For a period of time over the last 18 months, there really was little else for a luxury brand to do but wonder what its value was. City centres were ghost towns, airports were shuttered and the world sat at home and waited.
But with people unable to spend money on so-called luxury rivals such as holidays, experiences and clothing, fine jewellery started to emerge as something worth investing in. All luxury brands had to do was convince consumers to use their computers to buy it.
Céline Assimon has been CEO of De Beers since September 2020. “We launched our new global website in April last year, during the first lockdown. Debeers.com now offers an extended jewellery range, including high jewellery, up to $250,000,” says Assimon. “We also increased delivery capabilities to 15 markets, added French and Chinese versions. As a result, our digital business has more than tripled.”
Assimon was far from alone in realising that refining De Beers’ online presence had to be a key strategy. According to global management consultancy Bain & Co, online shopping for luxury goods has soared, doubling its share of the market to 23 per cent up from 19 per cent last year.
This leap has also contributed to a rise in third-party retail sites dedicated to fine jewellery. In the space of a few months, Once, Finematter and Omneque all opened their virtual doors.
However, buying luxury online is something the west has struggled with. Unprepared or reluctant brands are now being forced to play catch-up. “We are probably more conservative when it comes to using technology in our day-to-day life, but also most brands were just not offering these services,” explains Assimon. “The pandemic has accelerated the digital trend for essential shopping as well as for luxury items, and now we see a lot of requests for services such as live chats and virtual appointments. We now have the technology and trained brand ambassadors to provide this.”
Digital’s gain has been bricks-and-mortars loss, particularly in western markets. At the entry-level point of the jewellery market, US-focused Signet Jewelers committed to closing 100 stores in the fiscal year that started on February 1. Bucking this trend is mainland China. The demise of global travel caused neighbouring Hong Kong and Macau to be the worst luxury-retail performers worldwide, seeing their markets shrink by 35 per cent to €27bn. Conversely, the mainland’s market grew by a thumping 45 per cent at current exchange rates to €44bn.
These mainland Chinese consumers are doing much more than keeping luxury coffers full – they are driving the direction the fine-jewellery industry is taking. They are also significantly younger than their European or American counterparts, with 79 per cent under 40; 56 per cent post-1980s or Generation Y/Millennial, and 23 per cent are even post-1990s or Generation Z.
For the post-1980s group, this means growing up as China was establishing itself as a superpower, so they look to luxury purchases as a way to flaunt success, according to a report by management consultant Martin Roll. For the post-1990s generation, Roll suggests that being the products of China’s single-child policy has led this group to “seek out more individual or customised products and expect digitally enhanced shopping experiences”.
This is also a group for whom, both in China and globally, sustainability and provenance are increasingly important, something the mined diamond industry’s reputation struggles with. Mining natural diamonds is destructive, an estimated 250 tonnes of earth has to be excavated for every single carat of diamond. A total of 111 million carats were mined last year (compared to 142 million in 2019), and some mines are now so huge they can be seen from space using Nasa’s Terra satellite.
De Beers is trying to combat this image. “Although there continues to be misunderstanding about natural diamonds and their impact, interest in this area means there will be more people willing to take a look at how we create positive outcomes for the people and places around where our diamonds are found,” says Assimon. “For every hectare of land affected by mining activity, De Beers sets aside six hectares for conservation, totalling 200,000 hectares, which is 2.5 times the area of New York City.”
The brand has also recently created a set of 12 sustainability goals including a commitment to being carbon neutral across the business. It has also set up its Tracr programme, which uses a combination of AI and Blockchain technology to trace every stone.
The industry also faces competition from lab-grown stones. Created in a laboratory where chemical processes are used to simulate the intense heat and pressure required to form the stones in the Earth, they are chemically and structurally identical to mined stones, but without the supposed ethical concerns.
Sky Diamonds based in Stroud goes one further than most stone-growing labs. Where they are carbon neutral, Sky Diamonds is carbon negative – taking CO2 out of the atmosphere and replacing it with clean air. “I wanted to be part of the change,” says founder and environmentalist Dale Vince. “I created Sky Diamonds to show that there is always a different way to do things.”
De Beers has dabbled in the lab-grown market with its Lightbox collection, but right now Assimon, aside from trying to promote the positive impact natural diamonds can have, is focusing on building De Beers’ presence on China’s fastest growing luxury platform, Tmall Luxury Pavilion.
When it was revealed that reasonably niche, LVMH-owned, fine-jewellery brand FRED was one of the pandemic’s few successes, experiencing single-digit growth, its chief executive Charles Leung credited entry on Alibaba’s Tmall in China in April 2020 as a contributing factor. This business-to-consumer digital retail space is a platform where local Chinese and international businesses sell brand-name goods to consumers in mainland China.
Tmall has been a success for many Western brands from Chanel to Fenty Beauty, but where high-end brands want to have digital retail space is in the recently formed Luxury Pavilion – an invite-only site where Chinese mainland luxury shoppers love to spend.
“We had been exploring launching ecommerce in China for some time, and it was serendipitous that we were ready to launch the Tmall flagship at the end of last year,” says Assimon. “The results have been fantastic. We have outperformed our projections and can see a significant growth trend.”
This is not surprising. According to Meifang Chen, head of fashion and luxury UK & Nordics for Tmall, at the global shopping event to celebrate Singles’ Day in China on November 11 the gross merchandise value of luxury goods sold reached around £11m in two minutes and 24 seconds.
With a Tmall Luxury Pavilion store, brands can also have complete control over how they present themselves to their customers; a very important detail when you’re appealing to a Gen Z consumer base who expects a sophisticated digital interface.
“The Chinese luxury consumer is tech-savvy, ‘mobile-only’, has a cosmopolitan mindset and is eager to discover new brands,” explains Chen. “Stores that do particularly well [with this demographic] are ones that are leveraging a variety of channels and tools. [In the future] the store will no longer stand as an experience – consumers will expect it to harmonise with their devices.”
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This article was originally published by WIRED UK
