From AU
Bringing gold into the luxury goods business
Date: Monday, December 09, 2002
AngloGold, South Africa’s largest gold producer, today urged the luxury goods business not to discount gold in the fight for the consumer’s discretionary wallet, which in the United States accounts for $174 billion.
Speaking at the International Herald Tribune “Luxury Unlimited “ Conference in Paris, Sarah DaVanzo, Strategic Marketing Adviser to AngloGold, outlined how the company has started to work with luxury businesses to create new and exciting product lines aimed at the increasingly design-conscious consumer.
Jewellery sales per square foot are higher than those for apparel and accessories and in the United States, jewellery is the largest product category of discretionary spending, at around $40 billion annually. With gold jewellery responsible for $7 billion of this amount and room to grow, gold is an untapped business opportunity.
Sarah DaVanzo explained: “Recent innovations in manufacturing methods, gold technologies, creative design combined with gold’s unique versatility enable gold to be fashioned to suit any design or brand profile. Through specific applications of gold technologies, proprietary jewellery ’looks’ can be developed, deterring imitation and copyright infringement.”
Research has shown that almost 25% of brand-buying customers show a preference for gold, but say they cannot find jewellery styles they like and that there is not enough choice. Nine out of ten women in America own gold, so the opportunity to migrate consumers from generic gold to branded, design-led gold jewellery is substantial. Furthermore, gold buying consumers are luxury goods customers as they purchase significantly more designer clothes, fashion accessories and fragrances than non-gold buyers. For these reasons gold offers excellent cross-selling possibilities for luxury retailers.
A pure gold jewellery product line, without the addition of other gemstones, does not cannibalise existing luxury goods jewellery businesses; platinum and diamonds, for example, have very distinctive meanings and associations which differ from gold, and since they are not interchangeable with gold, they can be sold side by side.
DaVanzo continued: “From a business perspective, gold jewellery retailing has suffered from too traditional an approach to the retail experience. The retail space of luxury brands is much more conducive to selling jewellery as it is more open, displays are more inviting and sales staff more helpful. Gold also offers higher Gross Margin Return on Inventory than other fine jewellery categories. Pure gold jewellery, without any gemstones, requires much less value in inventory, which in turn means less cash tied up in inventory and, as a consequence, lower insurance premiums.
“Gold is neither seasonal nor limited to associations of ‘love’, unlike other precious metals or stones. For example, in the United States, 50% of Americans bought jewellery for gifts during this past year. Gold jewellery can tap into this market, offer customers the opportunity to buy for any occasion, every day of the year, and thus generate year-round traffic.”
This year AngloGold’s market development activities have been focused on the fashion and design aspects of gold. In its Afridesia project, AngloGold worked with three leading South African designers to create a range of gold jewellery and accessories to complement their latest fashion ranges for a show during New York’s Fashion Week. This project has shown the potential of innovative fashion designs in gold jewellery and has sparked the interest of several major US department stores. AngloGold’s e-tailing and catalogue joint venture, GoldAvenue, also continues to strengthen its B2C consumer offer with new product ranges. Going forward, AngloGold will continue to focus its efforts on new gold jewellery product lines, innovative design, and strategic opportunities through new retail channels and branding partnerships.
Disclaimer
Except for the historical information contained herein, there are matters discussed in this news release that are forward-looking statements. Such statements are only predictions and actual events or results may differ materially. For a discussion of important factors including, but not limited to development of the Company's business, the economic outlook in the gold mining industry, expectations regarding gold prices and production, and other factors, which could cause actual results to differ materially from such forward-looking statements, refer to the Company's annual report on the Form 20-F for the year ended 31 December 2001 which was filed with the Securities and Exchange Commission on 28 June 2002.
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