(IDEX Online) – The number of births has declined modestly for the past four years in the American market, according to the latest data from the National Center for Health Statistics (NCHS).

 

Is this just a bit of trivia? Or is this important for jewelers? Jewelry demand in the U.S. market is highly sensitive to the birth rate. When the number of babies being born begins to decline, jewelry demand also declines, both immediately and over the next three decades.

 

Why is jewelry demand sensitive to the number of children being born in the U.S.?

·        Jewelry is often given as a gift in honor of a newborn.

 

·        Diamond engagement jewelry demand is especially sensitive to the birth rate; thus, demand for this all-important category will be weaker around 2035, when today’s babies will begin to get engaged to be married.

 

The number of births peaked in 2007, according to NCHS data, and has been slipping very modestly ever since, though the rate of decline moderated in 2011. The table below illustrates trends related to the number of births in the U.S. market for the past seven years. In 2007, the number of U.S. births peaked at just over 4.3 million, but dropped to just over 3.9 million in 2011.

 

Source: NCHS

 

Population Estimates Subject To Adjustment

Most population estimates call for at least 415 million people in the U.S. by 2050, up from today’s 314 million. Based on rough predictions, this means about 50 million more women in the population base by then, and this solid increase is expected to drive substantial demand for jewelry.

 

However, all of the population estimates are being driven by a “total fertility rate” (TFR) of just over 2.1 children per woman, a rate that has been stable in the U.S. for some time. America’s TFR rate of just above 2.1 children per woman is enough to add about 100 million people over the next 40 years.

 

As it turns out, the total fertility rate in the U.S. dropped below 2.1 children per family in 2008, and has remained below that level since then, though the rate of decline has moderated.

 

Resilient Fertility?

U.S. fertility has been remarkably resilient over history, returning to just over two children per women in the post-war years (World War I and II), post-Depression years, following the stagflation and energy crises in the 1970s, and after the comparatively minor economic downturns since then.

 

Currently, most forecasters blame the recent Great Recession of 2007-2009 for the downturn in the number of births, as couples have put off having children until the economy stabilized.

 

For the birth rate to begin to rise, people need to feel that the economic recovery is real, and not likely to falter. Then, there is the inevitable nine-month delay related to the gestation period for humans. Some forecasters are already calling for an increase in the fertility rate, based on the smaller birth decline in 2011. However, there are some other challenges to the potential increase in the U.S. birth rate: for example, differences in trends by ethnic groups, and the impact of a group’s age structure on forecasts.

 

More Intense Marketing

How should jewelers react to this latest challenge to jewelry demand? More intense marketing efforts will be needed. At the store level, more sales training will be needed to increase the conversion rate – browsers to buyers. Industry groups will need to focus on increasing demand for their particular products, similar to the efforts by De Beers to promote its Forevermark diamonds.

 

The concept of “if you build it, they will come” is under attack from many forces, and only the savvy jewelers will survive.