Most retailers across product categories would be happy to put the memories of 2015 behind them. After all it was a difficult year as they grappled with weak consumer demand on the back of a sluggish economy. Even the jewellery industry, which enjoys strong basic demand due to weddings and ritual purchases on auspicious occasions, could not remain aloof in general.
The just released results of the 3rd Annual Retail Barometer, a study of retail sales carried out across key markets by the Platinum Guild International, stand out all the more sharply as a result. For they indicate that those retailing jewellery crafted out of this rare white precious metal, have not just bucked the overall trend, but turned in a relatively strong performance, particularly in India.
According to the study, conducted for PGI by StratWon Business Consulting, platinum jewellery in India registered a retail sales growth of more than 24% in 2015. In addition, it registered consistent growth every quarter, unlike gold, which, though up by an estimated 8%, saw some major spikes, but also experienced periods of slump. The study says that the diamond jewellery category remained flat during the year.
Strategic partners of PGI reported even higher sales, with IH Jewellers Ahmedabad reporting 50% growth, Joyalukkas a 30% growth and Senco Gold & Diamonds a 25% increase. Abaran Timeless Jewellery, a leading name in the South said that platinum as a category has been growing YOY, despite gold and diamonds having dropped, while Senco says that it plans to take the category beyond the metros to its outlets in Tier 2 and 3 cities and towns in 2016.
Interestingly, platinum sales are more or less equally split between studded jewellery (53%) and plain platinum jewellery (47%), with the latter being given added impetus by the growing popularity of platinum jewellery for men.
What accounts for this success?
Lower platinum prices are definitely a part of the story. The white metal is currently trading just below $1,000 per ounce, a level at which it has hovered for the past few months, during which is touched a high of $1,019 per oz and a low of $ 816 per oz. Throughout, it has remained well below the just over $ 1,100 per oz levels that prevailed in H1 2015.
However, that by itself cannot account for the consistent rise in demand for platinum jewellery over a much longer period, and sustained growth over the last decade and a half since it was first launched in the country.
The statistical success of the white metal is also a result of its relatively small base. A couple of years ago, Sandeep Kulhalli, then VP, Retail & Marketing at Tanishq had estimated that gold accounted for 75% of the approximately $30 billion Indian jewellery market. Diamond jewellery accounted for 15%, while platinum had a 1% market share.
Nevertheless, the reality is that platinum jewellery has successfully entered a market where it was virtually non-existent at the start of the millennium and created a constantly widening niche for itself.
A few examples can be cited to illustrate the point. There are a few recent success stories - the popularity of platinum Couple Bands, the impetus it gave to driving sales in the Men's jewellery category and the creation and evolution of the Platinum Evara, a bridal jewellery brand. Each of these has been backed by insightful studies to grasp market dynamics, and effective marketing-cum-advertising campaigns across print, electronic and social media platforms. Its digital strategy merits special mention, as PGI has one of the largest following among jewellery brands in the social media space.
Take the Platinum Day of Love campaign launched in 2009 which encouraged couples not just to observe formal anniversaries, but to actually celebrate the day they first fell in love, whether their's was an arranged marriage or not. PGI believes that this campaign has driven sales of platinum rings and bands, and led to a high acceptance of platinum in the Couple Bands category.
A spin-off effect of the Day of Love campaign has been the increasing acceptance of platinum by men, which has ensured a high growth in Men's Jewellery.
Similarly, Platinum Evara, the bridal jewellery brand that was launched early last year, helped retailers increase piece weight, margins and the size of their platinum business. Entry into this category was a strategic move, given that the bridal segment constitutes 60% of the overall jewellery market in India.
Platinum Evara is still seen to be at the nascent stage of the product life cycle, yet it has seen great response from consumers.
PGI sums up the factors behind the growth curve of platinum jewellery - growing consumer acceptance, increasing distribution and successful branded programmes. It has projected a 23% growth in 2016, and there is every likelihood that this will be achieved.
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