As the autumn shows of Paris Fashion Week approach, the luxury goods industry continues to post satisfactory results overall, even if some groups, such as Kering, are experiencing difficulties. According to forecasts by The Boston Consulting Group (BCG), the momentum is set to continue, driven by two sources of growth between now and the end of the decade: Chinese consumers and the younger generation, also known as millennials.
Accounting for 32% of the luxury market in 2019, millennials will represent 50% of the market in 2025. Chinese consumers are expected to increase their share from 33% to 40% between 2019 and 2025, and will account for 75% of growth between 2018 and 2025, taking first place on the podium.
These analyses serve as a compass for Manuel Mallen, co-founder of the luxury jewellery house Courbet created in 2018. This young brand has positioned itself on the market for synthetic diamonds and recycled gold with the aim of appealing to millennials. After France, Europe and the United States, Manuel Mallen wants to target Chinese millennials. What value proposition can he offer to win them over? Will eco-responsibility be able to make a difference to the major luxury brands with a century-old reputation?
A ‘Tesla of jewellery’?
To achieve this, Manuel Mallen recalls his marketing lessons. The perceived value of a good by consumers is made up of an economic, functional, hedonic and social value, reflecting in turn the monetary value of the good, the suitability of the good to fulfil the expected function, sensory pleasure and aesthetic beauty and, finally, the status that possession of such a good brings. The prestige conferred on its owner by luxury brings a symbolic value linked to the image that is projected to others. Rarity, customer experience and online co-creation are among the levers available to the brand to increase perceived value.
To create what he calls ‘the Tesla of jewellery’, Manuel Mallen set up shop in Place Vendôme, a prestigious address that is indispensable, especially when your ambition is to shake up the codes of luxury. For the name of the company, he chose that of the painter Gustave Courbet, a native of the Franche-Comté region like himself, known both for his avant-gardism and for having wanted to pull down the Vendôme column - which is located on Place Vendôme - during the Paris Commune.
30 million sales target
Courbet's mission is to reinvent non-extractive jewellery. Even if producing diamonds in a laboratory and using recycled gold are much more expensive, thanks to short circuits and local craftsmanship (France, Italy), selling prices are still 30% to 40% lower than those of competitors' jewellery.
Courbet achieved sales of €5 million in 2021 - 80% of which were generated in Europe - and is aiming for €30 million by the end of 2024, now that the health crisis is behind us. The corner in the Printemps Haussmann department stores' and the private evenings in the Place Vendôme showroom, banned under curfew, are back on the agenda, as is China, which is back on the world stage. Finally, Chanel and the investment company Raise are lending their support to synthetic diamonds with a €8.5m fund-raising round.
High-tech partners
Different times, different revolutions: unlike the major traditional jewellery houses, Courbet is adopting synthetic diamonds as a complement to coloured diamonds, as Fred had done until now. It has opted for synthetic diamonds for its entire range. The gold comes from old television sets. The jewellery is personalised, produced to order for unique pieces like this 9-carat diamond sold for 450,000 euros, the largest synthetic diamond to date and Courbet's pride and joy.
With a view to appealing to millennials, who are looking for technological innovation, the start-up has stepped up its partnerships with technology companies. As a result, the customer experience is omnichannel: appointments can be made via Skype or Facetime with 3D visualisation via Hapticmedia's SaaS solution for jewellery that is often unique. Payments can be made in cryptocurrencies using Lunu. For millennials keen on innovation, Courbet offers to send a digital certificate issued by GoodsId. The certificate changes colour in the event of theft, making resale impossible. Compensation from the Wakam insurer is faster.
An eco-responsible promise
Courbet has adopted an eco-responsible stance that breaks away from the major jewellery houses. The founder believes that his approach is more efficient than the actions taken by traditional companies in the sector, which resort to compensation measures or ‘remedial’ actions aimed at local populations (education, etc.).
He explains:
‘Our diamonds are not destroying the planet. Admittedly, it takes a lot of energy to produce it, but the energy is clean and carbon-free, so what's the harm in knowing that France owns and operates the third most carbon-free energy in the world?’
The challenge for brands is to communicate which technique - diamonds from open-cast mines or synthetic diamonds - emits the least carbon emissions. The founder of Diam Concept, which supplies Courbet among others, explains that the number of kilograms of CO2 produced is correlated to the origin of the energy: around 20 kg of CO2 per carat for the low-temperature method in her French workshops. "That's ten times less than the best known mines."
She points out that France uses mainly nuclear power in its energy mix. And for larger diamonds, Courbet obtains its supplies abroad from suppliers using hydroelectric power or energy from solar panels. These figures are disputed by the Natural Diamond Council (representing 80% of the world's diamond manufacturers), which funded the Trucost report - carried out by S&P - showing that a natural diamond (one carat) would emit an average of 160 kg of CO₂... compared with 511 kg for an artificial diamond. In addition, Courbet donates 15% of the sale price of the Let's commit bracelet range to various associations, including Ocean Cleanup, Save the Children, International Animal Rescue...
In addition to the carbon footprint, the importance of sourcing location and the different ways of contributing to achieving the 17 Sustainable Development Goals (SDGs) set by the UN for 2030, Manuel Mallen looks at the place of CSR in the choices made by millennials. Unfortunately, BCG and marketing researchers are not reassuring. Millennials willingly declare their awareness of CSR and say they are attracted by the ethical and responsible discourse of brands, but this does not translate into all their purchasing behaviour. There is a ‘green consumer gap’ between what they say and what they actually do.
Chinese consumers to conquer
If CSR commitment is not necessarily a differentiating factor that translates into sales, this is even less the case with Chinese consumers. They say they are likely to buy second-hand (except for clothes, where they differ from other consumers) but like to display expensive goods, with logos of well-known international brands. This conspicuous consumption is more important to them than to other consumers. These consumption practices can be explained by their historical, social and economic context.
Weaned on Western luxury products, in a market that is also flooded with counterfeit goods, Chinese consumers who have the financial means to afford luxury goods, particularly French ones, want to show it off. In this respect, their consumption is more social, influenced by the gaze of others. In this context, owning an eco-responsible item from the young Courbet brand does not bring the same social value or the same notoriety as owning a piece of jewellery from one of the great jewellers.
Finally, among the major trends in luxury, collaborations with celebrities and limited editions are particularly attractive to the Chinese (62% of them), especially millennials (60%). Chinese consumers appreciate influencers and the use of social networks twice as much as their Western counterparts. Even when it comes to luxury goods, 64% of Chinese customers have no hesitation in buying online and using an omnichannel approach, compared with 42% of European and American consumers. Many purchases are made via influencers during live sessions on Chinese social networks.
To meet this demand, Courbet is being supported in its introduction to China by specialist agency Hylink. Hylink recommended Jing Tian, an influencer with an affinity with luxury who is present on the relevant networks. Courbet creates thousands of pre-packaged jewels, in the form of special series for this purpose, which can be sold in the blink of an eye during a live session. The message will focus on luxury, designed to arouse emotions and the desire to consume.
With 12 million weddings a year and a growing appetite for luxury goods, particularly from France, the Chinese market would be a major windfall for a young luxury brand. Millennials account for 400 million people and 68% of diamond purchases. The next generation, Gen Z, is already following suit with 240 million people. Among them are many women, who are becoming emancipated and buying diamonds themselves, so much so that they account for 70% of buyers.
They still need to be convinced that CSR practices are a central element of luxury goods. Will the entry into the synthetic diamond market of brands such as Fred or Pandora help to democratise this product or, on the contrary, will the mixed results of De Beers, which sold them under its Lightbox brand, freeze the market?
This article by Catherine Lejealle, Lecturer and researcher in digital marketing, Head of the Creation of teaching materials and cases research area, ISC Paris Business School; Sabine Ruaud, Professor at EDHEC Business School and Thierry Delécolle, Deputy Managing Director, Pôle Léonard de Vinci has been republished from The Conversation under a Creative Commons licence. Read the original article (in French).
