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According to a National Retail Federation (NRF) forecast, 22% of Americans intend to buy jewelry during the winter holidays. That is a nice figure, but it represents a decline from the 23% that were forecasted to buy jewelry during the winter holiday period of 2017. Not a large decline, even within the statistical error, yet worth noting.
During the 2017 holiday season, sales by specialty jewelry retailers increased 3.7%, while total holiday sales rose 5.5%. This means that fine jewelry lost market share. Since 1993, the average year-over-year increase in the sales of specialty jewelry retailers was just 2.9%. That includes the drops during recessions, but also the sharp increases in the 90s, just 2.9%. This year, holiday season purchases are forecasted to rise 4.1%, which seems out of reach for most specialty jewelry retailers.
The above is just a snippet of bad news. Add another hurdle to the course: American consumers intend to make most of their purchases online. This year the forecast is 55%. In 2017 it was a little lower, but still a leading destination. If you are wondering why this is bad news for the jewelry industry, the answer is that to drive high-end sales, consumers prefer a look-and-feel experience, especially when it comes to diamonds. Online diamond sales are growing at a much slower pace than most any other category. So if our prospective buyers prefer online to brick and mortar, it is easy to forecast that diamond jewelry sales will be hurt.
This is not only an issue during the holiday season, but throughout the year as well. Since 2010, US retail sales, excluding car sales, have increased every year by 3.5% on average. In the same period, sales by specialty jewelry retailers increased on average by just 3% annually. Once again, this indicates that fine jewelry sales are losing market share. This is an issue throughout the year, during slow months and important retail periods as well.
Recently, a number of lab-grown initiatives were announced, signaling that companies are not shying away from this category. On the contrary. Richline just announced it will be selling a new jewelry line set with CVD goods to JCPenney and Macy’s. Couples is a new venture to sell high-end jewelry set with lab-grown stones. These are just two of many examples. The competition is on, and the need to develop distinctive diamond marketing that will create a clear separation between natural and lab-made diamonds is urgent. It must happen now.
To further add to the troubles, we heard last week that another diamond firm, an Indian manufacturer, closed, leaving large debts to a number of other companies in the diamond industry.
All this raises a number of questions: where are we heading? Are we operating in a growth industry or a declining industry? Do we want to steer the diamond ship out of troubled waters, or continue on the current course and risk much of what we built during our lifetime? More specifically, what actions are needed to enhance the appeal of diamonds to consumers? How do we convince retailers to stick with natural diamonds?
The answer to many of these questions is that our future is in our hands. Just as the retail diamond market grew by our hands, so it declined as a result of our action – and inaction. Our fear of change, our steadfast hold on the past and the way “things used to be” are wrong. Business is a world of evolution. Constant change is necessary. It looks like we forgot that.
The decline in sales, the slow yet continuous change in consumer attitudes towards natural diamond jewelry, the rise of lab-grown stones, the declining support of banks, are all part of a greater story. They are symptoms of an ailment that hit us, and we are not seeking treatment. We cannot wallow in memories. We must rise up and take action, think outside the box and come up with a blueprint for a future that is based on consumer interest in diamonds.
That future requires marketing, creating the ability to track goods from mine to storefront, proving the ethical sourcing of our product, providing education as well as considering new opportunities. The time for this is now, because we are already sliding down a slope, and we must catch a grip or risk sliding into a murky future of limited sales, thinner margins, and very little maneuvering room as a result of failing to develop our client base.
The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified adviser.