U.S Sales of Jewelry and Watches Expected to reach $79 billion in 2013
Temporary boost in sales of jewelry to continue for another two years thanks to a rebound in weddings
U.S Sales of jewelry and watches expected to reach $79 billion in 2013, according to a new report - State of the Core Market for Jewelry - published to Diamond Shades by Equity Communications. Young adults in America had pushed back plans for marriage as they struggled to navigate a rough economic environment after the recession. However, they are now feeling more positive about their future mainly because of improving employment prospects.
Continued gradual improvement of the US economy is good for sales of fine jewelry.† Historically, the marriage rate of Americans drops whenever consumers have to navigate economic uncertainty. †Now that conditions in the domestic economy and labor markets are getting better as we move further away from the recession, it gives young adults the confidence to go ahead with planned or postponed engagements and weddings. †The marriage rate of Americans has held steady at 6.8 marriages registered per 1000 Americans for a few years, suggesting that the number of marriages is temporarily matching population growth.
Bridal-related sales anchor the USA diamond market and, by extension, the US market for fine jewelry since diamond sales traditionally account for more than 50 percent of total jewelry sales. 85 percent of diamonds and diamond jewelry purchases in America are wedding related - engagement rings, wedding bands, and wedding day jewelry for the bride and bridesmaids. Bridal events also indirectly trigger purchases of anniversary jewelry and special event jewelry such as for Motherís Day.
However, the profile of the typical fine jewelry consumer has changed in the aftermath of the recession. Young adults in the market for bridal jewelry are older - closer to thirty years old - and almost always college educated. Fine jewelry demand continues to erode rapidly among low-incomes groups that were most affected by the recession.
Nevertheless, domestic demand for fine jewelry is still expected to steadily decline in the long-term. There are two reasons for this:
In the economic space, the reality is that increased labor market prospects for single adults drive down importance of marriage prospects.† Young Americans who forfeit marriage or push it back to their late twenties and early thirties have a much better chance of getting ahead in the labor market and also of meeting their self-actualization goals.
For the first 10-15 years of adulthood, single life is just more appealing.† Data available from the Bureau of Labor Statistics reveals that women enjoy an annual income premium if they wait until 30 or later to marry.† For college-educated women in their mid-thirties, this premium amounts to $18,152 over those who marry before they are thirty.
Americans are also having fewer children and each succeeding decade has a lower population base of Americans coming of age to continue cultural traditions. The lack of regeneration is nowhere near Japan -level critical but it is enough to cause a gradual long-term structural decline in demand for fine jewelry.
As a result, the jewelry industry in America is expected to shrink and consolidate further in response to there being fewer potential customers to service. Competition is also expected to intensify since customers have become highly-skilled at using mobile phones and tablets to search around for good value while on the go. The ability to offer greater customization for jewelry pieces is rising in importance and will become a crucial competitive advantage in the coming years.
Still, it is not all gloom for the jewelry industry. Young adults who push back marriage to pursue career goals with successful outcomes actually do get married in their late twenties and early thirties. The good news is that by this time they would have accumulated enough income that enables them to spend more on fine jewelry for engagements and weddings.
Jewelry stores may be selling fewer fine jewelry pieces but they are doing it at higher prices.† Furthermore, branded jewelry is performing extremely well for the major national jewelry chains and has added to margin success.
With performance of the USA economy now seemingly on a sustainable positive path, price inflation and the shift to higher income groups will grow the USA market for jewelry by 4 to 8 percent annually in the next five years. Growth will be stronger in 2013 and 2014 while pent-up demand for jewelry continues to be released, and weaker from 2015 to 2017 as long-term trends start to have greater impact on jewelry sales. Weight of fine jewelry sold will move in the opposite direction because of a declining customer base. At lower price points, it will become harder to separate the product profiles of fine jewelry and fashion jewelry.
About State of the Core Market report
The State of the Core Market report looks at the current economic and social state of the core age group for consumption of fine jewelry, using statistics and data from various U.S government departments such as the Bureau of Labor Statistics. The ages 26-35 are most likely to purchase jewelry than any other group - due to life stage (first marriage). They also spend more than twice the average on gifts of jewelry - due to Motherís Day gifts, Valentineís Day gifts, courtship gifts, and wedding related gifts.
†About Diamonds Shades
Diamond Shades is a diamond market research service owned and operated by Equity Communications.† Diamond Shades provides breaking news alerts, analysis and commentary on the diamond industry value chain, precious jewelry markets and the general luxury economy.
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