Articles and News

One, two, three, exhale.

The holiday season is just about finished, and by all accounts it’s been a good one. Both retail reports (including The Centurion 2010 Holiday Success Index) and encouraging news on the jobs front indicate a turnaround has progressed to the point where it’s beginning to be evident on the street, not just to analysts and economists.

While there certainly are many Americans for whom frugality remains a real necessity, those who were more affected psychologically than financially during the past two years have grown weary of belt-tightening, and the pent-up demand in both gift- and self-purchasing was evident in this season’s numbers.

Even men’s apparel sales rocketed which, according to Women’s Wear Daily, is a very good sign. When men—who even in the best of times rarely like to go clothes shopping—care that their suits are looking dated enough to do something about it, there’s turnaround in the air. The economy goes where the men go, posits WWD.

Two other trends of note that bode well for luxury jewelers: one, not only are men shopping, they’re also moving back towards a more dressed-up look for work, and two, they aren’t trading down. Sales of items like cashmere sweaters have been brisk this season. Rather than trade down, men simply stopped shopping for two years—not necessarily great news for retailers in the short term, but in the long term it’s good that they still desire quality and luxury and are willing to spend for it. That, combined with a robust rebound in luxury watch sales, bodes well for upscale jewelers. Jewelers should keep an eye on luxury shirt trends, too—if men are dressing up again, that may mean more French cuffs, which in turn means more cuff links.

Women, meanwhile, also bought their fair share of apparel—it was the highest gain for the category year-over-year since 1999. Even better, they’re flooding back to the accessories department—handbags and jewelry are key drivers of luxury goods’ resurgence.

The other good piece of news is that the return to luxury shopping is rooted in reality, not plastic. In other words, it’s consumers who can afford what they’re buying who are doing the shopping. They’re choosing—nee, insisting upon—demonstrable quality, and they’re either paying with cash or paying off their bills, not living beyond their means. This kind of confidence bodes well for a sustainable recovery, vs. a bubble. Yes, slow and steady wins the race after all.

There still are challenges ahead—jewelers have watched gold prices climb steadily this year and they’re still climbing, but many other product categories also are predicted to be faced with increases for raw materials next year, which means there needs to be either a price increase for consumers, eroding margins for producers and sellers, or, most likely, some combination of both. It may slow down some demand but signs now are strong enough that it’s not likely to stanch it.

Another benefit to jewelers this holiday season was the current cycle of electronics. This category is a perennial thorn in jewelers’ sides, but not this year. While there’s never any shortage of gizmos to buy, if ever it could be said that electronics are in a trough cycle, this year was it. The conversion to digital television is old news, flat-screen TV’s have come way down in price, a slew of e-readers is now available for hundreds less than the original models, personal DVD viewers can be had for under $100, and the hot new tablet category (i.e. iPad) launched in the spring, not for holiday. The latest iteration of television, 3-D, still is in its infancy, and while unit sales for electronics may be up, it was largely driven by lower prices, not must-have newness.

It’s clearly time for investment, not retrenching, for setting one’s sights on expanding, not just surviving. Newness is driving consumption—and in jewelry, there’s renewed interest in categories like colored gems, perhaps driven by the price of metal and perhaps just by a desire for something unique. Whatever the driver, it’s good news when consumers want to get beyond the basics again.

Here’s to a very, very happy, healthy, and revitalized New Year!