PGI Sees Positive Signs of Recovery in China's Platinum Jewellery Industry
Credit: "Platinum Moments" collection (China)
(12 June 2020, Hong Kong) – The latest Platinum Jewellery Business Review (PJBR) indicates positive momentum for the platinum jewellery industry later this year, with China leading the recovery in the second quarter. Despite jewellery demand beginning to falter in the first quarter of 2020 due to the impact of COVID-19, according to PGI’s quarterly research, platinum is better positioned globally due to the low metal price combined with the newly launched collections to attract young consumers, and the competitive landscape compared to other jewellery categories.
“In an unexpected turn of events, the high price of gold has made platinum more attractive for jewellers. Coupled with the successful launch of branded collections and targeted campaigns, confidence in China has increased. These factors, combined with a reduction in experiential spending suggest that platinum demand could see a recovery in jewellery, as early indicators from Q2 show," says CEO Huw Daniel of Platinum Guild International.
Despite the overall pandemic-related disruptions across the jewellery industry, Chinese jewellers are investing more on platinum. In Q1, platinum jewellers took advantage of low prices to stockpile and order new products and PGI’s partners have already recorded a gradual recovery in the second quarter indicating improved sentiment for the platinum jewellery industry. With plain gold, and gem-set jewellery currently overstocked, platinum jewellery manufacturers have seen an increase in orders for replenishment of plain platinum jewellery. In addition, there has been renewed interest reported from retailers who had previously stopped carrying platinum jewellery, and new interest by retailers who previously did not stock platinum.
New consumption-stimulating policies from the government combined with retailers’ promotions could support the recovery of platinum jewellery retail from Q2 and beyond, providing there is no second or third wave of the pandemic. Furthermore, initial consumer feedback from a newly commissioned report on consumer needs and purchasing behaviours during and post COVID-19 indicates recovery potential for jewellery with over a third of Chinese consumers expecting to spend more after the crisis.
PGI continues to work with partners on campaigns across China and is relaunching the Reboot Campaign in Henan Province in June. This is a similar programme to the successful 2019 Reboot Campaign which was initiated in Guangdong with 252 retail stores and 7 manufacturers in the region.
Although the coronavirus epidemic caused disruptions in the jewellery industry, PGI will continue to work with Chinese and international jewellers to address the needs of consumers, provide stronger branded products and improve partners’ business models.
Due to COVID-19, retailers began to experience diminished store traffic from the third week of February, and the jewellery industry missed important festivals and the key wedding season. The industry is facing the challenge of managing cash flow and liquidity, and likely to see greater consolidation with larger organised retailers gaining share.
Early research indicates that consumers are expected to return to stores and buy jewellery as a mark of positive beginnings when business resumes, which can be converted into an opportunity for platinum. With consumers unlikely to travel in 2020, jewellery has an opportunity to gain a larger share of the consumer spend as a discretionary purchase that can retain value and meaning. PGI programmes and marketing campaigns will continue to work with partners to drive sales and conversion amid the challenging environment.
USA and Japan
Strong holiday sales in the US allowed the jewellery industry to enter 2020 with a positive start. The pandemic largely hit the retail sector in the US starting from April, but there were still online orders for Mother’s Day and new demand for symbolic jewellery recognising doctors, nurses and first responders during the crisis.
On the contrary, jewellery sales during the holiday season in Japan were under pressure due to the increase in sales tax. Following the downward trend of all jewellery sales, PGI Japan reported a modest platinum jewellery decline in Q1. However, branded collection “Hello Me, Platinum” continued to expand its distribution thanks to increasing industry recognition and received strong orders at the International Jewellery Tokyo.
PGI’s recent research predicts that current metal prices will continue to position platinum favourably in both of the markets, especially against white gold. Jewellery could see positive growth once the economy stabilises, as people are putting more importance on family and meaningful moments in their lives, while experiential spending is likely to be reduced. PGI is focusing on initiatives of digital marketing and sales conversion that are necessary for a recovery post-COVID-19 in these markets.
The PJBR provides quarterly updates that include information for the industry.
For more information, graphs and charts, download the PJBR for Q1 2020 here.