(IDEX Online News) – Jewelry sales in the U.S. market during January showed a mid-single digit gain – +4.7 percent – about in line with long-term industry growth expectations. When compared to last year’s torrid 11 percent gain, jewelers might be disappointed.

 

The full analysis and statistics is available to IDEX Online Research subscribers and IDEX Online members here.

 

Further, jewelry lost share of wallet in January, another discouraging trend. However, since January is often a slow month for jewelers, we’re not changing our forecasts for jewelry demand for 2012 which call for a six percent sales gain.

 

Mid-Single Digit Gains in Both Key Distribution Channels

Here’s the preliminary summary jewelry sales report for January 2012:

 

·        Total U.S. Jewelry Sales +4.7 percent

·        U.S. Specialty Jewelers’ Sales +4.3 percent

·        Jewelry Sales at “Other” Merchants +5.0 percent

 

Here are some high-level trends that we believe reflect jewelry sales during the month of January 2012:

 

·        Jewelry lost a little market share in January. Total retail sales in the U.S. market were up about six percent, and total retail sales, ex-auto, were up just under six percent. Total jewelry sales were up 4.7 percent. Thus, jewelry lost a little “share of wallet” in the month. However, since January jewelry sales historically represent the smallest month of the year – just 5.9 percent of specialty jewelers’ total annual sales – it is too early to make any assumptions about annual sales trends based on this single month’s performance.

 

·        Specialty jewelers, with a sales gain of 4.3 percent, lost market share to other merchants – discounters, mass marketers and online sellers – who sell jewelry. These “other” merchants posted a 5.0 percent gain in jewelry sales.

 

·        Total jewelry (ex-watches) sales were up 4.8 percent. Jewelry sales (ex-watches) represented about 87 percent of total jewelry and watch sales, in line with historical levels. Branded jewelry sales declined by a sharp 11 percent in January, according to data from the LGI Network. We believe consumers are telling the industry that “fashion” trumps “brands.”

 

·        Watch sales, which were up 3.9 percent, were softer than total jewelry sales. However, data from the LGI Network reflects a more negative trend: LGI watch sales were down four percent, on a same-store basis during January.

 

·        January’s more modest sales gains were also confirmed by InStore magazine’s Brain Squad: the number of jewelers reporting an increase in sales declined modestly to 47 percent of those reporting, down from the mid-50 percent to low 60 percent range reported for most months of 2011.

 

The table below summarizes jewelry and watch sales data in the U.S. market for January 2012.

Source: US Dept of Commerce $ LGI Networks

 

Jewelry Sales Trend Softening

Jewelry sales gains peaked in mid-2011, and have been on a weakening trend since early last fall, as the graph below illustrates. Not only is uncertainty high – due to stubbornly high unemployment levels, uneven economic growth, foreign financial woes, and unstable geopolitical situations – but the vitriol associated with the upcoming 2012 presidential and congressional elections has had an unsettling impact on consumers. These factors have served to cap demand for luxury goods products such as jewelry.

 

Source: US Dept of Commerce

 

Outlook: 2012 Could Be Subdued

The national and international environment is likely to remain unsettled throughout most of 2012. Saber-rattling, especially in the Middle East, is likely to keep pressure on commodity prices – including the obvious: oil – and the less obvious: gold.

 

While 2011 jewelry sales were up just under 11 percent, we are projecting more modest growth longer term. Long term, our forecast calls for U.S. jewelry sales to grow by 3.5 percent to 4 percent annually, with modest inflation of 2 percent or so and unit growth of 2 percent or less. Obviously, though, inflation is the wild card.

 

What worries us the most about making a jewelry sales forecast for 2012? There are an unusually large number of major uncertainties looming both nationally and internationally – as mentioned above. Uncertainty has more of an impact on consumer spending on luxury goods than any other factor.

 

The full analysis for January 2012 is available to IDEX Online Research subscribers and IDEX Online members here. Click here for more information on how to subscribe or become a member.