Platinum's Rare Nature Gives it Additional Value and Appeal
Huw Daniel, CEO of Platinum Guild International (PGI), was recently interviewed exclusively by Rough & Polished and provided insights in major PGI markets and the efforts to grow and develop platinum jewellery amidst the pandemic. In the interview, Huw Daniel also shared how platinum addresses and deploys strategies to deal with the market challenges.
What’s your forecast for platinum jewellery in terms of growth in major consumer markets across the globe? Currently, what are the hurdles you think will impact the development of the global platinum jewellery market?
PGI develops the global platinum jewellery market as a new demand source for platinum. Since 1975, jewellery development has demonstrated a strong track record in delivering results, and platinum jewellery has contributed over 80 million ounces of demand. PGI has consumer marketing and educational programmes and collaborates with manufacturers and retailers in four major markets: China, Japan, India and the US.
As seen in 2020, PGI foresees a K-shaped outlook once consumers get back into stores and it will continue in 2021. The growth varies in each market:
- China is the first market to recover from the COVID-19 pandemic in 2020, and recovery in platinum jewellery will continue although at a slower pace in 2021. Those retailers who continued to introduce new SKUs with innovative technology and designs through branded collections drove platinum sales but mass, generic products will be facing competition from gold.
- India has been a fast-growing platinum jewellery market in recent years until the COVID-19 outbreak happened. Recovery started in Q4 2020 and continued in Q1 2021, while the second wave hitting India in mid-March sent many parts of the country into a lockdown or semi-lockdown. The business has gradually resumed since June but we expect the recovery in 2021 will take some time with concerns of another wave in Q4.
- Platinum has a large share in Japan’s jewellery market, which has seen a strong recovery from Q2 2021 led by affluent consumers and continued strong bridal performance, asset-type jewellery and high-end jewellery. This benefits platinum jewellery and its retail sales could have a modest increase this year.
- The US platinum jewellery market has undergone several years of growth, even in 2020 when COVID-19 caused the business shutdown in Q2. The US market continues its recovery in 2021, showing robust sales in H1 2021 compared to the same period of last year, driven by a booming stock market, the effective roll-out of vaccinations and improved economic conditions. Platinum jewellery retail sales are projected to grow for the eighth consecutive year in 2021.
Some main hurdles impact the development of the platinum jewellery market:
- Platinum has been and still is a relative niche category of the jewellery market in most regions, which requires constant spending on consumer marketing and education and trade investment to ensure platinum sits on top of consumers’ minds and is available at POS when they purchase jewellery.
- Because of the relatively small volume, platinum needs to differentiate from the mass category (i.e. gold) for both consumers and trade. It needs to provide a distinguished proposition from gold to appeal to consumers and a different marketing & sales strategy to create higher margins for the trade.
- The lack of novel designs and innovative technologies has made platinum jewellery less attractive, competitive and relevant compared with other categories such as k-gold, especially among young consumers and for non-bridal jewellery.
- Competition also comes from other categories beyond jewellery, such as travelling and holidays, once businesses and life return to normal. This could mean a smaller share of wallet for jewellery as a whole, and hence less spending on platinum jewellery.
In comparison to gold/silver as the favourites for plain and studded jewellery, what are the qualities that platinum possesses as a metal of choice going forward?
Platinum occupies a unique position in the jewellery market. Small in scale compared to gold and diamonds yet punching above its weight for those manufacturers and retailers who make it a strategic priority for their business. These companies find platinum compliments their other offerings by providing increased differentiation among their competitors, and higher dollar transaction sizes, leading to higher gross profit per unit sales. Platinum’s innate characteristics also mean less wear and tear, gemstone loss and maintenance issues, providing an overall higher quality offering for discerning customers.
Platinum is a pure, precious and durable metal that’s 30 times rarer than gold. It has a high purity level of over 95% and does not require rhodium plating which means it never changes colour. Platinum loses very little metal across a life of daily wear compared to less pure alloys that contain a higher percentage of base metals and are more vulnerable to corrosion and metal loss through scratching. Platinum’s high purity and hypoallergenic nature have been highlighted during the Covid-19 pandemic as corrosive agents in hand sanitisers cause pitting and brittleness in lower purity metal rings.
Like all fine jewellery platinum may scratch, however, metal is generally displaced on the surface of the piece creating a fine sheen or patina.
This squishing process is the reason why platinum shanks lose very little volume, and prongs rarely need re-tipping, resulting in the most secure setting for gemstones. Typically jewellers prefer to set gemstones of value in platinum prongs, regardless of the metal used for the rest of the piece.
These qualities make it a great choice for bridal jewellery and high-end jewellery that could last a long period, and the most secured metal setting diamonds and gemstones. Beyond platinum’s physical characteristics, thanks to decades of consumer marketing, platinum is established as a metal that strongly connects with quality, love and meaning. While gold and silver in many markets are associated with investment products and fashion jewellery.
This has been even more notable in 2020/2021 that COVID-19 has changed people’s lives from many aspects, and one is that people started to re-evaluate their life priorities, as PGI’s consumer survey shows, and appreciate their relationship with their family and loved ones in this challenging time. Platinum is now well-positioned when consumers look for ways to symbolize emotions and commemorate significant occasions and moments in their lives.
What are the difficulties or loss of market opportunities faced by the vendors of platinum jewellery in the jewellery markets globally? What steps has PGI taken to ease the situation?
There are some difficulties and potential opportunities for the platinum jewellery industry:
1. Platinum has been and still is a relative niche category of the jewellery market in most regions, which requires constant spending on consumer marketing and education to ensure platinum sits on top of consumers’ minds and is available at POS when they purchase jewellery.
2. In key markets, platinum has a strong connection with bridal jewellery, while has limited product offering in non-bridal and fashion segments, which limits growth in those areas.
3. The relatively small scale of the platinum jewellery market and the concentration of manufacturers also create hurdles for innovation in technology and designs, which is crucial to reduce production costs and improve appeal to consumers.
4. The small size of the platinum jewellery market requires jewellers to focus on product turn and margins, to stay competitive in the jewellery business portfolio.
5. The digitalisation of the jewellery industry has been behind others. The COVID-19 has accelerated digitalisation and requests jewellers to enhance their capacity to engage with consumers via multiple touchpoints and channels.
PGI has several initiatives that have responded to those difficulties and opportunities.
- To target identified demographics and consumer segmentations across the major markets, PGI has developed a branding strategy, including building platinum’s equity as a symbol of love, meaning and authenticity to highlight platinum’s qualities for consumers’ consideration and purchases, as well as developing branded collections to target specific consumer segmentations. Branded collections are either created in-house or co-developed with partners while PGI provides strategic and customised product design, marketing and sales support.
- PGI has guided and led the development of innovative technologies such as hard platinum and heat-treatable alloys to ensure better polish, better shape retention and higher scratch resistance.
- PGI reached and engaged with targeted consumers both online and offline to better understand their needs to improve sales conversion via multiple channels.
Read the full interview HERE.