The rapidly increasing disruption in the traditional fine jewelry market is not unique to the United States. The same shifts in consumer dynamics that U.S. jewelers face and must adapt their businesses to are happening worldwide. Here, Australian gem dealer and jeweler Ian Bone discusses the impact those shifts are having on the market both in his native country and anywhere fine jewelry and gems are sold.
Queensland, Australia—In my travels I regularly meet with jewellers and jewellery designers and chat to them about their businesses and their views about the gemstone and jewellery industry from a bigger-picture point of view. Most recognise the changes that are occurring; however, I feel few really comprehend the magnitude of the emerging trends and their impact going forward.
Here are some insights I have gained from these discussions:
1. Changing consumer behaviors: the demise of the traditional high/main street jeweller?
The impact of new technology and generational change on established retail models is happening before our eyes. The changing fashion tastes of Millennials, coupled with their changing values and ethics, is driving demand for individually designed or personalised bespoke pieces. This personalisation trend has been in place for at least a decade or more and continues unabated. Consumers, particularly younger consumers, are increasingly desirous of having unique pieces with unique gemstones.
More often than not, they are seeking an understanding about a gemstone’s provenance, an assurance that the piece is fabricated in fair-trade metals, and some guarantee of authenticity of the gemstones used in the jewellery piece. Consumers are shunning traditional jewellery defined by previous generations and seeking more experiential purchasing options. Olga Gonzales in her recent report about Tuscon 2017 in Gem-A’s Gems & Jewellery magazine sums it up nicely:
“The millennial wants a story that aligns with their values. They may insist on ethically-sourced and traceable precious metals and stones, or may only want to use a man-made diamond. Similarly, they may want to purchase a piece of fine jewellery that subtly expresses their political beliefs, or that supports a charitable cause relating to their environment, education or diversity. The way they value experience, ease and customisation has drastically affected retailers, dealers and designers."
The traditional jewellery retail model is under extreme pressure as consumers seek and are supplied with alternatives more suited to their needs and values. These changes have resulted in business turmoil in the retail jewellery scene with record number of jewellers closing their businesses in both the US and the UK as well as other western countries.
These consumer changes, coupled with the rise in technology assisted communication alternatives, will continue to put the traditional jewellery retail model under extreme pressure. One could well believe that the existing retail jewellery bricks and mortar model is at risk of demise.
2. Decline in demand for traditional jewellery. The rise of the savvy consumer with boundless purchase options has resulted in a dramatic shift in demand for main/high street jewellery.
Notwithstanding the fashion element inherent in jewellery and gemstones, there has been a staple “bread and butter” product line that retail jewellers have relied on for consistent revenue streams. These products have been part of our culture of life event celebrations such as engagements, weddings, birthdays, anniversaries etc. However, the weakening of these revenue streams is having a profound impact on the sustainability of many retail jewellers. Traditional jewellers are witnessing competitive pressure from both ends of the spectrum, declining demand for traditional products and slimmer margins of profitability as a result of the “commoditisation” of product lines.
3. Emergence of unlimited product options and sales channels. The emergence of communications technology associated particularly with smartphones has facilitated the rise of unlimited sales channels, and enabled each and every jewellery designer and/or manufacturer to establish an online sales presence. The geographical limitations of the traditional sales channels have been removed, with consumers now being open to a world of design and product choice. Platforms like Facebook and Instagram have been instrumental in enabling jewellery designers to promote, market and sell their products. Local shopping has been replaced with global choice. Consumer choice has never been more extensive with competition for the consumer’s jewellery dollar increasing exponentially.
4. Fair-trade and ethical sourcing of metals and gemstones. Fair-trade, ethical sourcing and environmentally friendly processes will continue to grow to reflect changing consumer attitudes and values. Transparency in sourcing metals and gems is becoming more clearly evident and having an impact on gemstone trading behavior and driving changes in various sectors of the jewellery industry. Both metal and gem suppliers are beginning to realise they have to change their procurement practices to meet the growing demands for fair-trade materials. The challenge for gemstone dealers is to be able to verify provenance and ethical sourcing functions going forward. Expectation is emerging on all levels of the gems and metals supply chain to meet transparency and disclosure provisions.
Certain parts of the industry are recognising and responding to these consumer demands and proactively working towards measures to better understand and respond to these changes. The emergence of organisations, forums and collectives such as the Responsible Jewellery Council, The Jewelry Industry Summit and the Fairlux collective, reflect the importance of establishing protocols to adapt to these changes.
Disclosure and provenance are words that are beginning to be heard more often with a growing number of consumers are coming to expect that jewellery retailers and designers adopt fair-trade and ethical sourcing practices.
Insights into the Future. Technological advances coupled with generational change is presenting significant challenges and potential threats for established jewellery and gemstone businesses, whilst providing opportunities for those individuals and businesses that see and respond to the emerging trends and behaviors.
From another perspective, one can view the changes as a reversion to the tradition model of craftsmanship, individual fabrications and bespoke works which was the norm for the making of jewellery throughout the ages. Perhaps the aberration was the standardization and “mass production” format that has been present in recent times and that the “reversion” is no more than back to the natural state for an individual’s acquisition of a jewellery item?
Successful people and their businesses will always be at the forefront of consumer choices and demands. Being aware of these choices is the first step in seeking ways to adapt and alter one’s business model. It is up to us all who are involved at any level in the gemstone and jewellery industry to adapt to change or face the consequences. --Ian Bone, @capricorngems