Articles and News

As jewelry industry leaders gathered for the kickoff event of 2011, the festivities surrounding and including the 24 Karat Club of the City of New York’s annual banquet, the collective mood about the industry was noticeably upbeat. It’s not surprising: more than half of respondents to The Centurion 2010 Holiday Success Index reported sales gains of 10% and higher throughout the holiday season.

The strong holiday for jewelry lifted the spirits of both manufacturers and retailers, and the difference between 2011’s renewed—albeit cautious—optimism and the fearful, somber moods of both January 2009 and January 2010 was clear throughout the weekend.

Jewelry, especially on the luxury level, outperformed many other retail categories. The jewelry category as a whole rose 10.4%, according to MasterCard Advisors’ SpendingPulse, which measures activity in the MasterCard payments network and also offers survey-based estimates for sales transacted with other forms of payment. Jewelry not only outperformed electronics this holiday season, it did so by a whopping margin. Electronics registered a less than 2% increase over last year’s figures.

The SpendingPulse report also identifies luxury jewelry as the strongest sector in the category, in tune with findings from The Centurion Holiday 2010 Success Index.

According to The Centurion survey, most respondents experienced holiday sales growth of 10% or more over 2009 figures. 60.7% of luxury jewelers surveyed for the period from Black Friday (November 26) to December 4, 2010 experienced a 10% or greater uptick in sales, while 57.1% and 54.1% of respondents, respectively, saw increases of 10% or more over last year’s sales during the final two weeks leading up to Christmas. On average for the entire period from Black Friday through the close of Christmas Eve, 53.45% of Centurion Success Index respondents experienced sales increases of 10% or more over last year. 

Luxury excluding jewelry (including fine dining, high-end apparel, and so forth) rose 8.9%, according to SpendingPulse. Another report in the Philadelphia Inquirer shows the wealthy were eager to treat themselves as well as loved ones this holiday, and luxury jewelry was a popular self-purchase.

The International Council of Shopping Centers predicts an increase of about 3% to 3.5% in retail sales across the board in 2011. Consumers remain price-sensitive, however, and some anticipated price increases in raw materials (such as cotton) could drive prices of finished goods above consumers’ threshold of comfort. Experts say downsized products or other cost-cutting measures are the most likely result. Indeed, the February 2011 issue of Consumer Reports, for example, highlights a number of popular grocery items such as orange juice and dish soap that recently lost some weight—i.e., smaller packages for the same price—while an article in the Chicago Tribune points to fashion trends like skinny jeans that require less fabric and weigh less to ship than their wider-legged cousins. The article also predicts apparel makers will hold prices in check by cutting back on styling and details and using cheaper materials. At what point, however, will consumers react just as negatively to the product cutbacks as the manufacturers fear they’d react to a higher price?

This news for other categories can present an opportunity for luxury jewelers. Rising costs for raw materials is de rigueur for jewelers, who’ve always had to deal with fluctuations in metal prices. Then our industry got hit with the double whammy of sky-high metals just as the recession drove consumers to cut back.

But luxury jewelers already are masters of designing around rising prices without sacrificing quality or style. Rather than using cheaper stones or thinner metal, luxury jewelers rely on creative solutions like adding touches of silver to a formerly all-gold design, reducing metal weight by incorporating more gems or cutout designs, or hanging a pendant from a silk or leather cord instead of a chain.

Another growing trend that’s starting to worry retailers in general is the increased use of smartphones as a shopping buddy. Again, jewelers have been there, done that. They’re used to consumers brandishing Internet price sheets, so while waving a smartphone may be more technologically advanced, the strategy for dealing with it remains the same: differentiated product, unique offerings, clever marketing, and exemplary service.

Luxury jewelers already are ahead of other retailers in having had to deal with these issues for a long time. What used to be a headache may very well turn out to be an advantage. So while the other retailers are racing to adapt, jewelers are well positioned to come out ahead in 2011 and beyond.