They are considered to be among the most nonessential items that shoppers can do without and yet, high-end jewelry items may turn out to be winners this Christmas season, according to MarketWatch.
Average jewelry spending by affluent shoppers with minimum household incomes of $100,000 jumped 31 percent to $4,813 in the third quarter from a year earlier, compared against declines of more than 30 percent each for clothing and for fashion accessories, including shoes and handbags, according to Pam Danziger, president of Unity Marketing. The consultancy surveyed 1,000 luxury shoppers.
"It shows signs of life that it's recovering," said Danziger. "Among affluent consumers, people are selectively indulging once again after a huge decline last year."
Still, Danziger said the spending was driven by those shoppers with higher average household incomes of $233,000. So-called "aspirational" shoppers, or those making below $125,000, have still yet to return to the market.
As a sector, jewelry's still struggling: For the 12 months extending through October, jewelry sales in the U.S. fell 22 percent to $22.4 billion from one year ago, with average retail prices declining 15 percent to $23.86, according to market research firm NPD Group. Zale, the No. 2 U.S. jewelry retailer, which caters more to mass shoppers, said in a regulatory filing that its comparable sales in November tumbled 19 percent.
"For lower-income consumers, with unemployment at ten percent, who has that money to spend on pure luxury?" asked Danziger.
Still, at Westfarms Mall in Farmington, Connecticut, general manager Kevin Keenan said jewelry has been "trending stronger" for several months, even while conceding that it's a mixed picture.
On the one hand, jewelry shops that are more upscale are seeing fewer customers, he said. But those shoppers are spending more as they wanted fewer gifts they are buying to be "special." Conversely, on the lower end of the price spectrum, demand tends to be driven by less expensive lines, Keenan said.
The recession and financial sector meltdown sent jewelry and other discretionary spending into a nosedive, leading to the bankruptcies of jewelry retailers from Fortunoff to Whitehall Jewelers. Across-the-board consumer cutbacks also led luxury retailers from Saks to Neiman Marcus to lower merchandise prices by more than 70 percent to clear excess stock. Is luxury returning? The tide, at least for high-end jewelry, may be slowly turning.
At closely held luxury retailer Barneys New York, spokespersons said improvement in the jewelry business has been very strong in the past couple months, without giving specifics. Barneys features a pair of $19,600 diamond slice earrings exclusive to its stores on the cover of its holiday catalog.
Customers "are looking to be charmed," said Judy Collinson, an executive vice president and women's general manager at Barneys. "They want fine quality. They want things that are beautiful and have meaning and humor."
Saks said it's also seen relative strength in jewelry, with strong sellers including $1,590 to $2,990 multiple earrings sets that have interchangeable studs in gold and diamonds.
"Luxury fine jewelry purchases that weren't made earlier this year were made again," said Saks' chief executive ,Steve Sadove, in an interview. "Luxury consumers are starting to feel a little better."
Retailers operating in nontraditional channels have also seen strength in jewelry.
Perhaps there's nothing more telling about luxury jewelry demand than sector bellwether Tiffany & Co. The New York-based retailer in late November posted a better-than-expected third-quarter profit after strong demand from Asia. Tiffany also raised its full-year outlook, as it said that November sales at the time had tracked favorably versus management's expectations.
According to israelidiamond.co.il, UK jewelry sales dipped 9% due to the recession and soaring gold prices. The leading UK cashback shopping website, www.froggybank.co.uk, offers an analysis of the spending habits of its half a million members between November 2008 and 2009. According to the website, not only are people buying less jewelry, but they are more likely to sell existing gold items to make some spare cash.
According to froggybank.co.uk's marketing manager Nadeem Azam: "While there are a number of factors affecting jewelry sales, the cost of gold is certainly having a major impact. Jewelry sales as a whole are down on last year, and the price of gold jewelry has contributed heavily to the figures."
He added: "Families are still tightening their purse strings and therefore are unable to splash out on extravagant purchases such as fine jewelry."
He noted that on top of this, the cash-for-gold schemes are proving to be a very attractive option for people to make money quickly on their excess gold jewelry, which obviously means they are less likely to buy more.
Sales of artworks, jewelry and precious metals declined by 8.3 percent this year in Japan, according to an Associated Press report.
Among the other product categories, clothing sales declined by 15.6 percent and personal accessories declined by 12.4 percent, according to data released by the Japan Department Stores Association.
Japan's department store sales in 2009 will drop below 7 trillion yen ($77.399 billion) for the first time in nearly a quarter-century. "The downward trend might continue until around March 2010," said Seichi Iioka, a senior official of the Association.
As for the emerging markets, israelidiamond.co.il said that according to a CCTV.com report India's reign as the world's top gold consumer is likely to come to an end in 2010, as China is expected to surpass its in individual gold consumption.
According to CCTV.com, China's gold and jewelry consumption in 2009 came to roughly 450 tons – skirting previous gold consumption leader India, which reported approximately 380 tons in gold consumption. Unlike China, gold demands in India suffered from soaring gold prices. The global financial crisis has caused gold demand in India to drop nearly 50% over the past 12 months, while China saw a 14% rise in gold demands.
Silver may be a buzzword at the sales counter, but demand for the metal's use in jewelry is actually expected to decline for the 2009 year, CPM Group's new "Silver Long-Term Outlook" report reveals, according to www.nationaljewelernetwork.com.
The use of silver in jewelry and silverware currently accounts for 35 to 40 percent of total fabrication demand for the metal, CPM Group's Adam Crown, executive vice president, told National Jeweler, adding that demand for silver is expected to decline in this category by around 4 percent to 249.9 million ounces for the 2009 year, primarily due to dampened consumer spending on non-discretionary items.
As for who is buying, the largest consumer of silver for use in jewelry and silverware is India, followed by Thailand, Italy and then the United States, www.nationaljewelernetwork.com said.
Prices, set to average close to $14.70 in 2009, are more than triple the average $4.81 average price from 1990 through 2003, according to the report. Prices have been pulled higher by strong investor demand - investors over the past four years have bought more than 400 million ounces of silver - coupled with strength in some electronic and other industrial applications.
"In the medium term, CPM Group expects jewelry demand to continue to decline but at a lower or slower rate than we've seen in the past year," Crown said.
Beyond 2011, the consultancy is forecasting a gradual recovery in demand for silver jewelry.
