Platinum Jewellery Leads China Jewellery Industry in a V-Shaped Recovery
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With manufacturers reporting greater demand volumes and retailers confirming a steady increase in business in April and May, the China jewelry industry finds itself in the midst of a V-shaped recovery in the second quarter of 2020. A confluence of factors has led to platinum becoming a strategic category as the industry embarks upon recovery programs.
Platinum jewelry manufacturers have been reporting greater demand volumes through April and May as a result of a remarkable level of replenishment purchasing in platinum. Retailers across the board, from national and Hong Kong chains through regional chains, independents, and wholesalers have shown strong interest in a new generation of designs that provide stronger margins. By May, platinum fabrication volume had returned to a level on par with the same period last year.
Retailers have witnessed a gradual ramp-up in business volume since the reopening, with some reporting sales of platinum jewelry reaching 80% or higher compared to the same period last year.
Over-stocking of gold and gem-set jewelry due to lockdowns imposed since January had led to an inventory backlog in these categories. Record high prices for gold have depressed buying among consumers and retailers, while a record low platinum price has made platinum an attractive replacement for some pure gold and k-gold counters, offering improved profit margins and turn.
This comes at a time when manufacturing partners of Platinum Guild International (PGI) have been prioritizing new collections and design directions to meet changing consumer needs.
“Retailers have witnessed a gradual ramp-up in business volume since the reopening, with some reporting sales of platinum jewelry reaching 80% or higher compared to the same period last year.”
Underpinning this innovation has been the development of new alloys and technologies that PGI has been working with partners in recent years. This includes hard platinum and heat-treatable alloys that allow for refined contours in designs, better polish, better shape retention, and higher resistance to scratch. These innovations are expected to enable platinum to capture a more competitive market position in the jewelry space. The incorporation of new materials including enamels also add color and novelty allowing for more designed collections, such as Chow Tai Fook’s Frozen II and Angel of Peace Collections.
“Our industry partners in China are reporting a platinum recovery driven by competitive pricing and the launch of new products which utilize innovative new technologies and designs that are capturing the interest of a new generation of consumers. Platinum Guild International’s initiatives to engage with both the jewelry trade and consumers have been extremely effective in accelerating this recovery during post-COVID-19. Despite pandemic uncertainty ahead, we hope conditions will allow for continued foot traffic to stores to ensure the sell through needed for a sustainable recovery,” says CEO Huw Daniel of PGI.
More players have begun to enter or re-enter the platinum jewelry industry, leading to a rising interest in platinum fabrication. New players from the gem-set and gold retail industries have also started to carry platinum. For example, Shining House, which is a newcomer in platinum gem-set jewelry, now carries platinum in 100 of its 300+ stores in Central and East China, with the intention to include a platinum exclusive collection (“One Life One Love”) to all stores by end of third quarter.
”We are prioritizing this new SKUs, with improved production technology, that enables better pricing and recognizable new features for sales push this summer. We believe these SKUs could better help sales recovery,” says Ms. Sun, Product Head of Changzhou Jewellery, a regional prominent retailer in East China.
Questions & Answers
Q.What factors have led to platinum becoming a strategic category for the China jewellery industry's recovery?
What factors have led to platinum becoming a strategic category for the China jewellery industry's recovery?
A confluence of factors, including remarkable replenishment purchasing, strong interest in new designs offering better margins, and platinum's attractive price point compared to gold, have made it strategic during the recovery period.
Q.How have new alloys and technologies contributed to platinum jewellery's competitive position?
How have new alloys and technologies contributed to platinum jewellery's competitive position?
Innovations like hard platinum and heat-treatable alloys allow for refined designs, better polish, improved shape retention, and higher scratch resistance. These developments enhance platinum's market appeal and competitiveness.
Q.What challenges are other jewellery categories facing that platinum is not?
What challenges are other jewellery categories facing that platinum is not?
Gold and gem-set jewellery categories experienced inventory backlogs due to lockdowns. Also, record high gold prices have depressed consumer and retailer buying, unlike platinum which has a record low price.
Q.How quickly did platinum fabrication volumes recover in China?
How quickly did platinum fabrication volumes recover in China?
Platinum fabrication volume returned to a level on par with the same period last year by May. Some retailers also reported platinum jewellery sales reaching 80% or higher compared to the previous year.
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