A new Platinum Guild International study reveals growing interest in entry-level platinum and a surprising sales spike thanks to the rising price of gold.
Over the past several years, gold and platinum prices have performed a dramatic tango on world markets. Having climbed to historic highs, with the former still rising, the metals have slipped into virtual parity on more than a few occasions.
The circumstances—combined with the effects of the economic crisis—have thrown the industry into a tizzy. In search of low-cost solutions for consumers and retailers with a soft spot for white metal, Platinum Guild International launched a high-profile campaign to promote entry-priced platinum that retails for $5,000 or less.
To determine the effects of the campaign thus far (it began in 2010), the organization recently commissioned a survey of retailers about platinum sales. The survey queried 400 small chain and independent jewelry retailers in the first quarter of 2011 about recent sales as well as attitudes and expectations for future sales. Findings reveal that entry-level products, especially in the bridal jewelry category, are revitalizing the platinum business, while the rising price of gold is converting more would-be gold buyers to platinum purchasers.
Semi-mount in platinum with 0.12 ct. melee; $2,500; Sholdt,
Seattle; 206-623-2334; sholdt.com
With platinum’s price per ounce just 2.5 percent higher than gold’s, the difference in cost between the two precious metals amounts to about $350 (at press time). For retailers, this can mean a lowered barrier to buying platinum jewelry, especially for customers who once thought the posh precious metal was well out of their reach.
Of course, it’s not always the customer who needs convincing; retailers, too, can be resistant to purchase platinum. This was the case with John Carom, owner of Abby’s Gold and Gems in Uniontown, Pa. For the past six of his 26 years of operation, Carom didn’t think his customers cared for platinum, so he didn’t stock a single piece. “I said what every jeweler has said for years: ‘I don’t have it, but I can get it for you,’” he says. “I assumed that my customers didn’t want platinum because of the price.”
Then Carom attended the Independent Jewelers Organization show in Washington, D.C., last summer and was persuaded to change his tactic after encountering Jeff Bergman, president of Mercury Ring Corp., a vendor at the show. Bergman urged Carom to try some entry-level bridal jewelry along with sales aids from PGI.
Carom ordered five mountings and semi-mounts ranging in retail cost from $800 to $2,250 (within PGI’s entry-level platinum jewelry price parameters) and one wedding band for $1,350. Within the first month of delivery in October 2010, Carom sold two engagement rings. Within three months, he had sold five pieces, including the band. He reordered immediately after each sale, making him part of the majority of jewelers (65 percent) who do so, according to PGI research. “I was wrong,” says Carom, referring to his old attitude about platinum bridal rings. “If you stock them, they’ll sell.”
Whereas many stores consider inventory dated if it’s still sitting in showcases after six months, Carom argues that bridal jewelry needs a little more time to sell. “I would give platinum bridal jewelry a full year,” he says, adding that basics—think stud earrings—should sell within six months.
At Sheffield’s Diamonds in Oro Valley, Ariz., platinum sales—steady since the store opened in 2003—shot up 20 percent in 2010, says owner Eric Sheffield, for one very conspicuous reason. “As the price of gold increases, the price of platinum becomes a better value,” Sheffield says. And when customers ask for a white gold style, he responds with a simple “Why?” He then explains that within a year, he’ll have to charge the shopper $50 to re–rhodium-plate a white gold piece, which starts to yellow with time, but that he’ll only need to buff up a platinum ring (gratis) because repolishing an inherently white metal requires no additional materials.
This scenario played out in Sheffield’s store recently, when a married woman looking to update her engagement ring mounting came in to buy a karat gold Tacori ring, but wound up ordering a platinum version for a 20 percent premium.
This might explain why 75 percent of Sheffield’s bridal jewelry sales are platinum, and why his average sale for a platinum engagement mounting or semi-mount is $4,300. That’s nearly 54 percent higher than the national average of $2,800, according to PGI research.
Semi-mount in platinum with 0.53 ct. melee; $3,500; Saturn Jewels, New York City; 212-944-9325; saturnjewels.com
Olivia Cornell, president of Rochester, N.Y.–based Cornell’s Jewelers, knows the thrill of the upsell. While she’d typically expect older customers to be interested in downsizing rather than upgrading their jewelry collections, she recently had an 85-year-old collector add an $8,000 platinum estate flower pin to his wife’s personal inventory. “He’s bought five pieces in the last two weeks,” she says. “His son keeps telling him it’s time to get rid of stuff, and his reply was, ‘We are celebrating our 58th anniversary, and I don’t know if we’ll be around next year, so I’m buying it now.’?”
Meanwhile, other survey findings show that “almost half of jewelers reported that platinum engagement rings performed the same compared to other engagement rings” in the first half of 2010. To round out those figures, however, consider that 33 percent of jewelers reported that platinum engagement rings performed worse. To some jewelers, the numbers don’t surprise; a bad economy, a lack of training, and simple ignorance are all culprits contributing to platinum’s precarious place in the market. Many retailers still regard the white metal as an upsell, especially if they’re not cognizant of the cost dynamics in today’s volatile precious metals market.
But those with newfound clarity about the platinum market are optimistic. Take Carom, for example. While he’s not ready to “start stocking $5,000 platinum mountings,” he says he will at least begin to pose a simple question to customers going forward: “Would you like that in platinum?”