Several major trends in the typical jeweler’s sales mix have been confirmed by just-released data from the Census Bureau’s Economic Census. Some of the trends are surprising and seem contrary to the information that jewelers report to us; other trends confirm sales mix shifts that publicly held retailers and others have reported.

 

·        Diamond jewelry has been one of the fastest growing categories over the past two decades. Demand has been driven largely by De Beers’ generic advertising, in our opinion.

 

·        Gold jewelry has lost half of its market share with specialty jewelers over the past two decades.

 

·        Platinum jewelry has come from virtually no meaningful sales levels in 1992 to just under 2 percent of a typical jeweler’s sales today.

 

·        The typical jeweler’s watch sales mix has increased, despite contrary reports. While some younger consumers may opt to tell time with their personal electronics gadgets (mobile phone, Blackberry, etc.), consumers are still purchasing big-ticket timepieces which have helped boost jewelers’ sales.

 

·        Estate and antique jewelry has become slightly less important for American specialty jewelers, despite strengthening demand from young consumers. This category typically carries above-average margins for merchants.

 

Many of the trends reported in the Economic Census mirror sales mix trends reported by the Jewelers of America Cost of Doing Business Survey, though there are a few differences noted in the narrative which follows.

 

Trend Analysis

IDEX Online Research has analyzed sales levels and trends of the top ten jewelry categories based on the past four editions of the Economic Census – 2007, 2002, 1997 and 1992. Here’s what we’ve found:

 

Solid Growth Categories

The following jewelry categories have become more important to American specialty jewelers.

 

·        Diamond jewelry – In the Census Bureau’s 1992 Economic Census, diamond jewelry represented 32.9 percent of a typical jeweler’s annual sales. By the 2007 Economic Census, diamond jewelry had become much more important; it represented 43.1 percent of total annual sales.

In the Jewelers of America Cost of Doing Business Survey, diamond jewelry represented 27 percent of a jeweler’s sales in 1992, and had climbed to 38 percent of sales by 2007. We note that the recession has taken a toll on diamond jewelry demand. Consumers apparently are opting for less expensive jewelry and so diamond jewelry’s sales mix declined to 35 percent of a typical jeweler’s sales in 2008.

Now that De Beers apparently has reduced its generic diamond jewelry advertising, the industry may see either slowing growth or a shift to other jewelry categories, among many possibilities.

 

·        Loose Gemstones – The Economic Census asked jewelers for the “loose gemstone sales, including diamonds and other precious gemstones.” This category has shown steady growth over the past four editions of the Economic Census.

Unfortunately, it makes analysis of underlying trends difficult, since diamonds and other precious gemstones are combined into a single category. Clearly, the Census Bureau does not realize just how important the category of “loose diamonds” is to most jewelers. The Jewelers of America survey shows that loose diamonds have growth from 11 percent of a jeweler’s sales in 1992 to 14 percent of sales in 2007.

The Census Bureau survey reported that just over 5 percent of a typical specialty jeweler’s sales consisted of loose gemstones, including diamonds. This is less than half of the level reported by the JA survey, which includes only loose diamonds. IDEX Online Research is unable to reconcile the difference in the data points.

 

·        Watches – The typical specialty jeweler reported that watch sales were just less than 10 percent of total sales in 1992, according to the Economic Census. By 2007, watch sales had grown to over 12 percent of total annual sales, with steady growth over the four census periods.

Other data suggests that consumers have shifted their demand for watches to discount merchants. Some merchants also report that watch demand has declined as young consumers rely on their mobile phones and personal data assistants (PDAs) for the correct time.

The Jewelers of America survey shows that demand for timepieces at specialty jewelers has declined, but its results for 2007 appear to be an aberration – the sales mix is much lower than prior or subsequent years (see table below). Rather than the 3.7 percent sales mix shown for 2007, the average watch sales mix for specialty jewelers as reported by the JA survey has been about 5 percent for the past five years or so (excluding 2007). 

 

·        Platinum Jewelry – Platinum jewelry did not show up as a category in the 1992 Economic Census. Since then, it has shown steady growth to 1.6 percent of a jeweler’s total sales. While this is only a tiny portion of specialty jewelers’ annual sales, it is a growth category.

The Platinum Guild has continued to focus on building generic demand for platinum jewelry, despite limited resources.

Platinum jewelry growth and sales levels in the JA survey correlate closely with those reported by the Census Bureau’s Economic Census.

 

·        Other Jewelry – “Other jewelry” has grown from just under 4 percent of a typical jeweler’s sales in 1992 to almost 6 percent of sales in 2007. In the 2002 Economic Census, it was 6.4 percent of sales. “Other Jewelry” is mostly fashion jewelry, and it is an important category, especially for younger consumers.

The JA survey specifically tallies “fashion jewelry and it shows that it has been a stable category, with sales near 3 percent or so of a typical specialty jeweler’s annual revenues.

 

Stable Jewelry Categories

The following categories have remained a relatively stable portion of a typical U.S. specialty jeweler’s sales mix over the past two decades.

 

·        Pearl Jewelry – Pearl jewelry has remained stable at about 3 percent of a specialty jeweler’s sales over the past two decades, according to the Census Bureau’s Economic Census. It dipped to about 2.7 percent of sales in the 2007 Census, but that could be a sampling aberration.

The JA survey pegs pearl sales at about 2 percent of a specialty jeweler’s total revenues.

 

·        Repairs – Specialty jewelers told the Census Bureau that their repair revenues have been steady at about 3 percent of revenues over the past two decades.

The JA survey reports a different trend: repair revenues have declined from about 15 percent of sales to 10 percent sales over the past two decades.

 

Declining Jewelry Categories

The following categories have declined in importance to specialty jewelers.

 

·        Colored Gemstone Jewelry – According to the Census Bureau’s Economic Survey, jewelers reported that their sales of colored gemstone jewelry have fallen to just below 8 percent of total sales in 2007, after peaking at over 11 percent of sales in 1992.

The Jewelers of America Survey shows that colored gemstone jewelry sales have been about stable at around 10 percent or so of sales for the past two decades. Many specialty jewelers report that their colored gemstone sales have strengthened in the recession as customers have opted for less expensive colored gemstone jewelry versus more expensive diamond merchandise.

 

·        Gold Jewelry – Gold jewelry sales have shown the most precipitous decline in a jeweler’s sales mix over the past two decades: sales are down by about half. In the 1992 Economic Census, karat gold jewelry represented 18.4 percent of a specialty jeweler’s annual sales. After showing a steady decline, it has fallen to just 9.5 percent of a specialty jeweler’s sales mix in 2007.

Figures from the JA Survey correlate closely with data from the Economic Census.

 

·        Estate and Antique Jewelry – The decline in this category is a surprise, since most jewelers report that demand for estate and antique jewelry has risen, fueled largely by younger consumers who want “something different.”

Economic Census sales figures bounce around somewhat for estate and antique jewelry: in 1992, they were 2 percent of sales, but climbed to 3 percent of sales in 1997. By 2007, they had fallen to 1.5 percent of sales.

The JA Survey shows a similar trend: antique and estate jewelry sales have been about 2 percent of total sales for many years.

 

The table below summarizes sales by the top ten major merchandise categories for specialty jewelers over the past two decades, as reported by the Census Bureau’s Economic Census.

 

Source: Census Bureau

  

The table below compares the results of the Census Bureau’s 2007 Economic Census with data from the Jewelers of America Cost of Doing Business Survey.

 

Source: Census Bureau

 

Explanation of Differences in Data

One survey shows that watch sales were just under 4 percent of a specialty jeweler’s sales, while another survey shows that watches were just over 12 percent of sales. Which is correct? Differences such as these are due to several factors, but the three most important are as follows:

 

·        Definitions Vary – Each survey typical gives a definition its individual merchandise categories. These definitions vary. For example, the JA survey calls watches “timepieces.” We know that some jewelers put gemstone-studded timepieces in other categories, so the sales mix is distorted.

 

·        Categories Vary – In both the Economic Census and the Jewelers of America Survey, categories are pre-defined. For example, the Census Bureau does not have a category for loose diamonds, despite their importance; the JA survey has a specific category for loose diamonds.

 

·        Sample Sizes Vary – There were roughly 27,600 U.S. jewelers with employees in 2007. The Census Bureau surveyed nearly all of them. The 2008 JA Survey with data for 2007 surveyed less than 400 jewelers. While this should have been an adequate sample size, some glitches kept it from being a totally scientific sample size. Much of the differences between the two surveys can be explained by the size of their sample.

 

·        Qualitative Issues – When a jeweler is confronted with a daunting questionnaire – one from the government and one from the key industry association – who do you think gets the attention. Typically, the jeweler takes little time to complete the government form, but will often provide thoughtful answers to the Jewelers of America questionnaire, since it will benefit him and other American jewelers.

 

So, which data to you use? The quick answer: both surveys should be used together to get a full picture of the jewelry industry.

 

Economic Census Occurs Every Five Years

Unlike the U.S. population census which is conducted every ten years by the U.S. Census Bureau, an economic census is taken every five years – during years ending in 2 and 7. While high-line data becomes available about a year after the census is completed – beginning in early 2009 for the 2007 Census – detailed data is just becoming available by industry. Over the next twelve months, more detailed data will become available down to the postal zip code level, including the number of jewelers, their aggregate annual sales, payroll figures and other information.

 

IDEX Online Research uses the data from each Economic Census as a cross-reference to data from other sources. Further, we compare data from each prior census back to 1992 data (data prior to 1992 is non-comparable due to a variety of reasons).

 

Businesses are required by law to respond to the Economic Census questionnaire; failure to complete the census form can result in a large fine. All businesses with five or more employees received a census questionnaire in late 2007 and early 2008; smaller businesses were sampled.