As the likes of Gucci continue to struggle in China, fellow Richemont stablemate Van Cleef & Arpels looks set for a successful 2024, fueled by strong demand for its iconic Alhambra bracelet. But will this demand prove immune to a price hike in mainland China?
On May 31, Van Cleef & Arpels increased the prices of select items – such as the brand’s ultra-popular Vintage Alhambra bracelet – by around 11% in China, confirming earlier rumors in the Chinese-language press. The 18K gold and carnelian Alhambra bracelet increased from 36,700 RMB ($5,068) to 40,800 RMB ($5,634), while the 18K rose gold model with diamond and mother-of-pearl jumped to 123,000 RMB ($17,003) up from 111,000 RMB ($15,344) – 11% increases on both.
These price increases are not expected to be limited to China. In Japan, prices are rumored to have risen by about 7.5% yesterday, with the Alhambra bracelet seeing increases of 14% to 15.5%. Updates for the South Korean and US markets are pending.
Van Cleef & Arpels has not officially commented on the price hikes, but in China, the rumors earlier in May drove value-minded consumers to stores. One customer reportedly purchased dozens of pieces in a single morning at one Beijing boutique.
In Japan, where Chinese travelers continue to take advantage of a weak yen, Van Cleef & Arpels stores are among the hottest destinations for Chinese shoppers. Chinese news media report that it has become exceedingly difficult for Chinese tourists to secure appointments at Van Cleef & Arpels stores in Japan, with reservations filling up within minutes of opening.
Ahead of its price hike, Van Cleef & Arpels managed to achieve something rare in the Chinese luxury market in 2024: getting consumers to line up at its Beijing and Shanghai flagship stores.
As Jacques Roizen, Managing Director, China at Digital Luxury Group (DLG), puts it, “My belief is that [Van Cleef & Arpels belongs] to a very small exclusive club that includes Hermès, Chanel, and Louis Vuitton – true luxury powerhouses. Because in their case, they have reached a scale that is far beyond the second segment, which I consider to be the scarcity brands, such as Patek Philippe, Vacheron Constantin, Loro Piano and Brunello Cucinelli, among others.”
Beating the odds#
Like Chanel – which recently reported a surprising 16% YoY increase in 2023 revenue to $19.7 billion – Van Cleef & Arpels continues to buck the luxury industry slowdown that is impacting brands like Gucci and Burberry.
Chinese-language reports note that Van Cleef & Arpels outperformed other high-end jewelry brands in key luxury malls across China from January to April of this year, surpassing Cartier, Bulgari, and Tiffany & Co. in sales. Despite an overall decline in the luxury sector’s brick-and-mortar sales compared to the previous year, Van Cleef & Arpels saw the smallest drop among the four major jewelry brands, maintaining a low double-digit decline similar to Louis Vuitton and Chanel in the soft luxury category.
According to Roizen of DLG, Van Cleef & Arpels – like Louis Vuitton – has “benefited from the middle class’ appetite for luxury, but was able to stay focused on providing the most elevated product, communication and experience, while first and foremost targeting venture capitalists and high-net-worth individuals.”
As such, Roizen notes that Van Cleef & Arpels is “far less exposed to the current economic environment than many luxury brands in China.”
Recent financial reports highlight that the jewelry division, including Cartier and Van Cleef & Arpels, remains Richemont Group’s best-performing segment. For the fiscal year ending March 31, 2024, the division’s sales grew by 6% YoY to €14.24 billion ($15.4 billion), with its share of group revenue rising from 50% to 68%. This robust performance has propelled the group’s total annual revenue above €20 billion ($21.7 billion) for the first time.
A smart China expansion strategy#
Van Cleef & Arpels’ success in mainland China is partly due to a cautious expansion strategy, which prioritizes new boutiques in developed luxury markets in the eastern and northern parts of the country. The brand is avoiding China’s southern coast due to its proximity to tax-free shopping in Hong Kong and the clear price gap, as Laura Lai, managing director of Van Cleef & Arpels, China, recently told Jing Daily.
Van Cleef & Arpels entered the mainland China market in 2010, opening around two boutiques per year until 2020, when it increased openings to three or four annually. “The Chinese were making their purchases within the country,” Lai says, “and the trend continues.”
The brand will open its fourth boutique in Beijing this summer, adding to its current five in Shanghai. Both cities are crucial due to their status as major travel hubs with sophisticated buyers, Lai notes, adding that sales in these cities often shape luxury consumption trends across mainland China.
Provincial cities with populations of over 10 million also show potential for luxury market growth, particularly Hangzhou and Nanjing, where Van Cleef & Arpels has performed well. The brand plans to open its first boutique in Suzhou later this year, reflecting its strategic approach to expanding in high-potential regions.