US jewelry sales down in January as US economy is coolingApril 03, 19
(IDEX Online) - The news that retail sales increased a meager 0.2 percent in January came from a government report that was delayed by the partial federal shutdown earlier this year. That same report showed that sales had tumbled 1.6 percent in December 2018, constituting the largest drop since late 2009, when the US was exiting the 2007-09 recession. In its preliminary report, the government had reported a 1.2 percent decline for December 2018. Clearly, the US economy's big engine - retail sales - is cooling.While the last quarter of 2018 still generated positive sales results, in January, total sales of watches and jewelry were down 1.8 percent compared to the previous year.
Specialty jewelers' sales disappoint toward year-end
Specialty jewelers, so called by the US 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 keeps declining, albeit at a moderate pace. In January, these jewelers took one on the jaw as sales dropped more than five percent to only $1.9 billion.
Total American jewelry sales posted a 1.8 percent decrease in January 2019. Looking at the sales results of the first months of 2018 when growth rates were in the high single percentages, it is clear retail jewelers will need to prepare themselves for a difficult 2019.
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 that year continued to remain robust for them with increases in excess of 10 percent in the first six months of 2018. The most important season that includes Thanksgiving, Christmas and New Year's, however, was disappointing.
The market began bouncing in the summer of 2018 and went flat toward the end of the year. In January 2019, jewelry sales were very disappointing.
Specialty jewelers keep struggling
While throughout 2017 and 2018, Specialty jewelers kept pace with their counterparts, in January 2019, they underperformed. Specialty jewelers are most often the first retail jewelers to feel market trends, both positive and negative, as can be seen in the below graph.
According to the US Department of Commerce's Census Bureau, in February 2019, retail sales dropped 0.2 percent, instead of the 0.3 rise forecasted. The department said that households cutting back on purchases of furniture, clothing, food and electronics and appliances, as well as on building materials and gardening equipment were the chief reason for the decline. On the other hand, the Commerce Department revised its data for January, showing retail sales increasing 0.7 percent instead of gaining 0.2 percent, as previously reported. Economists polled by Reuters had forecast retail sales rising 0.3 percent in February. Retail sales in February advanced 2.2 percent from a year ago.
As reported in March, delays in processing tax refunds in the middle of the month of February "due to the prolonged government shut-down" created uncertainty. Reuters reported that tax refunds were smaller on average compared to previous years, following the revamping of the tax code in January 2018. Cold and wet weather could also have hurt sales.
Since the jewelry industry operates in a highly competitive environment, with other luxury product categories competing vigorously for the consumers' discretional dollar, growth in the jewelry sector will only come through increased marketing efforts geared toward increasing consumer desire and confidence in diamonds and diamond jewelry.