Platinum Jewelry Poised To Recover And Grow, Says Global Report
Hong Kong—Despite challenging conditions worldwide, Platinum Guild International (PGI)’s latest Platinum Jewellery Business Review (PJBR) Q2 2020 reports positive signs of recovery in global platinum jewelry markets, including the United States. The report is based on surveys of PGI’s manufacturing and retail partners, together with findings from other industry surveys conducted by independent sources, analyzing ounce demand, retail sales, and trade sentiment in the four major platinum jewelry markets: India, China, the United States and Japan. Image: pendant from the Platinum Moments collection.
The coronavirus pandemic accelerated the need for change across an industry that has been notoriously slow to evolve. But the fact that it is adapting very quickly, coupled with the current price of gold (more than double that of platinum) positions platinum jewelry favorably for growth. Industry players are seeing demand for platinum jewelry gradually return, and growing consumer interest in new designs and collections.
“The report shows that markets are starting to recover in mainland China and consumers may be willing to spend on jewelry post-COVID-19. With the restrictions on traveling and spending on experiences, this gives platinum jewellery an opportunity to gain a larger share of discretionary purchase if manufacturers and retailers continue to prioritize new collections and design directions to meet changing consumer needs for meaning and value,” says Huw Daniel, chief executive officer of PGI.
In the United States, jewelry business started to recover in June after lockdown measures were eased. But even before that, many better jewelers continued to experience good sales during the lockdown, although the way they conducted business obviously changed. To survive and position themselves for long-term success, retailers have had to accelerate omni-channel selling, something that’s likely to continue even after the pandemic is over. Many independent jewelers also used the lockdown period to refocus their business, reduce inventory through promotions, and address management issues they hadn’t had time to do before.
PGI USA’s strategic partners reported a 40% decline in platinum consumption by the ounce in Q2, but reported a strong uptick in business in June and are optimistic about the holiday season. Although there are headwinds—in-person shopping has yet to recover fully in the United States, and both unemployment and concerns about job security remain high—much disposable income previously spent on experiences that now are canceled is available for meaningful purchases that symbolize love, celebration, and gratitude, including platinum jewelry.
Consolidation is likely to be one of the consequences of the pandemic, says PGI’s report. To wit, Signet Jewelers reported that it won’t reopen 230 stores closed due to COVID-19 and plans to close another 150 stores this year. But its e-commerce sales rose 6.7% year on year in Q2. Consolidation isn’t limited to chains, either—even some independents are finding it helps better focus their business.
Weaker stores will close, but the remaining retailers will be stronger, better managed businesses. While it will be a challenging road ahead until an effective COVID-19 vaccine is introduced, PGI feels there could be a strong rebound in Q4 if the pandemic is under control, as the industry would benefit from a strong bridal season. Separate research from De Beers is showing consumers are more focused on emotional gifting, meaningful relationships, and diamonds as an expression of both.
Around the world, China has shown an impressive recovery from the lockdowns, and platinum jewelry sales increased 1% year-on-year in Q2. In Japan, although jewelry sales were weak overall, platinum jewelry was the best performing category with bridal and high-end jewelry seeing the most demand. A “New Me, Platinum” TV-shopping initiative targeting affluent, mature consumers achieved encouraging sales despite the pandemic.
In India—fast becoming the new world epicenter for coronavirus—store traffic and consumer demand dropped significantly in Q2. But PGI’s report says platinum will benefit from retailer focus on high-margin categories once business returns.
Globally, as consumers are putting more importance on family and meaningful moments, PGI is focusing on digital marketing and sales conversion initiatives that focus on creating meaning, to capture discretionary spending.