USA
Online jewelry sales in the U.S. fell 15 percent in January, according to comScore's latest figures. Of the 14 sales categories that online market research company comScore regularly tracks, jewelry was the fourth worst performer.
The economy is definitely having a negative impact on online retail sales, according to comScore. By income category, comScore found that those earning less than $50,000 a year reduced their online spending by 9 percent, those in the $50,000-to-$99,999 income category increased their spending by 2 percent and those earning more than $100,000 spent 8 percent more online than one year ago.
The group's survey found that more than eight in 10 consumers were cutting back spending due to concerns about the economy, citing job security as the largest factor. Eighty-five percent of those in the $50,000-to-$99,999 income bracket and 78 percent of those earning more than $100,000 reduced their spending. Forty-two percent of those earning less than $99,999, and 46 percent of those earning more, said they feared the economy would worsen in the next three months.
New research from comScore found that the Internet has grown in importance as a tool for consumers' buying decisions. More than six in 10 said that the Internet was either "very important" or "slightly important" to them when price shopping and purchasing a product.
Jewelers of America, the US trade association for businesses serving the fine jewelry retail marketplace, has initiated a campaign to oppose the introduction of luxury tax proposals on jewelry and watches in several US states.
Jewelers of America President and CEO Matthew A. Runci noted that studies of past luxury taxes revealed that many consumers mistakenly believe all jewelry and watches are subject to the luxury tax, causing a further decline in demand for these products, and thus harming businesses that sell less expensive jewelry and watches.
China
China’s jewelry retail sales grew 29.2 percent in January 2009, compared with the same month a year earlier, the country's Ministry of Commerce reported. Over all sales categories, the 1,000 major Chinese retailers surveyed for the report saw their sales rise 24.5 percent during the month. Jewelry was among the strongest growth categories in January.
For the ninth consecutive year, China is the world's largest market for platinum jewelry since 2000, although the market faced widely fluctuating platinum prices in 2008, according to israelidiamond.co.il.
China Daily reports that in the first half of the year, high prices drove manufacturers to cut down on acquisitions, forcing them to optimize inventory management.
Nevertheless, Platinum Guild International (PGI), a global organization dedicated to promoting platinum jewelry, believes that the decline of platinum prices in the second half of 2008, along with proactive domestic fiscal policies, will provide the platinum market with new opportunities in 2009.
PGI predicts that coming growth will be caused by a combination of several factors in China, namely a drop in platinum prices as a result of falling industrial demand, proactive domestic fiscal policies stimulating domestic spending, Chinese consumers' love for platinum, and the ongoing promotion of platinum over the past decade.
Oracle Added Value, a leading marketing research and consulting firm in China, said that its survey, "The Wedding Jewelry Market in 2008", indicated that platinum jewelry continues to dominate the wedding market with 75% of the interviewed brides and 68% of the grooms stating they had chosen platinum wedding rings.
India
The Hindu reports that India’s Gem & Jewelry Export Promotion Council (GJEPC) has signed agreements with China, Iran, Russia and other CIS countries for the promotion of India’s diamond and jewelry products in these regions.
Due to sluggish jewelry exports to the US and Europe, India is endeavoring to penetrate new potential markets.
An MoU has reportedly been signed between the Shanghai Diamond Exchange and the GJEPC, opening the possibility of selling processed diamonds from India in the region. China is currently the world’s fastest-growing jewelry manufacturing center.
GJEPC Chairman Vasant Mehta stated that with regards to Russia and Iran, the GJEPC has consented to host buyer-seller meets in Syria, Uzbekistan, Azerbaijan, Poland and Ukraine.
According to The Times Of India, the Indian diamond industry is seeing a golden opportunity to explore the domestic market for polished diamonds. For this purpose, the Gems and Jewellery Export Promotion Council (GJEPC) is soon likely to launch a nationwide three-year program for the domestic generic promotion of polished diamonds. The program will cover metros as well as tier-II and tier-III cities, and involve the active participation of trade bodies and jewelry retailers.
Vasant Mehta, chairman of the GJEPC said the council has earmarked tens of millions of rupees for the generic promotion of diamonds in India. A team of marketing professionals has been hired to prepare a road map for the promotional program.
According to market analysts, generic promotion of diamonds in India will surely increase the domestic market share vis-a-vis gold. "The generic promotion is likely to give a major boost to the ailing diamond sector. It will ensure sustainability for the industry," said K K Sharma, executive director of the Indian Diamond Institute.
Japan
Diamonds.net reports that according to the Japan Department Store Association Japan's department store sales dived 9.1 percent year-on-year to $6.6 billion in January. It was the 11th consecutive monthly fall and the steepest drop ever in department store sales for the month of January, which were calculated on the basis of total sales at 289 outlets of 90 companies, said the trade body.
Sluggish sales of clothing and expensive items such as jewelry were a key factor in the department store sales plunge, according to the association. Sales of clothing plummeted 11.9 percent to $2.9 billion, and those of jewelry dived 19.1 percent to $233.8 million. Food sales, however, grew 0.7 percent to $1.4 billion, the first rise in two months.
UAE
Sky-rocketing prices and the worsening economic crisis have resulted in a 70% drop in February sales of gold jewelry in Abu Dhabi, according to Business Intelligence Middle East.
Investors turn to precious commodities such as gold as a shelter against the effects of the faltering economy. This response by investors has resulted in forcing up prices on fine jewelry which makes it out of reach for consumers with dwindling disposable income.
In an interview with Reuters, Chairman of Abu Dhabi Gold and Jewelry Group, Tushar Patni had this to say: "It is going from bad to worse. It has not picked up. The price is still high. Buyers are staying away and the gloom in the market continues. Retail sales in Abu Dhabi dropped at least 70% in February; a little more than 70% fell in January."
According to Patni, sales will improve if gold prices come down but given the economic forecast it may take many months before there is an improvement.
"Even credit is not available easily and that is making things difficult for traders."
In neighboring Dubai, gold jewelry sales have been primarily to visiting tourists because the domestic demand has fallen dramatically. Local jewelers in Dubai have noticed that less and less tourists pass through Dubai and this further injures gold jewelry sales.
Outlook for 2009
The Economist says that revenue in the luxury-goods industry may fall by 3 to 7 percent this year according to Bain, a consulting firm. That could prove to be a conservative estimate as the economic slowdown begins in earnest. Bad news is pouring in. Diamonds, a byword for luxury, are not forever. On February 23, 2009, De Beers, the leading diamond producer, admitted that operations have been suspended at Debswana, a joint venture with Botswana’s government and the world’s biggest diamond producer. Other diamond miners are taking similar measures. Consumers in the U.S., who buy half the world’s diamonds, are resisting the lure of the sparkle, apparently forgoing fancy engagement rings for now.
At the beginning of February, LVMH Moët Hennessy Louis Vuitton, the French luxury-goods empire, reported flat profits for last year. Its jewelry division faltered, and sales of watches, wines and spirits fell. Other luxury-goods firms tell a similar story.
The battering of luxury is having far-reaching effects. The luxury-goods industry had, in recent years, reaped rewards from widening its base of customers to the merely well-off. But in broadening their appeal, businesses have come to rely on consumers who are more sensitive to ill economic winds. The super-rich may brush off recessions; everyone else is hurting. Evidence abounds that diners can walk into fancy restaurants that previously had to be booked months in advance; the reasonably affluent are said to be withdrawing children from pricey private schools.
And yet the super-rich are still able to throw their money around. Sales of Rolls-Royce cars hit a new record of 1,212 in 2008. The maker of the incredibly expensive automobiles of the plutocracy fared far better than BMW and Aston Martin, which produce cars for the wealthy. BMW saw sales drop, and Aston Martin saw them plunge. Demand for yachts of up to 35 meters (115 feet) also slumped alarmingly, yet sales of super yachts of 100 meters (328 feet) and above, which are favored by oligarchs and other billionaires, have held up remarkably well. Makers of hyper-luxury goods at least have something to cheer. Despite the downturn, billionaires are still more common than they used to be.
