Jewelry manufacturing revenue in the U.S. is expected to increase 2.4 percent to about $8.9 billion in 2012, according to the latest report by IBISWorld, www.diamonds.net says. High prices for materials and greater import penetration have adversely affected industry players and profit margins over the past five years. IBISWorld concluded that looking ahead for the five years through 2017, industry revenue is forecast to decline.
Improved manufacturing capabilities in Asia have led to increased jewelry production overseas, placing significant pricing pressures on U.S. manufacturers. To maintain demand, industry players have been forced to further reduce their markup and incur lower profit. With falling margins, industry players have merged, consolidated or exited the industry, according to the group.
IBISWorld's industry analyst Josh McBee said that demand for jewelry has been unfavorable in the past five years. ''The Great Recession caused consumer spending to plummet, especially on luxury items like jewelry. As such, revenue is expected to decline at an annualized rate of 2.9 percent during the five years to 2012.''
McBee characterized the U.S. market as having a large number of small operators, indicating a low level of industry concentration. Tiffany & Co. is the industry’s largest manufacturer. As a result, the industry is highly price competitive and local firms compete with low-priced Asian imports. This industry is projected to experience slight growth as economic conditions continue to improve next year. As consumers regain job security and higher income, demand for jewelry will return to growth. The pricing battle with imports is anticipated to strengthen and limit the industry's growth in the long run.
The U.K. faces similar issues only it has the added burden of a weakening economy this year and next. The industry there is fragmented and there is a lack of large firms able to propel the industry forwards, IBISWorld noted. Consumers have been reluctant to spend and cheap, imported products from low-cost countries have become more appealing to retailers seeking to protect their margins, and to consumers looking for value for money. IBISWorld predicts that for the five years ending in 2013, industry revenue will decrease an annualized 11.7 percent to $1 billion (GPB 650 million). Over the five years through 2018, the industry is expected to grow modestly.
Nigel Fitzpatrick, IBISWorld's analyst for the U.K. report, concluded that following a revenue decrease of 7.6 percent next year, reflecting subdued retail spending and a growing number of imports, the U.K. could experience modest growth ''supported by a stronger local market, a lift in consumer spending and increased exports to developing markets like China and India, as well as exports to oil-rich countries.”
Major companies in the U.K. include Boodle & Dunthorne, Buckley Jewellery & Abbeycrest.
