Total sales of fine jewelry and fine watches in the US market surged in September – up by 4.8 percent, the monthly largest gain in more than two years. Once again, however, the beneficiaries of this remarkable consumer demand were the multi-line retail merchants – primarily discounters – whose sales rose by an extraordinary 8.5 percent. In contrast, specialty jewelers’ sales fell by 0.6 percent.

 

This surge in consumer demand for jewelry bodes well for the 2015 holiday selling season. We are more confident of our forecast of a sales gain in the low single-digit range for the all-important November-December period.

 

Market Bifurcation Continues

Total sales of fine jewelry and fine watches in the US market in September were an estimated $4.9 billion, according to the latest preliminary data from the Department of Commerce. This was the largest monthly sales gain posted by the US jewelry industry since April 2013. The market remains bifurcated, as the following data illustrates:

 

 

•           Specialty jewelers, those merchants who derive a majority of their revenues from the sale of jewelry and watches, posted a slight sales decline of 0.6 percent in September. Specialty jewelers’ sales represent just over 40 percent of total US jewelry sales. This group of retailers has been losing market share for the past four decades.

 

•           Jewelry sales through multi-line merchants such as Wal-Mart, Costco and others rose by an estimated 8.5 percent during the period. Jewelry sales through multi-line merchants represent just under 60 percent of total US jewelry sales.

 

•           Consumers are clearly shopping for “value,” and specialty jewelers haven’t been able to convey a “value” message.

 

Jewelry Demand Very Strong in September

With the surprising strength of September jewelry demand, jewelry sales for the past five months have grown by an average of 3 percent. However, due to substantial weakness early in 2015, year-to-date jewelry sales are up by only 0.9 percent for the first nine months of the year.

 

The graph below illustrates monthly growth since the beginning of 2014, on a year-to-year basis, of fine jewelry and fine watch sales in the US market.

 

 

 

Specialty Jewelers’ Sales Very Weak

Specialty jewelers’ sales during September were an estimated $2 billion, a 0.6 percent decrease over September 2014, as the graph below illustrates. This is in line with reports from our sample of specialty jewelers. Most specialty jewelers report that customer traffic has been weak for the past several months, though the average ticket increased due to slowing sales of beads and rising sales of diamond jewelry.

 

 

It is important to note that revised August sales for specialty jewelers showed a greater decline than preliminary data showed last month. This does not bode well for these independent merchants.

 

Outlook – We Are Optimistic

As the US jewelry industry heads into the all-important November-December period, with sales driven largely by Christmas demand, we believe that current sales trends will continue: low single-digit gains.

 

The mood of the American shopper seems more positive than it has been in several years, and the US jewelry industry will likely benefit. The big question is will specialty jewelers get their share of shoppers’ spending during the 2015 holiday selling season? Absent a compelling competitive differential, we think that they will continue to lose incremental market share.