Expected spending on precious jewellery has increased year-on-year, with the average expenditure on precious jewellery having grown in the third quarter, compared with the same quarter the previous year.

This was supported by double-digit increases in the average expected self-buying of non-bridal jewellery across Japan, China and India, as well as a 6% increase in the US, the Platinum Guild International (PGI) said in its latest Platinum Jewellery Business Review (PJBR).

Spending for others also increased, most notably in Japan and China, while India and the US increased slightly. Self-buying of bridal jewellery, meanwhile, is estimated to be higher than in the third quarter of 2020 for most markets, with China leading at 21% growth, followed by India (+10%) and the US (+4%).

Millennials and Gen-Z consumers are the driving force of future purchases, the PJBR noted, adding that younger consumers would be the driving force in the precious jewellery market, “not only because they are the core consumers for bridal jewellery”.

Over 60% of consumers aged 18 to 45 have plans to buy non-bridal precious jewellery within the next year, either for themselves or as a gift, the survey noted, adding that, in comparison, 47% and 55% of consumers aged 46 to 55 plan to buy non-bridal jewellery for themselves and as a gift within one year, while only 32% and 38% of consumers aged between 56 and 65 plan to do so.

Platinum has gained more attention among young consumers in multiple markets, with the preference for the metal largely increasing in China and the US, while the Japanese continue to “show the highest preference for platinum”.

The PJBR said the improved preference for platinum is mainly seen for engagement rings and wedding bands.

REGIONAL OVERVIEW

China’s gross domestic product (GDP) slowed in the third quarter to the lowest rate this year, primarily driven by a power crunch, supply chain bottlenecks and government regulation on industries such as real estate and tutoring.

However, the jewellery market sustained growth, but at a slower pace, while gold squeezed market share from other categories, including platinum. PGI retail partners saw sales decline compared with the fast recovery in 2020’s third quarter.

China’s economy showed signs of stalling with the third-quarter GDP growing 4.9% year-on-year, the lowest rate so far this year, following growth of 18.3% year-on-year in the first quarter and 7.9% year-on-year in the second quarter.

This, the PJBR said, led to 9.8% year-on-year GDP growth in the first nine months of 2021.

In July, retail sales of consumer goods increased by 8.5% year-on-year, and growth slowed to 2.5% year-on-year in August before recovering slightly to 4.4% year-on-year in September, according to the National Bureau of Statistics.

In the first three quarters of this year, total retail sales rose 16.4% year-on-year and were up 8% compared with the same period of 2019.

China’s jewellery market had slower sales growth in the third quarter, largely owing to sporadic outbreaks of the Covid-19 pandemic and a continued softening of the economy.

According to the National Statistics Bureau, the sales value of gold and silver jewellery only grew 15.6% year-on-year in the third quarter, compared with 35.3% year-on-year in the second quarter.

Gold, meanwhile, was still the key driver of all jewellery sales, despite declining growth in the third quarter, compared with the second quarter. The price drops sparked a bout of bargain hunting during the key purchase occasions of Chinese Valentine’s Day and Mid-Autumn festival, the PJBR said.

India’s economy, meanwhile, is experiencing a V-shaped recovery after a lockdown period in the first half of the year owing to another wave of Covid-19 infections.

Business rebounded, especially gold, buoyed by lower gold prices, and platinum jewellery sales from PGI strategic partners delivered notable growth, driven by early recovery programmes.

Post the disruption in the second quarter, India’s economy began a steady recovery in the third quarter, supported by a reduction in the number of new infections leading to markets opening up across the country.

India’s GDP in the third quarter grew by 8.4% year-on-year, compared with a contraction of 7.4% year-on-year a year ago. The PJBR noted that it was slower than the 20.1% year-on-year growth in the second quarter, but said investment remained the key growth driver, yet private consumption spending still lagged.

In turn, this has led to 13.7% year-on-year growth for the first half of the 2021/22 financial year, and the Finance Ministry’s Chief Economic Advisor forecast a double-digit growth for the full financial year.

The World Bank, meanwhile, has projected India’s GDP to grow at 8.3% in the current financial year in its latest forecast, while the Reserve Bank of India has projected GDP growth of 9.5%.

After the devastating impact of the second wave of Covid-19, the third quarter saw the gems and jewellery industry regain lost momentum and bounce back with business recovery.

With most stores opening from July, alongside the decline in new infections and the rapid pace of vaccination, there was an increase in consumer walk-ins to stores in India. July and August were key months in this quarter, as the recovery during this period was mostly driven by higher sales of wedding jewellery.

Favourable gold prices, wedding dates in July and key festivals in the third quarter added to the jewellery buying impetus as consumers were optimistic and looked to make the most of lower gold prices and prioritized buying early in the fear of an expected third wave.

Gold imports in the third quarter grew 163%, on the back of a low base last year, as well as growing demand owing to the festival season and favourable prices. Post the second wave of Covid-19, Indians’ appetite to spend on precious jewellery has seen a rise and platinum brands have a great opportunity, as 81% of young consumers feel precious jewellery is important for special occasions and 70% agree that it marks significant emotions and relationships, the PJBR noted.

PGI’s strategic partners saw a growth of between 55% and 60% year-on-year in platinum jewellery sales volume in the third quarter, compared to the year before, driven by multiple factors.

The growth is off a low base in 2020’s third quarter, when most markets were largely closed and with limited business, as the recovery had not yet started last year.

While the market opened in June to save the full third quarter, the PJBR said some wedding purchases were made in the third quarter on the back of a potential third wave in the fourth quarter.

Further, Japan’s economy also faced challenges with a continuous state of emergency in the third quarter. The jewellery market continued to recover, but ongoing restrictive measures limited growth.

Platinum sales grew on asset-type jewellery and new offerings, and more young consumers entered the platinum category, partially thanks to the recent Platinum Woman campaign.

Japan’s real GDP contracted by 0.8% in the third quarter from the previous quarter, or an annualised rate of 3%, lower than expectations amid the worst spread of Covid-19 since last year. On a year-on-year basis, GDP grew 1.4%, against the low base last year.

According to the PJBR, Japan’s consumer confidence index (seasonally adjusted) dipped in August to 36.7 as Covid-19 cases continued to rise.

New cases peaked in late August as the Delta variant took hold but are down as of the end of October.

Retail sales in Japan stalled in the third quarter, falling for a second consecutive month in September, followed by a fall of 3.2% year-on-year as consumers limited spending amid concerns over the longer-than-expected grip of the pandemic.

The third quarter was the worst quarter this year as it was impacted by surging cases, following a strong rebound in the second quarter.

About 202 out of 273 days this year were under a “State of Emergency”, including all of the third quarter. The State of Emergency was finally lifted from October 1.

About 71% of the total population and 91% of Japanese aged 65 and over were fully vaccinated as of the end of October. The lifting of the state of emergency at the end of September is likely to boost sales in the fourth quarter.

Jewellery unit sales were up for yellow gold (+5.2% year-on-year), followed by pink gold (+1.5% year-on-year). Kihei chains in yellow gold contributed to sales growth, and white gold was still the worst performer declining 5.3% year-on-year, being the most expensive alloy using palladium.

Sales of metal-only jewellery were up 1.7% year-on-year, which the PJBR said was higher than diamond jewellery (+1% year-on-year). Platinum jewellery unit sales saw a small increase of 0.7% year-on-year in the third quarter.

By sales channel, platinum unit sales grew the most for independent stores, non-store channels and discount stores.

Sales in the third quarter grew by 2.4% in value, 1.1% in units and 1.3% in average price, compared with the same period last year, but not yet back to pre-Covid levels.

Despite ongoing restrictive measures, the third quarter saw consumer traffic climbing and retailers acclimatising to a “living with Covid” business environment. With restricted spending on travel and dining out, the wealthy continued to support sales by maintaining their appetite for high-end jewellery.

Lastly, the US’s pandemic recovery experienced some bumps in the road during the third quarter with economic growth slowing, partially as a result of supply chain bottlenecks and a spread of the Delta variant of the coronavirus.

The third quarter’s GDP growth was reduced to 2.1% on an annualised basis from the previous quarter, and down from 6.7% on the second quarter’s growth.

The decline in growth was mainly attributed to consumer spending that previously drove the recovery and slowed business investment. On a year-on-year basis, GDP still grew by 4.9%, compared with 12.2% in the second quarter.

Consumer confidence is still high but has fallen from the recent peak in June.

Among PGI partners, platinum continues its impressive, double-digit growth and all of them expect strong year-end results not only compared to 2020, but 2019 as well.

It has been a “banner year” for many in the industry and sentiment has been extremely positive.

Platinum jewellery unit sales from PGI USA’s primary business development partners grew for the fifth consecutive quarter by nearly 20%. Platinum ounces grew over 30% as retailers started building stock for the upcoming holiday season.

Sales in platinum crowns increased over 20% year-on-year in the third quarter, and were showing stronger appeal of platinum for diamond and gemstone jewellery.

PGI USA’s gemstone jewellery brand partner reported that the first nine months of this year nearly matched the full year 2020 sales.

They have continued to expand their distribution to the major chains, department stores and independent retailers.

The consumer bridal brand partner, meanwhile, reported a high double-digit year-on-year increase in platinum sales by the end of the third quarter.

While the times have been challenging, the PJBR said the US jewellery industry had used this time to learn, re-tool, re-stock and re-engage with their customers wherever they are – online or in-store.

PGI therefore has a very positive outlook for the platinum jewellery business in the fourth quarter and throughout 2022.