PGI: Platinum Jewellery Weathers Difficult Conditions Favorably in Key Markets

Platinum Guild International ("PGI") today published the findings of its third annual Retail Barometer. The Barometer, conducted by independent platinum market experts and industry analysts, reveals the consumer retail sales data of platinum jewellery in 2015 and projections for 2016. It is the only research in the industry that measures sell-out, i.e. platinum ounces sold from retailers to consumers.

The Retail Barometer gives a unique view of platinum demand from retail sales. Platinum jewellery is the second largest consumer of platinum in the world after the autocatalyst market.

The research survey covered over 400 jewellery retail companies with approximately 23,000 retail outlets in the four main international markets of China, India, Japan and the USA. The research was conducted between January and February 2016.

Key findings:

The platinum price is at its lowest for decades and the spread between the gold and platinum price created a buying opportunity for more consumers, as well as a margin opportunities for retailers.
In China, the overall economic slow-down hit the entire jewellery industry. Performance by retailers varied, with Hong Kong chains and PGI's strategic partners significantly outperforming the market, while local independent chains suffered the most. In total, platinum jewellery retail demand in China have decreased by 4% in 2015
In India, platinum continued to benefit from overall growth in the market. Platinum, as an up and coming market maker, was able to leverage and further fuel growth through varied programs in the market. In total, platinum jewellery retail demand in India have increased by +24%
In Japan, modest increases in favor of platinum jewellery coupled with shift in share of heavier product forms off set the slight decrease in sheer unit sales of platinum jewellery, leading to an overall growth of +2.7%
In the US, the low platinum price incentivized manufacturers and retailers to stock and sell platinum, leading to an overall growth of +10%

Huw Daniel, Chief Executive Officer of PGI, commented, "despite manifold challenges in the luxury category and a difficult year for jewellery in general, jewellery retailers vested in platinum have weathered the storm ahead of their peers. The historically low platinum metal price has benefitted consumers and retailers alike, presenting a unique opportunity to acquire the most aspirational fine jewellery. Even China, the biggest market for platinum jewellery, shrank to a much lesser extent than other jewellery sectors. Both China and India remain key development markets for platinum jewellery which we will further grow ahead of the market average, leveraging successful programs and new launches."

Tim Schlick, Chief Strategy Officer of PGI, commented, "the jewellery industry is at a point where future growth comes from either conquest of market share or unlocking untapped consumer segments. PGI and our partners feel confident that having initiatives that provide both will continue to give us a competitive edge, as consumers increasingly seek quality and differentiation."

China
China's economic growth in 2015 was slowest in 25 years at 6.9%. The slow-down reflects an adjustment towards a consumption-based economy, which bodes well for future growth in platinum jewellery. Retail witnessed a year of fluctuation, however the growth in the H2 didn't counter the decline in H1, resulting in a modest platinum jewellery volume decline of -4% for the whole year

The bridal segment continued to grow moderately despite the overall decline in jewellery consumption -- in addition to pair rings and engagement rings, bridal platinum jewellery saw growth in other jewellery products, such as necklace and bracelet, which were typically purchased as a set along with the wedding rings.

Based on initial retailer outlook, PGI expects to see a flat year of virtually no growth, or even a modest decline of 0% to -3%.

India

The Indian economy was also impacted by the global slow down, although consumer spending at a macro level increased slightly. Platinum Jewellery volume grew 24% in 2015, driven by increasing acceptance of platinum as the choice of the young aspiring urban consumer. Platinum saw increases across the board from Platinum Love Bands, Men's Jewellery, and the new Evara Platinum Blessings, which marked platinum's entry to the key wedding category in 2015.

For 2016, PGI and retail partners expect continued growth of +23% - retailers expect platinum to continue outperforming the category average.

Japan
Japan economy is working to maintain modest recovery leading up to the 2020 Olympics with a GDP growth of 0.6%. The exceptionally warm winter benefitted jewellery and record numbers of inbound tourists benefitted metropolitan retailers and service providers, especially department stores and non-bridal. Platinum jewellery sales outperformed total jewellery, and platinum jewellery volume increase 2.7% in 2015. For 2016, retailers are nervous about economic outlook, but expect growth rate of +1% to +2% in platinum jewellery volume.
USA
The US economy has been further recovering and growing moderately at 1.9% in 2015 with overall retail growing in line with the GDP growth rate. Platinum jewelry imports experienced sharp increases in 2015, while retail demand increased +10%.

For 2016, PGI expects platinum to continue to benefit from the positive 2015 momentum, in particular if the ounce price remains low, resulting in an expected volume growth rate of +5% to +7%.

SOURCE: Platinum Guild International