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Guess what jeweler Barbara Palumbo is giving herself for her 35th birthday? She's chosen a right-hand palladium ring.
So don't try telling her that this platinum family member isn't a fashion metal. And don't try telling that to Mel Anda of Unique Settings in Long Island City, New York, one of Palumbo's leading suppliers. Every item that his company offers in platinum or white gold is now available in palladium. At last count, that was over 21,000 SKUs, many of them self-purchase pieces.
Slowly but surely, palladium is inching into the American jewelry mainstream. Palumbo, who is vice president of web site UnionDiamond.com and its affiliate brick-and-mortar showroom in Atlanta, Georgia, says the metal is in the early stages of the same "life cycle" that platinum went through. "You have to get used to living life with any new precious metal," she says. "I love platinum and started up the purchase chain with an engagement ring, then a wedding band. Only afterwards did I explore fashion options with the metal. Now I'm ready to repeat the same cycle with palladium."
Actually, Palumbo jumped several steps ahead in the purchase chain with palladium. "I've got all these platinum pieces that have been constant companions for years," she says. "So I wanted a palladium piece to join the collection and see what it would look like a year from now after daily wear."
Since Palumbo has been selling palladium for nearly four years, and her committed customer base for the metal is growing by leaps and bounds, she already knows the outcome of her personal road test. "My ring will look good and hold up well," she predicts. "Putting the metal through its paces was just an excuse. Besides, I love to talk about the things I sell in the first person—as parts of my life."
THE GOOGLE FACTOR
Make no mistake. Palladium is still a bridal metal. Palumbo's palladium customers come to her looking first for loose diamonds, then mountings for them—most of which are engagement rings or wedding bands. Like most Internet shoppers, they've done plenty of homework about their purchase, usually starting with Google searches that map dozens of roads to this new precious metal option. "The customer can start with a query as broad as 'ring' or as specific as 'white metal,' but somewhere along the way, they often learn that platinum has brothers and sisters and one of them is palladium," she says.
Pre-purchase Internet orientation about palladium is becoming more and more a fact of life as consumers hang out at blogs and get in-depth answers to their questions and ecstatic testimonials about the metal from their peers. "The Internet is now a major familiarization tool about the metal," Palumbo says.
No wonder that palladium makers and shakers like Hoover & Strong, Richmond, Virginia; Guertin Brothers, Roanoke, Virginia; and Unique Settings in New York are all launching ambitious web sites to proselytize on behalf of the metal. And the Palladium Alliance—now flush with marketing money from South Africa's palladium mines—is wrapping up a site revamp. All these new web streams of information, says David Skuza of Guertin, "are sure to build greater product recognition."
NEW FELLOWSHIPS OF THE RING
The Internet is proving much more than an advertising tool for palladium. Given its interactive nature, it is also serving as a powerful b-to-b medium that is contributing to palladium's growing popularity. By b-to-b we mean "buyer-to-buyer" communication. This is a dynamic of market making that was absent during platinum's rise to glory in the 1990s. As Palumbo says, "There are now thousands of people who have been wearing palladium rings for a year or more, many of whom are posting testimonials on the Internet." As consumer tributes to the metal proliferate, a new very friendly and persuasive peer pressure is building for the metal.
But even without hundreds of billboards (and message boards) along the information super-highway, palladium would find its way in and on to the hands of American bridal shoppers. It has what Hoover & Strong's Torry Hoover calls "too many plus-factors" to fail to make a case for itself.
That's a lesson jeweler Ted Koester of Herzog Jewelers, Fort Marshall, Kentucky, has learned and profited handsomely from ever since deciding to become a booster of palladium in 2006. "Every employee has been trained to offer shoppers the opportunity to hear, see and, most importantly, feel palladium when they are making a bridal ring purchase," Koester says. "Sixty percent of these customers now decide on palladium."
That 60 percent conversion rate is worth repeating, especially since Koester's customers almost never have heard of palladium until the shining moment they encounter it in his store. "Our customers have not done Google searches. They have to begin and end their learning curve at our counter."
Koester figures he has ten minutes maximum to pitch palladium. That pitch starts with the metal's membership in the platinum family—an instantly comforting fact to most shoppers. Palladium's chances of selling are greatly enhanced by its metallurgical blood ties to the world's most royal metal.
PLATINUM: FRIEND, NOT COMPETITOR
Palladium's family ties to platinum are something many in the platinum world fear. They see the jewelry newcomer as an interloper poised to take away sales from platinum. But Palumbo says such fears are unfounded. "Palladium takes away sales from white gold, not platinum," she insists, proving her point with sales figures.
For the first four months of 2008, as compared to the same period in 2007, palladium sales at Union Diamond jumped from 13 to 17 percent of total engagement ring sales. During the same time frame, white gold sales fell from 53 to 50 percent and platinum from 27 to 26 percent (which Palumbo calls "statistically negligible"). Yellow gold held steady at 7 percent. What does Palumbo make of these figures? "First of all," she says, "palladium is no threat to platinum. The platinum shopper is prepared to pay whatever it takes to own that metal. It has a reputation so prestigious that skyrocketing prices haven't deterred demand among our customers."
On the other hand, rising gold prices have played to palladium's advantage. "At current prices [$2,094 per ounce for platinum; $443 for palladium; and $885 for gold], palladium mountings cost what their 18k white gold counterparts do," Palumbo says.
No doubt about it, current pricing for palladium pieces makes switching to the metal easy. Palumbo compares prices for a popular generic 2mm width engagement band with 16 points of G-H/VS diamonds: $549 in 14k white gold; $649 in 950 palladium; and $1,349 in 950 platinum. "When customers ask about the price difference, we explain that palladium is 95 percent pure (with an additional 5 percent of another platinum family metal) while 14k and 18k white gold are only 56 percent and 75 percent pure."
In addition to palladium's greater alloy purity, there is the not inestimable fact that it is far more hassle-free than white gold. "When a person buys white gold, they are signing on to the virtual certainty that at some point—be it months or years—their piece will have to be re-plated," says Palumbo. "When consumers realize they are going to face greater upkeep problems with white gold, it's then that similarly priced, low-upkeep palladium takes on a very powerful practical appeal."
As more consumers become aware of or are told by jewelers about the irritating reality of transient rhodium-plated white gold, says Skuza, "The purity argument for palladium becomes as much about greater convenience as it is greater precious metal content."
THE PLEASE-TOUCH-ME FACTOR
With prestige, price, and purity going for it, palladium is a far easier sell than most imagine. Palumbo says that these factors give it a kind of pre-sold status. "All the elements for a successful sale are already there once the metal's very positive attributes are explained," she says.
But there is one essential factor for selling palladium that many jewelers ignore or skip: on-hand inventory. "You want to know the kiss of death for any palladium sale?" asks Koester. "It's the words, 'I can order this for you in palladium.' The absence of palladium pieces in your store contradicts everything glowing you say about the metal. The customer thinks, if palladium is so great, why isn't there much of it in this store? Your inventory has got to convey commitment to the metal."
Inventory is more than just a sign of commitment. It is a part of the theater of selling palladium. "The key to selling palladium is providing a tactile experience," Koester says. "The customer is going to want to touch the metal and connect with it in a very personal way. Seeing is believing, especially when it's something as new and beautiful as palladium."
author: BY DAVID FEDERMAN, CONTRIBUTING EDITOR - Modern Jeweler