Falling platinum price to help retail sales - Platinum Guild International
October 30, 2008 -- The recent drop in platinum prices will help retail sales, especially in those markets least affected by the economic crisis, James Courage, Chief Executive Officer, Platinum Guild International, tells JewelleryOutlook in an exclusive interview.
Jewellery Outlook: Platinum prices have halved after hitting record highs earlier this year. Do you think lower prices are helping global platinum jewellery demand? What impact is the global financial crisis having?
James Courage: The effect is positive at the retail level and will together with the smaller premium over gold, help sales – especially in markets less affected by the economic crisis and where current stocks of platinum jewellery are relatively low. Platinum is better protected being in the bridal sector in all its markets – the lower prices should also help jewellery sales in Japan, where higher price points led retailers to move part of their offer to other white metals.
Jewellery Outlook: How have Chinese consumers responded to platinum price falls? Do you think consumers who delayed purchases earlier because of surging prices, are now buying again at retail level?
James Courage: Retailers have lowered prices and seen a positive response; manufacturers report higher orders and are restocking their showrooms given the lower prices. Too early to judge the full effect of the lower prices on any delayed purchases.
James Courage, Chief Executive Officer, Platinum Guild International
Jewellery Outlook: What trends are you seeing in demand for platinum jewellery in the key markets of Japan, the United States and Europe?
James Courage: Japan is showing signs of a recovery with retailers looking to stock more platinum at current prices in jewellery as well as increasing bridal acquisition.
The lower prices are likely to reduce recycling and thus positively affect sales of new metal into the market. In the US lower prices are being reflected in higher orders into the major manufacturers but it will take time for the prices to work through to retail except where retailers are only holding limited stock.
Jewellery Outlook: Is Platinum Guild International developing new markets? Or is the focus to strengthen platinum’s position in established markets?
James Courage: PGI is focusing on the markets where it is established and adjusting its efforts to the situation in each of these markets.
David Marshall necklace & earrings
Jewellery Outlook: Have you planned any fresh promotion or marketing campaign, such as launching a new range of jewellery, in key markets such as China and Japan?
James Courage: In China we focus on jewellery and more recently on matching wedding pair rings – the latter category showing strong growth as many take to the Western concept of three wedding rings.
PGI launched a programme called Thanks Days Platinum in 2007 in Japan to focus on the baby boomers retiring.
This has been well received by the trade as it adds a segment opportunity and reflects the demographics of the Japanese market.
Jewellery Outlook: Platinum jewellery is struggling to make an impact in India. Is this because of the strong cultural association with gold and platinum's resemblance to silver? Does PGI plan a special marketing campaign to penetrate this potentially huge market?
James Courage: Measured on platinum awareness and results in areas where PGI has been able to focus its efforts, progress has been positive. Key jewellery manufacturers are partners to PGI and we are looking at further developments in 2009.
Jewellery Outlook: What is your forecast for platinum prices in 2009? Could prices test record highs again next year?
James Courage: The platinum price is set externally and all the factors that influence the market can make a significant difference as we have seen with the very large fluctuations in 2008. As a result it is hard to forecast 2009 as it will depend on both industrial and jewellery offtake and the levels of production. .
Jewellery Outlook: What is your view on the outlook for platinum supplies? Do you think production problems in South Africa will continue for years to come?
James Courage: Production issues are being addressed but there continue to be cost, labour and other factors that have made it difficult for the producers to achieve their targeted output in recent years – and will remain challenges going forward.