Based on the latest figures from the U.S. government’s Bureau of Labor Statistics (for 2006), high-income consumers are the jeweler’s best friend, Ken Gassman says.
The average U.S. household spent $523 on jewelry in 2006. At the lowest income levels (consumer households with less than $15,000 in reported income) spent only $146 on jewelry, most of which was probably inexpensive fashion jewelry. Among the highest income consumers (those households with $70,000 or more in annual income) shoppers spent just over $1,000 annually on jewelry. In fact, 30 percent of all U.S. households with incomes over $70,000 annually make almost 60 percent of all jewelry expenditures.
One of the problems confronting jewelers is how to reach higher income households. The use of “mass media” advertising appears to be inefficient since more than half of U.S. households earn under $50,000 annually, and they account for a scant 23 percent of all jewelry expenditures.
Once again, the highest income households hold the most potential for jewelers: the 6 percent of all U.S. households that earn $150,000 or greater annually are responsible for almost a quarter of all jewelry expenditures.
Apart from that, jewelry consumers spend in direct proportion to their educational level: the highest and best-educated consumers spend the most on jewelry.
Consumers with a college education spend over 2.25 times more on jewelry than a consumer with only a high school graduate. Consumers with a post-college graduate degree (for example, a Ph.D.) spend triple the amount on jewelry versus a high school graduate.
The disparity is even greater when comparing the highest-spending consumers (post-graduate degrees) versus a consumer who did not complete high school: the best-educated consumers’ jewelry spending was about seven times as much in a year as the jewelry spending of a high school dropout.
Occupation and income explain some of this spending disparity, but not all of it. For example, households where shoppers have post-graduate degrees earn three-and-a-half times as much as a high-school dropout, but their jewelry expenditures are dramatically greater, as noted above.
When jewelry expenditures by educational level for 2006 are compared to those for 2005, it is clear that the spending disparity narrowed in 2006. This is in line with expansion of the total jewelry market: 2006 marked a year in which the jewelry industry reached new consumers in virtually all demographic groups. High school grads spent about $386 per household on jewelry in 2006 (versus $343 per household in 2005). Highly educated consumers spent about $875 on jewelry in 2006, down from $926 in 2005.
The aggregate market size of high school educated consumers is slightly larger than the aggregate market size for college-educated consumers. This is because there are about 85.6 million households with only a high school education, but there are about 33.2 million households with a college degree. While the spending per household of high school educated consumers is not large, they wield huge buying power as a group.
