(IDEX Online) – U.S. demand of jewelry and watch strengthened significantly in April, up by 11.2%. This is the largest gain since the industry was beginning to recover from the recession.

 

Watch Sales Gains Greater Than Jewelry Sales Gains in April

Watch sales in April 2011 showed a greater gain than jewelry sales. Preliminary figures in prior months had shown an opposite trend. New data shows that watch sales gains outpaced jewelry sales increases for each of the first four months of 2011. Historically, jewelry sales gains have consistently been greater than watch sales gains every year since 2004. Thus, we are watching this trend closely.

 

Total jewelry and watch sales in the U.S. market were an estimated $4.8 billion in April 2011, up from the prior year’s estimated $4.3 billion. April’s monthly sales of $4.8 billion were greater than other months in 2010 and early 2011 which did not have a major sales event driving demand such as Valentine’s, Mother’s Day, or Christmas. We believe that the April preliminary data will be revised downward.

 

Jewelry (only) sales represent about 89% of total industry sales, or an estimated $4.3 billion in April 2011.

 

The graph summarizes monthly changes in sales for jewelry (red bar) and watches (blue bar) over the past fifteen months.

 

Source: US Dept of Commerce

 

Specialty Jewelers’ April Sales Show Dramatic Gain

Specialty jewelers posted a dramatic double-digit gain, 20.8% in April, based on preliminary data from the Department of Commerce. Despite a major revision to specialty jewelers’ sales data earlier this year, we believe that this is an anomaly, and will be revised downward in the next reporting cycle. This is one of the largest gains in the recovery cycle. While it compares to a moderate 5% gain in April 2010, this number is “suspect.”

 

In April, specialty jewelers’ sales were about $2.2 billion, up from last year’s $1.8 billion.

 

The graph below summarizes fifteen months of sales trends for specialty jewelers in the U.S. market.

 

Source: US Dept of Commerce

Specialty Jewelers Gain Market Share From Competitors in April

For more than three decades, specialty jewelers have been losing market share to other merchants who sell jewelry. Typically, specialty jewelers lose market share in recessionary periods, and they never seem to regain this market share, even when the economy rebounds. We believe that this may be due to consumers’ quest for “value” – they believe that they can get a better deal on a day-to-day basis by shopping at discounters like Costco, Wal-Mart, and J.C. Penney than at specialty jewelers. An analysis of gross margins suggests that specialty jewelers tend to mark up their prices more than discounters and online merchants.

 

However, in April, specialty jewelers in the U.S. took market share from other retailers who sell jewelry. This is a departure from the first three months of the year, when specialty jewelers lost market share to other merchants who sell jewelry.

 

The graph below summarizes specialty jewelers’ sales versus jewelry sales at other merchants. Specialty jewelers’ sales are shown by the blue bars, while other merchants’ jewelry sales are represented by the red bars.  

Source: US Dept of Commerce

Jewelry Gained Share of Wallet in April

Jewelry gained share of consumer expenditures – also called “share of wallet” – in April, based on preliminary numbers. Longer term, we expect this trend to continue: jewelry represents an industry with solid growth prospects in the U.S. Globally, we are forecasting the same trend, driven by new demand especially in markets like China and India.

 

Further, revised data shows that jewelry took market share in the first three months of the year, when compared to total U.S. retail sales gains (ex-auto). In the aggregate, jewelers also took market share during the first four months of 2011, based on total retail sales of all items.

 

The graph below compares retail sales gains (ex-auto) to jewelry sales trends. Retail sales are shown by the green bars, while the red bars represent jewelry and watch sales.

 

Source: US Dept of Commerce