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U.S. Jewelry Sales Trending Up, But Even Affluent Millennials Still Shop Like Middle Class ConsumersBy Hedda Schupak, Editor, The Centurion |  October 07, 2015 (0 comments)

Merrick, NY—Pessimism and negativity are de rigueur in the diamond and jewelry industry, but are things as bad as the doomsayers believe?

Maybe not. Despite repeated assertions that consumer demand for fine jewelry is tanking, new figures show that U.S. fine jewelry sales have been trending up since spring 2015. But with diamond inventory backed up all the way through the pipeline, increasing sales at the retail counter is just the beginning of clearing out the backlog.

According to the latest report from industry analyst Edahn Golan, year-on-year jewelry sales have increased for the fourth straight month in a row. While not quite cause for celebration yet, the figures justify some cautious optimism, says Golan. One month’s improvement could well be a fluke but continued improvement signifies a trend, especially when the rate of improvement has grown by 0.2% each month, and each month also has posted record fine jewelry sales.

One reason why sales may be up is that prices are down, says Golan. Both diamond and precious metals prices have dropped, with the Jewelry Consumer Price Index steadily declining since December 2013. But whether the decline comes solely from lower cost of materials resulting in lower prices for the same jewelry or a shift in consumer preference for less expensive styles is still uncertain. Golan says anecdotal evidence gathered from confidential discussions with both suppliers and retailers suggests a combination of both.

“From all the data I have, it is clear that sales are up because more people are buying more lower-priced jewelry,” he told The Centurion.

Edahn Golan

Still, the fundamentals of the U.S. consumer jewelry market—summarized here by analyst Ben Janowski—aren’t likely to change soon. Luxury jewelers naturally benefit from an economic recovery that favors the affluent but as buying power shifts from Boomers to Millennials, even luxury jewelers will have to adjust to new consumer shopping patterns.

There is ample evidence that lower-priced luxury is gaining importance across all categories. There always will be ultra-rich customers with a taste and the means to acquire what Steven Fisher of Image, Style, & Design Studio calls connoisseur luxury, but those consumers constitute a small part of the overall affluent market. In total dollars, the heavy luxury spending will come from the mass affluent (incomes between $100,000 and $250,000.) And when they do become rich, there’s still no guarantee they’ll change their brand preferences.

Leah Swartz of FutureCast says the majority of affluent Millennials (64%) are female—but their favorite retail brands go to the core of their middle-class roots and the bargain-hunting mentality common among Millennials. In a recent article for Luxury Society, she explains how luxury brands need to adapt to attract their attention.

The Millennial generation is flipping the definition of affluence upside down, she says. Female Millennials largely started their careers on par with their male counterparts. As such, luxury brands that originally targeted women with the message that luxury goods are “deserved” need to shift their message to acknowledge that luxury goods are “earned,” in order to better represent the hardworking mentality of female affluent Millennials.

“We are seeing this transition from deserved to earned take shape among affluent female millennial brand preferences,” Swartz says. In partnership with YouGov Brand Index, FutureCast was able to survey affluent female Millennials (those with household income above $100,000) to identify their favorite retail brands. With the exception of Nordstrom, none were luxury. They were, in order:

1. Target
2. H & M
3. Gap
4. Macy’s
5. Nordstrom
6. J. Crew
7. Ann Taylor
8. Banana Republic
9. Victoria’s Secret
10. LOFT

These findings reinforce that for Millennials, luxury is not about showing off what you can afford, it’s about quality, buzz, and value. Swartz says they’ll splurge for something when they see the value in it, but overall they’re aligning with a more budget-centric shopping mentality. Three things to remember for engaging affluent Millennials, says Swartz:

1. Be inclusive and invite everyone to the party.
2. It’s not about the price tag, it’s about the quality, buzz and value.
3. The definition of the luxury is changing. Millennials focus on the greater bang-for-the-buck, not the bling.

Read the full article here.