sales channels. One such cynic is Meloni, who said: "As our pieces cost a considerable amount of money, I don't think people will buy our style of fine jewellery online. People want to try them on in person and still prefer to buy in shops."
Aware of the buyer preference for a more intimate pre-purchase assessment of higher-end jewellery, some companies – including Kuala Lumpur-based Emperor's Fine Jewels – are attempting to offer more sophisticated online viewing options. Explaining its approach, Krishan Gupta, Emperor's Assistant Sales Manager, said: "We're already working on the launch of our e-commerce store – maisondenitingoenka.com. The site will allow people to view our jewellery in 360 degrees, with serious buyers then given the option of requesting a home visit by one of our sales staff in order to try on the actual pieces."
Such bespoke fitting is popular in Malaysia, with custom-made jewellery, brooches, rings and long necklaces always in demand. One company specialising in this sector is Juwelen Designs, a Kuala Lumpur-based creative jewellery studio.
Explaining its more niche approach, Ivy Teong, the company's Chief Designer, said: "Brooches sell well in Malaysia, particularly among wealthy Muslim women. As they need to cover up their heads and faces, they don't favour short necklaces or earrings as adornments. Their top choices tend to be rings, long necklaces, and brooches."
Zai Hamid, a Sales Executive with Kuala Lumpur's Ceres Jewels, had a similar take on local preferences, saying: "Rings and long necklaces sell very well here, far better than earrings for instance. It is, however, hard to specify a particular items that outsells everything else by a long way, as we also sell collections.
"These collections consist of tiaras, necklaces, bracelets, rings and earrings. We tend to sell largely through private sales in our boutiques in Brussels, Dubai, Hong Kong, Kuala Lumpur, Moscow, Mumbai, New York and Zurich."
Murat, though, is more direct about the market his own company is serving, saying: "Rings are our best-sellers, then loose gemstones. Overall, though, custom-made jewellery accounts for most of our sales.
"People prefer such items as they get to choose the designs and materials and end up feeling more involved. At the end of the day, customers tend to like bespoke pieces far more than ready-made, branded items."
It is those catering to the highest end of the market, though, that remain the most optimistic, and possibly with good reason. According to one recent Euromonitor report, Finding Future Growth in Fine Jewellery (Asia in Focus), demand in the sector remains very much focussed on fine jewellery, which accounted for 87% of total jewellery sales in 2016.
Acknowledging the truth of this for many Malaysian jewellers, Gupta said: "Most clients are primarily interested in pieces with a truly high value. Their motivations are deeper – it's not just about fashion or style. They value tradition and family and they want only the best-quality pieces. For them, it's about investment and it's about passing on a worthy legacy to the next generation."
The Malaysia International Jewellery Festival 2016 took place from 11-14 November at the Kuala Lumpur Convention Centre.
Geoff de Freitas, Special Correspondent, Kuala Lumpur