U.S. jewelry and watch sales rose in last quarter, but industry lookout is not bright
March 03, 19
(IDEX Online) - Sales of fine jewelry and fine watches rose steadily during the last quarter of 2018. While in October the rise was 5.7 percent, in November sales increased, only to fall back to a 4.5 percent increase in December. The numbers were reflected by the feedback from jewelry retailers, both chains and individual stores. Overall, for jewelers, the holiday sales of jewelry had been "okay," but just not great.
During the past three months of 2018, watch and jewelry retailers registered $5.8 billion of sales in October and $7.2 billion in November. December has always been the sector's banner month. Sales amounted for $15.5 in December 2018, according to data provided by the U.S. Bureau of Economic Analysis of the Commerce Department.
Specialty jewelers sale disappoint toward year-end
Specialty jewelers - so called by the U.S. Bureau of Economic Analysis of the Commerce Department - are retail jewelers operating a single store or multiple stores. This sector still makes up almost half of the retail jewelry sector but is slowly declining. Sale in the Specialty Jewelers sector remained flat compared to the previous years at almost $3 billion in November, an increase of just over half a percent. Data of Specialty jewelers sales in December are still awaited, but one can deduct and conclude that most of the sales increases were generated by watch sales.
Total American jewelry sales posted a 5.9 percent increase on the year in October, 6.4 percent in November and 4.5 percent in December, as shown by the below graph.
The graph below summarizes sales trends for specialty jewelers since the beginning of 2016. For American jewelers, sales grew strongly throughout most of 2017, and this year continued powerfully for them with increases in excess of 10% in the first six months of 2018. The most important season however, that includes Thanksgiving, Christmas and New Year was disappointing.
The market shrunk from July and was negative in September. It then bounced back in October, but again fell back to an almost flat growth rate in November.
Specialty Jewelers keep struggling
While across the board, Specialty jewelers seem to be keeping pace with their counterparts, they underperformed in the year-end period as can be seen in the below graph.
Outlook
According to the US Department of Commerce's Census Bureau, overall retail sales in the US dropped 1.2 percent in December. This, reportedly, is the most significant fall since September 2009. In addition, online sales fell 3.8 percent. Those are worrying numbers.
Still, in 2018 the American retail jewelry market remained the proverbial steam engine pulling the global diamond gem and jewelry industry train. While in recent months, the US stock market has been rather volatile, unemployment is at a low and job creation on the rise. One would surmise that these factors would bode well for the jewelry industry and trade’s performance, too.
But this not necessarily the case. While the full data for the last quarter of 2018 have not yet been made available - as noted above, final data for December are still awaited - the holiday sales season of 2018 did not bring much relief and sales of jewelry were rather flat. In 2018, most of the industry's growth, compared to 2017, was achieved with watch sales, as forthcoming data will no doubt show.
At the same time, the jewelry industry operates in a highly competitive environment. During the past decades the bandwidth of the luxury industry has become much wider with many more products competing for the consumers' discretional dollar.
Therefore, long-term, substantial growth, while dependent on macro-economic indicators, will only occur when on the micro level, the industry will take those measures necessary to stimulate consumer desire and confidence in diamond and diamond jewelry. In that realm, significant changes will be needed to appeal to the new audiences to fuel the steam engine.