Even if you wait in line for 8 hours to buy it, is ancient gold an “inheritance” or an “IQ tax”?

Wen| Interesting understanding of business

As gold prices repeatedly break new highs, the retail prices of gold in major brand gold stores also continue to rise. According to data released by today’s gold price market, on February 18, the retail price of gold in multiple brand gold stores was mostly around 880 yuan/gram. The retail prices of Chow Tai Fook, Luk Fook Jewelry, Jin Zhizun, Chao Hongji, Xie Ruilin, Saturday Fook and Chow Tai Seng had the highest, reaching 882 yuan/gram.

The continued rise in gold prices has caused many people to take a wait-and-see attitude towards gold. However, Lao Pu gold has ushered in growth against the trend.

1. Line up for 8 hours to buy old shop gold

According to multiple media reports, recently, Beijing’s SKP Laopu Golden Gate has seen a big show. Consumers queuing told the media that some of them started queuing at 4 a.m., and based on this situation, people at the end of the queue would have to wait at least 8 hours before entering the market. The popularity of Laopu gold has given rise to scalpers who buy it on behalf. Some consumers have reported to the media that it is too difficult to buy, and all the gold they like has been robbed by scalpers.

Image source: Weibo screenshot

On February 16, the topic of someone queuing for 8 hours to buy gold from an old shop sparked discussions on social platforms. In this regard, some netizens were puzzled. Why would they buy it at such a high price?! rdquo; Some netizens think it is expensive, and I can’t buy more than 800 a gram. There are also netizens who are really fragrant. Don’t they all sell gold? What’s so special about their home? Until I found the sword online……”

Laopu Gold is popular in the market. The small price reduction of gold and the brand launch of preferential activities are one aspect. Behind this, it is also because the positioning of Laopu Gold is different from that of most brand gold stores. Laopu gold is positioned at a higher end and mainly promotes higher-premium ancient gold. Unlike other traditional brands, Laopu gold is a one-price price. Therefore, compared with jewelry with investment value, Laopu gold’s products are more like luxury goods. This unique approach has attracted many high-net-worth people.

2. The old shop gold that grows against the trend

Many consumers flocked to Laopu Gold, which brought considerable benefits to it. The financial report shows that in the first half of 2024, Laopu Gold achieved operating income of 3.520 billion yuan, a year-on-year increase of 148.24%, exceeding the revenue for the whole year of 2023; the profit during the period was 588 million yuan, a year-on-year increase of 198.48%, far exceeding the growth rate of brands such as China Gold and Chow Tai Seng during the same period.

Behind the rapid growth of Laopu’s gold performance, offline stores have made a lot of contributions. The financial report shows that as of June 30, 2024, Laopu Gold has opened 33 self-operated stores in 14 cities. Compared with 6 new stores in the same period in 2023, all of which are located in the SKP and Vientiane City Departments with strict access requirements. These 33 stores contribute nearly 90% of the revenue to Laopu Gold. In 2023 and the first half of 2024, Laopu Gold’s revenue from stores accounted for 88.4% and 88.9% of total revenue respectively, while online platform revenue accounted for only 11.6% and 11.1%.

Photo source: Financial report

Regarding the reasons for the disparity in the proportion, Laopu Gold wrote in its financial report: Our product sales are still mainly based on store channels, and online platforms are a powerful supplement for us to improve our customers ‘shopping experience.& rdquo;

Affected by the rapid growth of performance, Laopu Gold’s share price has also been rising. When it was first listed in June 2024, the issue price of Laopu Gold was HK$40.5/share. As of the close of trading on February 18, it was HK$469.8/share, an increase of 1060% compared with the issue price, and the total market value also surged to HK$79 billion.

3. Hidden worries under rapid growth

However, behind the prosperity, there are also hidden concerns about old gold. The prospectus shows that from 2021 to 2023, the outsourcing proportion of Laopu’s gold products will be about 40%. Some people believe that relying more on outsourcing has affected the reputation of Laopu Gold to a certain extent. On social platforms, many netizens posted complaints about the quality of their products.

In addition, the financial report shows that in the first half of 2024, the sales and distribution expenses of Laopu Gold were 532 million yuan, a year-on-year increase of 113%. During the period, its research and development expenditure was 655.5 million yuan. Therefore, Laopu Gold has been questioned by the outside world as emphasizing marketing over research and development.

The high proportion of outsourcing and the suspicion that it places emphasis on marketing over research and development have also caused some consumers to have doubts about its main ancient craftsmanship. On social platforms, some netizens raised questions about whether Laopu Gold’s products were purely handmade or assembly line. When Laopu Gold’s ancient craftsmanship was questioned by some netizens, many brands such as Saturday Fu and Liufu also entered the ancient gold market. The ancient gold track has become crowded, causing Laopu Gold’s market share to decline. The prospectus shows that in 2017, its share in the ancient gold market was 14%, while based on 2023 revenue, its share in the ancient gold and jewelry market fell to 2%.

Among all his peers, Laopu Gold’s style of play is indeed unique and has also promoted strong growth in performance. However, other brands are learning from its advantages. Laopu Gold still has hidden concerns. If it wants to continue its current development momentum, it must not only cultivate its internal skills, but also tell new stories.