NEW YORK (Commodity Online): Will platinum ride a wedding demand to get over the slump in automobile sector demand?
That is the question being asked in the PGM market across the globe now. Platinum demand from automobile industry has fallen to unimaginable levels due to the recession and miners are now banking on jewellery demand to tide over the crisis.
Several auto companies like General Motors have gone bankrupt and this has hit the platinum market badly. Platinum is used to make the exhausts of cars to control pollution.
However, PGM firms are now expecting a rise in demand from jewellery sector. In China, more and more people are buying platinum jewellery during the recession time.
Even as platinum prices have lowered, skirting ever closer to the price of gold, many jewellers said they see a rise in demand from jewellery sector.
Platinum was trading at just under $1,169 per ounce compared with gold’s $948-per-ounce price. The differential was nearly zero six months back, when platinum was selling at $823 per ounce and gold at $822 per ounce. And the figures from both dates contrast sharply with data from May of 2008, when platinum’s price was more than $1,000 higher, per-ounce, than the price of gold.
And that means an opportunity that retail jewelers might be missing out on, according to Platinum Guild International (PGI-USA), which contends that employing a set of specific at-the-counter techniques might help retailers make higher-priced platinum sales.
Many retail jewellers agree that platinum customers often enter stores knowing what they want, having already been schooled on platinum’s characteristics via a strong marketing presence in bridal and fashion magazines, and simply through the connotations of the metal’s name.
Research from a PGI-USA mystery shopping study indicates that when sales associates show platinum to a customer as a first choice and are confident in their platinum knowledge, they almost double their chances of making a platinum sale. They also boost sell-through levels by describing platinum as pure, positioning it as the best and worth the price, and allowing customers to feel the piece and try it on. It helps, too, if pieces are clearly labeled and visible.
On the manufacturing side, a number of designers have also found an opportunity for themselves in platinum. While many designers during the Las Vegas jewellery shows were introducing silver offerings or lower price-point pieces, Chad Allison debuted a new line of platinum earrings, necklaces and bracelets positioned as pieces that brides can wear on their wedding day and long after.
In terms of bridal, some designers say 95 per cent of their bridal sales are in platinum.
