Brand thinks small to go big in China
Diamond jewellery retailer Harry Winston has finalised plans to launch three stores on the mainland next year, including its largest worldwide in Shanghai, to target more sophisticated clientele in the fast-growing luxury goods market.
The New York-based luxury brand, which is owned by namesake Canadian mining and retail company Harry Winston Diamond, said opening a few stores was part of a calculated approach to build its mainland presence.
'We are different from some other brand names, as we don't see China as the El Dorado for mass luxury at all,' Harry Winston chief executive Frederic de Narp said, referring to the legendary lost city of gold that has long fascinated explorers. 'We see it as the most exclusive destination.'
Compared with that strategy by the self-described 'king of diamonds', luxury jewellery retailers Cartier and Tiffany are keen to expand their reach across the mainland. These high-end brands have announced plans to add more stores in the mainland's major metropolitan cities and its lower-tier cities over the next few years.
In a conference call with analysts last Friday, de Narp said: 'Harry Winston's unique diamond jewellery and heritage brand built upon quality, craftsmanship, design has untapped potential in China as consumers become more selective.'
'We treat China as our priority, and we treat Chinese for what they are: extremely sophisticated,' he said. 'So, we don't go with quantity. We go with quality.'
Harry Winston, which first mentioned its plan to establish from two to three new mainland stores 12 months ago, currently has a salon inside the Peninsula Beijing Palace Hotel at busy Wangfujing Street. In Hong Kong, it has a salon at The Peninsula in Tsim Sha Tsui.
Cyrille Baudet, the group chief financial officer at Harry Winston's parent firm, declined to disclose the amount of investment to be made for the mainland expansion, but indicated that so-called normal revenue flow from a new store is typically achieved within its second or third year in operation.
The new flagship Harry Winston store in Shanghai will open in the first quarter. It will have a retail space of 460 square metres and a 12-metre-high fa?ade.
A smaller salon will be built later next year inside the lobby of The Peninsula Shanghai, which is on the popular waterfront area the Bund. Management consultancy McKinsey has forecast the mainland to account for about 20 per cent, or US$27 billion, of global luxury sales by 2015.
In parent Harry Winston Diamond's three recent fiscal quarters to October 31, luxury brand sales grew 41 per cent to US$298.1 million from US$212.1 million for the comparable period the prior fiscal year.
Sales in Asia rose 77 per cent year on year to US$126.2 million, while sales in the United States increased 53 per cent to US$97.9 million. European sales decreased 4 per cent to US$74 million.
Travelling luxury consumers from the mainland have apparently helped sales across Harry Winston's other salons worldwide.
'Chinese clientele around the world ... ought to increase by 17 per cent [annually] for the next 10 years, and that will not stop,' de Narp said. 'We learn from them. For example, the percentage of bridal rings we sell from our London salon is extremely high to Chinese clients, which is unbelievable because we don't have visibility yet in mainland China.'
Harry Winston, which directly operates a total of 19 luxury jewellery stores worldwide, has started to hire more Chinese-speaking staff in select salons so they can attend to travelling mainland luxury consumers.
'Two or three months ago, we had zero Chinese-speaking people in our salons,' de Narp said. Chinese-speaking staff now serve mainland luxury consumers at Harry Winston salons in Las Vegas, Nevada, and at the South Coast Plaza and Orange County in California.
There will be more Chinese-speaking staff added at salons in London, Paris and other international sites, de Narp said.