(IDEX Online) – Preliminary U.S. government commerce data confirms what merchants told us about jewelry sales during the 2011 Holiday Selling Season: sales were mixed.

 

While total jewelry sales were up just over 7 percent during November, specialty jewelers’ sale eked out a paltry 1 percent gain. In contrast, jewelry sales at other retailers – discounters, mass merchants, and other multi-line shopkeepers – rose by nearly 12 percent. Our analysis: consumers were seeking value-priced goods, and shoppers have the perception that they can get a better value at the multi-line discounters than they can at specialty jewelers.

 

Consumers were more fickle than ever in the 2011 Holiday Selling Season. Their demand for goods ebbed and flowed – it was strong around Thanksgiving and just before Christmas, but was weak in early and mid-December. Further, shoppers sought discounts: advertisements of “10 percent off” or “20 percent off” did not get their attention; rather, it took promotions touting “40 percent off” or more to capture market share. And, worse, those “40 percent off” promotions needed to be “real” – not just a markdown from some fictitious trumped-up price.

 

Jewelry Sales Mixed By Distribution Channel

Here’s the preliminary summary jewelry sales report for November 2011:

 

·        Total U.S. Jewelry Sales +7.3 percent

·        U.S. Specialty Jewelers’ Sales +1.1 percent

·        Jewelry Sales at “Other” Merchants +11.8 percent

 

Here are some high-level trends that we believe reflect jewelry sales during the month of November 2011:

 

·        Jewelry neither gained nor lost market share in November. Total retail sales in the U.S. market were up 7.0 percent, and total retail sales, ex-auto, were up 6.6 percent. Total jewelry sales were up 7.3 percent - that’s not a statistically significant difference from retail sales.

 

·        Specialty jewelers, with a sales gain of only 1.1 percent, lost significant market share to other merchants – discounters, mass marketers and online sellers – who sell jewelry. These “other” merchants posted a strong 11.8 percent gain in jewelry sales.

 

·        Watch sales, which were up 7.2 percent, kept pace with jewelry sales. The LGI Network data reflects a similar trend. LGI watch sales were up 5 percent, on a same-store basis during November.

 

·        Because of moderating sales gains, unit sales of jewelry were estimated to be down by nearly 1 percent in November. Specialty jewelers’ unit sales were down an estimated 7 percent in the month, based on preliminary sales results.

 

·        Year-to-date jewelry industry sales are up by about 10.9 percent, as measured by dollar volume (“dollars through the cash register”). This is comprised of a unit sales gain of just under 2 percent, along with a 9 percent increase in jewelry prices due to price inflation related to higher diamond and precious metals prices.

Specialty jewelers’ sales are up just under 7 percent year-to-date. However, their unit sales are down by an estimated 2 percent for the eleven months ended November 2011. That’s why so many jewelers say that, despite solid dollar sales; it doesn’t “feel” like jewelry sales are up strongly.

 

The table below summarizes jewelry and watch sales data in the U.S. market for November 2011.

Source: US Dept of Commerce & LGI Network

Jewelry Sales Trend Softening

Jewelry sales gains peaked in August 2011, and have been on a weakening trend since then, 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.

 

It appears that U.S. jewelry sales will be up by 11 percent or so in 2011. But that figure is somewhat misleading: most of the increase is due to inflation. Unit sales are ahead by under 2 percent, with the balance of the sales gain due to higher diamond and gold prices. Still, this strong sales gain represents significant “dollars through the cash register”, even if margins might be more modest.

 

Long term, we are forecasting that jewelry sales will 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. Our 2012 jewelry sales forecast will be published near the middle of the first quarter, after December sales numbers are available.