PGI at 12: Back to the Future

When the Platinum Guild International (PGI) opened its American office in 1992, it set itself the ambitious task of building widespread desire for the metal among American consumers. Platinum jewelry had been popular prior to World War II, but its use in jewelry was curtailed during the war, and consumers born after the war weren’t accustomed to buying it. With the exception of a few designers such as Michael Bondanza, who carved a market niche for himself by using the metal, platinum was regarded as something your grandmother wore or as a holder for big, expensive gemstones.

PGI’s task—educating a new generation of consumers about platinum—was daunting, but its timing was excellent, and 14 years later a new research study commissioned by the Guild shows that it accomplished its original goal. Consumers want to own platinum jewelry. The problem is that manufacturers don’t necessarily want to make it and jewelers don’t necessarily want to sell it.

Under a new management team and with a new initiative under way, Platinum Guild International USA has a new goal: to get more platinum into jewelry store showcases and onto consumers’ fingers, ears, necks, and wrists. PGI USA’s new president, Huw Daniel, explains the organization’s repositioning away from public relations and advertising and toward a more strategic business partnership with the trade.

“We’ve seen tremendous acceptance of platinum by consumers. Now we need to remove the barriers to growth on the trade level. All of PGI’s programs are targeted toward closing the opportunity gap to [consumers] buying it.” PGI is not pulling out of advertising and p.r. entirely, he stresses, but rather is seeking to better understand the issues retailers and manufacturers are having with platinum—and addressing those issues.

A history lesson. PGI already had offices in several European countries when the U.S. office opened in 1992. It couldn’t have picked a more opportune time to reintroduce the metal to American consumers. The retail marketplace was on the brink of several major shifts, and platinum was an ideal product to fit the changing landscape.

First, the excess of the 1980s was passé, and a new taste for sleek, minimalist design had emerged. Though the economy was still sluggish from recession, and conspicuous consumption was still frowned upon, consumption itself was alive and well. People were still shopping—they were simply choosing understated ways of spending their money. Platinum, heavier and more expensive than gold, was perfect for the simple, small-scale designs that consumers sought.

Retailing was changing as well. The “democratic luxury” movement was heating up. Consumers were growing more sophisticated and aware of good design and premium products. They were beginning to cross-shop, looking to trade up in categories that were important to them even as they traded down in others. And the fine-jewelry industry was just beginning to get on the branding bandwagon in a big way.

PGI began its efforts to promote platinum with the bridal market, which then—and now—accounted for the lion’s share of platinum jewelry sales. PGI focused its initial efforts on the trade, seeking to get the product into stores before building consumer desire for it. Early designs were frequently executed in two-tone, so that consumers would feel comfortable wearing platinum with their yellow gold and not think they had to buy a separate jewelry wardrobe.

Within a few years, however, the white metal trend was in full swing and the early two-tone designs gave way to all-white looks. Platinum was in demand—but so was white gold, which was less expensive and didn’t require the kind of specialized bench expertise that platinum did. Plus, advances in rhodium plating addressed the yellowish tinge that had earlier turned many consumers off to white gold. It had its pitfalls, but it was a formidable competitor.

By the turn of the millennium, PGI’s promotion efforts had turned toward the consumer market, and much of its trade initiative took a back seat to promoting the metal in fashion magazines and on celebrity award programs. The strategy helped build desire for the metal among consumers, but there was an increasing disconnect with the trade. In late 2003, PGI commissioned a survey to see where platinum stood in the marketplace. The results underscored the problem: Demand for platinum jewelry had far outpaced the supply.

The next level. There’s no shortage of platinum, but there is a discernable lack of platinum jewelry in the United States. As a result, PGI is in many ways back where it started in 1992: It has to encourage the industry to design, manufacture, and sell more platinum jewelry. And, once again, its initial efforts will emphasize the bridal market, the entry point to platinum. But this time its outreach programs and public relations efforts will include the nonbridal market as well.

PGI president Huw Daniel was appointed to head the American PGI office a year ago, in April 2003. His prior experience includes a position as senior vice president and management director at the ad agency Saatchi & Saatchi as well as a stint at J. Walter Thompson in Hong Kong, where he was the Diamond Marketing Group director responsible for managing integrated marketing communications programs for De Beers in 11 markets across the Asia Pacific region.

PGI also tapped the expertise of Michael O’Connor, senior vice president in charge of public and trade relations in the east. O’Connor comes to PGI with more than 23 years’ experience in marketing and brand-building, working with such industry leaders as Frederick Goldman Inc. and Goldstein Communications. Jenny Luker, part of the existing PGI team, is director of trade relations for the central and western United States and heads PGI’s new training and online initiatives. And Jurgen Maerz, director of technical education for PGI and another member of the existing team, remains responsible for developing and augmenting PGI’s new technical program designed to help manufacturers and bench jewelers.

One problem holding back platinum sales was education at the counter. PGI initiated a mystery shopping program last year to assess platinum sales in retail jewelry stores. The study revealed that in-store sales associates were frequently uninformed—or worse, misinformed—about platinum, its attributes, and its key selling points. A new sales training program is being developed to address this issue.

But PGI faces some hurdles not present in 1992. Platinum has been hovering around $850 an ounce since Jan. 1, spiking to a record $895 an ounce on March 1. (Source: Johnson-Matthey.) On the manufacturing end, the cost of leasing it is very high, and retail and manufacturer margins are being squeezed. Nevertheless, Daniel remains confident that consumer demand for platinum will keep the business model afloat, and he says leasing costs have come down somewhat.

“It comes down to the business dynamics most premium products have: Does the customer want it, and is the customer willing to pay?”

On the consumer end, the answer to both is yes, he says. But PGI is still in a difficult trade position, between manufacturers’ reluctance to invest in making platinum jewelry and retailers’ lack of training in selling it.

The toughest problem manufacturers face is price volatility driven by speculation, he explains. The underlying market dynamics—demand outstripping supply—naturally drive prices up, but so does disillusionment with the stock market and the dollar’s drop against world currencies. When the dollar drops, metals look like a safe harbor, and investors rush to put their dollars into it, again affecting both demand and price. But Daniel thinks prices may have peaked.

“I sense we will see demand drop off, especially in Asia,” he says. “China is the biggest market for platinum, but it’s sold by weight. I think demand should drop, so [prices] should ease up. I hate to predict what prices will do, but I do understand overall what makes prices rise and fall.” Meanwhile, PGI has to focus on helping retailers understand the value properties of platinum, says Michael O’Connor.

Training. Thanks to its mystery shoppers, PGI realized that a major part of the opportunity gap between consumers’ desire for platinum and actually owning it was happening at the store level. Because sales associates didn’t understand the metal, they didn’t know how to sell it.

This spring PGI is launching an ambitious new training program that will include training materials and a trainer who comes to the store to work with staff. Luker explains that while role-playing is a good way to train sales associates, store managers are often uncomfortable trying to lead it, so having an in-store trainer will eliminate that problem.

A training DVD—which also has a role-playing segment—is being developed as well to address multiple topics. Divided into concise chapter segments and accompanied by a handbook, it’s designed to be played at the store’s convenience.

The third component will be PGI’s Platinum Resource Book, designed to be an “A to Z of all you need to know about platinum,” says Luker. The fourth is a planned 10-city regional tour designed with two tracks—one for sales associates and the other, led by Maerz, for bench jewelers. The technical segment will address basic in-store issues such as sizing and small-shop casting. Many bench jewelers are not used to working with platinum and need to relearn techniques as they apply to platinum vs. gold, says Luker.

On a larger level, PGI again sponsored its annual Platinum Day during the MJSA Expo in March. Platinum Day is devoted to technical issues of manufacturing with platinum. This year, says Daniel, instead of devoting time to “extreme technology,” the discussions and panels will focus on more common issues, tools, and techniques of working with platinum.

“We want to get people just starting in platinum and those not technically savvy,” Daniel explains.

No sacred cows. The new team is leaving no stone unturned in PGI’s repositioning. The first sacred cow to be flipped on its head is the Platinum Edition, the glossy jewelry look book PGI has published for the past 12 years. Institution it may be, but now it will be available only online, and it will be more marketing tool than picture book, explains Jenny Luker.

The new online Edition will allow manufacturers to not only present significantly more merchandise than they were allowed to in the catalog (six in print vs. up to 20 online) but also to change their selections regularly. Manufacturers will participate through a subscription program, while retailers will be able to access the online Edition at no cost.

Retailers will be able to search the Edition by both category and designer as well as download images for use in their own marketing materials. They’ll be able to view the entire product gallery as thumbnail images, but to avoid conflicts of exclusivity within a marketplace, manufacturers will control deeper access to their pages. (A retailer denied access to a particular manufacturer’s pages will be notified and told how to request access.) High-resolution images will be available for print, and low-resolution will be available for retailer Web sites and customized online presentations. Retailers also will have the option of selecting predesigned PGI templates for postcards, catalogs, and mailings—they click and drag images they want to use—and of using PGI’s printing firm if they wish. Or, they may download the selected images for use in their own marketing pieces using their own printer.

How will an online catalog play to the somewhat technophobic jewelry industry? Luker says response from retailers who previewed the beta Edition at the Centurion show in February was excellent. “If you say ‘online’ to this industry, they traditionally gasp. But most retailers [in the kind of store likely to take advantage of PGI’s programs] have a marketing person who is computer savvy.”

“If you look at the Jewelers of America [Cost of Doing Business] study, the level of computer usage in the industry is quite high,” adds Michael O’Connor.

PGI began its manufacturer sign-up shortly after the Centurion preview and expects to roll out the online Edition during The JCK Show ~ Las Vegas.

Additionally, the Platinum Edition will have a button for press and stylists. While PGI is focusing first on assisting the trade, it isn’t abandoning the consumer marketplace. O’Connor says it’s still critical to create excitement and demand for platinum jewelry, and one way to do that is by celebrity and photo placements. To this end, besides the Edition, PGI is hosting a series of “red carpet” events and inviting stylists and press to view platinum jewelry (the “Red Carpet Collection”) for future use on celebrities and in photo shoots. Two events have been held so far, one in New York and one in Los Angeles.

“We want to be a one-stop shop for stylists, photographers, etc.,” says O’Connor. “Usually stylists do the Rodeo [Drive] trip—they go to Martin Katz and the jewelers there.” For the one-and-a-half-day event on the West Coast, PGI pulled together 40 platinum designers and showcased their looks. According to stylists, the event not only made it easier to shop but also opened their eyes to many designers they never knew existed.

“By doing this we help the industry, because manufacturers and designers don’t have to get their names out there—we get their names out there,” explains O’Connor. “It’s also important to get new names out there. Of course, we’ll always have the classic names, but we’re getting exposure for people who couldn’t otherwise afford the exposure.

“Lots of the oohs and aahs came over the new things we showed. A lot of the stylists who dress the ‘A-list ‘celebrities, such as Philip Bloch and Jessica Paster, said over and over that they’d never seen any of these designers before.” Several designers even created special pieces for the Red Carpet Collection.

From the West Coast event, PGI lent out more than 30 pieces, including Cathy Waterman earrings to Jamie Lee Curtis for the Golden Globe Awards, Martin Katz platinum and diamond earrings to Joan Rivers for Fashion Police, and numerous pieces in response to editor calls.

“Even if we hadn’t gotten any placements, we got name recognition with editors and stylists,” said O’Connor. The event drew 27 stylists and 22 editors. It was so successful, he said, that PGI probably will reallocate some money to host a fall Red Carpet event in time for the Emmy Awards in September.

A total partner. With these initiatives, PGI hopes the trade will think of the organization as a strategic business partner, not just a p.r. agency or an underwriter of co-op advertising.

“The consumer demand is there, and now we need to remove the barriers to growth on the trade level,” says Daniel. “If we keep on fueling the ultimate desire, it will help retailers and manufacturers and hopefully will insulate platinum from the vagaries of price. All of PGI’s programs are targeted to closing the opportunity gap to buying it.”