The Edge Retail Academy, which aggregates approximately $2 billion in sales data from independent retail jewelers, shows sales for the three weeks starting May 21, 2020 are running only about 7% below last year, even with all the COVID shutdowns and impact to the economy. Or, to look at it in a positive light, sales are already running at 93% of last year’s.
“We got this!” says Sherry Smith, The Edge Retail Academy director of business development.
Meanwhile, articles in both Fashionista and the Los Angeles Times, among others, say fine jewelry—including designer pieces with hefty price tags—has been a strong seller even among consumers who don’t plan to go out much in the coming months.
Is this too good to be true? Or was all the COVID worry no more than a tempest in a teapot?
Luxury market researcher Pamela Danziger of Unity Marketing cautions jewelers these sales figures could be a bounce, not a trend. The Centurion caught up with her late last week after the release of her new whitepaper, The HENRYs After COVID-19: What Comes Next for the Luxury Market. In it, she explains how the pandemic impacts all sectors of the luxury market.
In an exclusive Q&A with The Centurion, Danziger explains how either scenario—rapid rebound or prolonged downturn—is possible and why jewelers need to be prepared for both.
The Centurion: Do you feel that jewelry and watches, with their emotional or collectible components, are in a better or worse position than other luxury categories to rebound after COVID?
Pamela Danziger: There is the overarching question of how eager consumers will be to purchase jewelry after COVID-19 abates. A McKinsey global survey conducted in April 2020 found that jewelry was tops among the products luxury consumers say they are willing to give up first.
Due to the pandemic, consumers have shifted purchasing to necessity items and away from discretionary items, like jewelry. With luxury being the most discretionary of all discretionary purchases, it has been one of the first sectors to experience a downturn and likely will be one of the last to return.
The Centurion: There has been a noticeable decline in marriages, though not in committed relationships. But enough that De Beers renamed its “bridal” category to “commitment,” with traditional bridal being just one element. Do you anticipate this crisis will renew a desire to marry in the traditional sense, or will we continue to see more commitments without marriage?
Danziger: This has been strongly impacted by the younger generation delaying or even forgoing marriage. The economic impact of the pandemic seems to be hitting the younger generation and professionals just getting started in their careers hardest. As a result, we should expect more hesitation for Millennials to make the big step of getting married or buying diamond engagement rings moving forward.
That said, there we may see a counter trend where young people will realize the importance of creating a permanent life bond in the face of the impermanence of life the pandemic has exposed. If that is the case, marriage rates may rise. Time will tell, but jewelers should plan for both scenarios.
The Centurion: Will consumers be inclined to shop in independent locally-owned stores once they reopen? Is supporting small businesses important to HENRY or other luxury consumers? Or is their focus solely on product value?
Danziger: I think small Main Street businesses have a good shot at growing business post-pandemic, if they can survive. This pandemic has exposed how important community is and community-based Main Street jewelers are critical members of the community.
The Centurion: Your whitepaper points out the importance of value and personalization and not being a walking billboard for logos. How will this impact fine jewelry and watch sales?
Danziger: We are seeing a push back against income inequality, as evidenced by “Eat the Rich” graffiti posted during recent riots. I think wealthy people are going to continue to retreat from ostentatious displays of wealth. It just doesn’t feel right right now.
The Centurion: Your whitepaper mentioned decluttering. It was already a trend, but the pandemic has accelerated it. Is it simply having more time while you’re quarantined or a shift in mindset? Will the luxury home category become a bigger competitor to jewelry?
Danziger: Post-pandemic I believe consumers are going to invest more in their home spaces, which will mean a shift of spending from personal to home luxury. Decluttering caught on because people feel the need to simplify their lives. Decluttering is an obvious way they can restore harmony and simplicity in their lives.