(IDEX Online) - Diamond jewelry sales in the U.S. market during the upcoming holiday selling season are expected to be down modestly, based on newly released data of diamond sales trends in the first half of 2010. This new data points to much more pessimistic trends than earlier preliminary data.

 

IDEX Online Research is projecting that diamond jewelry sales at retail will be down by about 5 percent in America during the all-important November-December 2010 selling period.

 

Unfortunately, diamond suppliers will experience a greater decline in sales due to a slightly reduced diamond content in the lower-cost diamond jewelry which is being sold by specialty jewelers and other merchants who sell diamond jewelry. On a unit basis, sales of diamonds will be down by a modest double-digit level.

 

The table below summarizes the IDEX Online Research forecast for diamond jewelry sales as well as diamond sales by value and by units in the 2010 holiday selling season in the U.S. market.

 

 

IDEX Online Research is projecting that diamond jewelry sales in the U.S. retail market during this year’s holiday selling season will be down by about 5 percent on a dollar-value basis.

 

However, the value of the diamond content in jewelry has dropped from about 27 percent last year to about 26 percent this year because of the decline in the average ticket of diamond jewelry.

 

With the average retail diamond jewelry sale down about 10 percent, labor is proportionally a larger component of cost, resulting in a decline in the value of the diamonds in the jewelry. Based on the decline in diamond content, the value of diamonds in diamond jewelry could be down by 8 percent to 9 percent in the holiday selling period.

 

On a unit basis, diamond jewelry sales will be down by 15 percent or so, based on our latest projections. This is due almost entirely to the 8 percent increase in the average price of a polished diamond between mid-2009 and mid-2010 coupled with the decline in the diamond content of diamond jewelry. Prices for polished diamonds bottomed in mid-2009, and have shown a relatively steady recovery since then. When dollar-value sales are adjusted to exclude price inflation, the result is that unit sales are expected to be down in a mid-teen range in the 2010 holiday selling season.

 

Earlier, preliminary forecasts by IDEX Online Research had suggested that diamond jewelry sales in the U.S. would be more robust. However, with the receipt of half-year data in the past few days, it is evident that the diamond jewelry sales mix has fallen further than we had originally estimated; further, the diamond content in diamond jewelry has also declined notably.

 

Diamond jewelry Sales Expected to Be Weak

Diamond jewelry sales in the U.S. market are expected to be weak during the 2010 holiday selling season for several reasons:

 

·        Consumers want more fashion-oriented jewelry. They seem to have lost some of their desire for traditional jewelry like a diamond solitaire on a chain.

 

·        Consumers have cut back on the purchase of more expensive jewelry. Diamonds are among the most expensive pieces of jewelry.

 

·        Jewelers have been promoting categories with higher margins than diamonds. Diamonds have become a commodity, especially as a result of online diamond sellers. As a result, diamond margins are among the lowest of all jewelry categories.

 

·        The average diamond jewelry ticket is down by an estimated 9 percent to 10 percent, based on several sources. Further, the typical specialty jeweler’s sales mix of diamond jewelry has fallen from about 47 percent in 2008 to about 43 percent in 2010, according to new data from The Edge.

While we have been forecasting that polished diamond prices will likely move higher as the global economy recovers, it is important to note that the 2010 holiday selling season in the U.S. market won’t provide any energy to push polished diamond prices higher. That energy will need come from other geopolitical regions of the world.