Total jewelry sales in the American market were up about 4.9 percent in August, about in line with trends of the past several months. However, specialty jewelers lost market share to other merchants who sell jewelry, a trend which has been ongoing.

 

• Total U.S. jewelry sales in the U.S. market during August were up 4.9 percent over the same month a year ago. This was a solid gain, and about in line with total consumer spending on all goods and services which was up 5.0 percent in August and well ahead of the total retail sales gain of only 3.9 percent. 
• U.S. specialty jewelers posted a more modest sales gain of 3.5 percent versus August 2006. This was down somewhat from July’s strong gain.  

The table below summarizes sales trends for the past three months.

 

Source: Various

 

On a year-to-date basis, total U.S. jewelry sales are up about 4.4 percent, while specialty jewelers’ sales are up about 3.5 percent.

 

Averages Don’t Tell the Full Story

As in prior months, the averages do not tell the full story. Guild jewelers have been posting robust sales gains in the high single digit and low double digit range, while mass market jewelers have been struggling to keep even with the prior year. Jewelry unit sales are probably down slightly for the year. Larger, better quality jewelry – especially diamond jewelry – with a high average ticket seems to be selling well, while commodity goods are weak.

 

Branded jewelry sales are strong, along with designer goods and fashion jewelry. Diamond sales remain quite strong, especially larger high quality stones; colored gemstone demand is also strong. Platinum jewelry demand is under pressure, while gold jewelry demand is flattish at best. The bottom line: consumers are willing to pay for quality, and they want something unique. A one-carat solitaire pendant is neither unique nor fashion-oriented; prices and discounts vary so widely that consumers are scared off. Certified diamonds may proliferate, but jewelers are undermining the confidence of those certificates by claiming that some have more credibility than others.

 

Our 2007 jewelry sales forecast calls for specialty jewelers to continue to lose market share to other merchants who sell jewelry. For the full year, we are holding our sales forecast at +4.4 percent; specialty jewelers are likely to show a sales gain of 3.5 percent to 4.0 percent for the full year.

 

For the holiday selling season, our sales forecast calls for a gain in the 3.5 percent to 4.2 percent range, unchanged from our formal forecast in early October. This is more or less in line with most of the predictions for total retail sales during the 2007 holiday selling season. Jewelry demand is not expected to be wildly dissimilar to demand for goods in most other retail categories.

 

We are going to repeat our advice that we’ve given for the past several months: inventory management will be critical in the coming months between now and the end of the year. If jewelers cut back on new goods, there won’t have anything new to entice current customers.

 

If jewelers cut back on total inventory, they surely won’t sell as much because they won’t have enough merchandise. The best jewelers have sophisticated inventory management systems. As a jeweler, you can’t afford to run your business by the seat of your pants any longer, especially if you plan to be around in subsequent years.

 

August Jewelry Sales Steady

Demand remained solid – and steady – for jewelry during August. While there are no major calendar events driving jewelry demand in August, it is one of the stronger months of the year for jewelry sales.

 

In 2006, August jewelry sales were 7 percent of a typical jeweler’s annual sales. We believe this is driven by bridal demand: there are more weddings in August than any other month (forget the old adage about “June brides”); further, engagement ring sales are particularly strong in August.

 

The graph below compares specialty jewelers’ sales trends to total jewelry sales trends in the U.S. market. As the graph clearly illustrates, jewelry demand has been steady for the past several months.

 

Source: U.S. Dept. of Commerce

Specialty Jewelers’ Sales Lag Total Retail Slightly in August

During August, specialty jewelers posted a sales gain of about 3.5 percent. This lagged the total retail sales gain of 3.9 percent for all goods except food and automobiles. Total consumer spending, which includes both goods and services, was up 4.9 percent in August. Increasingly, America has become a service-driven economy. It is important to note that costs of such items as health and welfare (health insurance, for example) are included in tallying the amount consumers spend for services.  

 

The graph below illustrates sales trends for all retail goods (excluding food and automobiles) versus specialty jewelers’ sales.

 

Source: U.S. Dept. of Commerce

Consumer Spending Holding Steady

While there has been some cyclicality in retail sales and jewelry demand, overall consumer spending on goods and services has remained steady.

 

The graph below summarizes trends in American’s total spending (blue line), retail sales of all goods (black line), and expenditures on jewelry (red line).

 

Source: U.S. Dept. of Commerce

 

Outlook: Our Forecast Remains Unchanged

There are many moving parts to the U.S. economy. That’s the bad news. That’s also the good news. While the housing bubble may have burst, and sub-prime mortgages may be giving the financial community heartburn, neither of these factors is enough to send the U.S. economy into a tailspin.

 

Think about it this way: the U.S. accounts for 5 percent of the world’s population, but its economy represents 28 percent of global Gross Domestic Product. A huge array of economic sub-sectors are strong, and they are enough to offset problems elsewhere.

 

We continue to predict that jewelry sales in the U.S. will rise by about 4.4 percent for the full year. Our forecast continues to call for a holiday sales gain in the 3.5 percent to 4.2 percent range for jewelry. Remember, Christmas comes every December 25, without fail.

 

Source: U.S. Dept. of Commerce