In September 2022, Platinum Guild International (PGI) China released its views on promoting the future of China’s jewellery market at the 2nd Shanghai Platinum Week. To promote the sustainable development of platinum group metals, Shanghai Platinum Week facilitates international cooperation and communication in market intelligence, technology, investment, and business amongst international stakeholders of platinum group metals.
A survey revealed by the Gems & Jewelry Trade Association of China stated that the total scale of China’s jewellery market in 2021 reached a staggering new height of 720 billion yuan, an 18% increase from 610 billion yuan in 2020.
Pui P. Poon, Managing Director of PGI China, was invited to share her thoughts on driving the future of China’s jewellery market at the event. She spoke about three areas of growth for jewellery, which are young consumers, branded collections and omnichannels. Against the backdrop of these growth areas, Ms. Poon pointed to the challenges that stand in the way of growth. Firstly, with weakening consumer confidence, many consumers now prefer to save rather than to spend or invest. Secondly, consumers demand perceived value when buying jewellery. Finally, continued uncertainty with the COVID-19 pandemic makes it difficult for consumers to place urgency on discretionary items such as jewellery.
Innovation is the answer to overcoming these challenges and tapping into the three areas of growth simultaneously. Ms Poon shared three key innovation areas that jewellery industry players need to excel in: Branding innovation to create perceived value, promotion innovation to make jewellery purchases relevant all year round, and channel innovation to sell where consumers prefer to shop.
Branding innovation to create intangible values
A McKinsey’s industry outlook report predicted a CAGR growth of 8-12% for branded fine jewellery, whereas overall fine jewellery is only projected to grow 3-4%. Currently, only 15% of the total jewellery in China is branded. As such, the continued development of branded collections is the most obvious opportunity area for growth. Furthermore, in purchasing jewellery, consumers today demand perceived value, including intangible values such as emotional relevance. Branded collections fulfil that need by imbuing jewellery products with the power of emotional connections to consumers.
An example is PGI’s Pt Moment® collection. The brand slogan ‘Tenacity powered elegance’ resonates deeply with young female consumers who are proud of their elegance, despite facing stereotypical challenges. PGI will continue providing holistic and sustained support to partners to realise the potential of branded collections.
Promotion innovation to make jewellery relevant all year round
In China, post-95s population makes up 13% of all China’s consumption share, ahead of the global average of 8%. Furthermore, the 260 million Generation Z consumers in China (post-90s) contribute 50% of the luxury market share and will grow at a higher rate compared to older consumers, and therefore are set to become the main consumption driver for the market.
PGI swiftly adapted to these changes by integrating youth culture and hot topics into seasonal promotions. As an example, PGI and Cuihua Jewellery collaborated on a Chinese Valentine Day’s promotion by integrating northeastern China’s barbecue culture to create a youth-relevant promotional platform that can be used year-long, rather than just for a specific festival.
Channel innovation to sell where consumers are
As much as physical stores remain the primary sales channel for luxury goods, the usage frequency of online channels is increasing dramatically. Furthermore, new retail formats such as multi-label stores are becoming popular with young consumers. In this context, channel innovation must include expansion to relevant online and offline channels where young consumers prefer to shop.
In recent years, PGI has been actively working in these two areas. PGI has been supporting retail partners to expand beyond traditional physical stores. Lukfook Jewellery and Caibai Jewelry, for instance, participated in the 618 e-commerce shopping festival with customised content and promotions that target young consumers. PGI also experimented with leveraging multi-label stores as a new channel through its collaboration with SND in Chongqing’s Shin Kong Place and Shanghai’s Taikoo Li Qiantan, with the aim of increasing platinum jewellery’s presence in channels that are becoming popular amongst young consumers.
Innovation part of PGI’s DNA
Through our experience over the years, PGI is convinced that our people are the key to delivering innovation. Hence, PGI places great emphasis on empowering our employees with related skills training, such as Creative Problem Solving and GRASP, a set of tools to bring innovation to life through various phases such as identifying consumer needs to solutions prototyping. PGI also focuses on team development training that creates trust, freedom, idea-support, risk-taking and other organisational climate dimensions that foster an innovative culture. Finally, PGI adopts practices that increase innovation, such as cross-functional project teams, and a rapid development and deployment approach to trial, fail, learn, and succeed quickly.
The jewellery industry in China is facing some challenges, but at the same time, it has great potential for growth. With its unending pursuit of innovation, PGI continues to co-create a more optimistic future with its partners.