Beyond the basics such as food, most retailing is event driven. In a society with high levels of discretionary income, merchants must create reasons — usually events — to drive shoppers to their stores. In the jewelry industry, sales are generally driven by three types of events:
Calendar Events•Holidays – Christmas, Kwanzaa, Chanukah
Life Cycle / Milestone Events
•Weddings / Anniversaries
•Births / Birthdays
•Religious Events – First Communion, Bar/Bat Mitzvah
•Merchant-Created Events – Trunk Shows, “Midnight Madness”
•Impulse – “I Just Want It Now”(Generally Self-Purchase)
Calendar Events Are Important to Jewelers
Key calendar events create jewelry demand in the U.S. market (as well as other global markets) that is highly seasonal . For example, the typical American specialty jeweler generates about one-third of annual revenues in the November-December holiday selling season.
The other two key calendar events which drive jewelry demand are Valentine’s (February) and Mother’s Day (May). However, these events are only minor when compared to the holiday season.
Graph 7 illustrates the seasonality of jewelry sales by month in the U.S. market.
Life Cycle Events Are Less Seasonal
Major life cycle and milestone events with which jewelry is associated are much less seasonal, and are spread across the year. The most important life cycle event that drives jewelry demand is the bridal market. The bridal market – engagement rings, wedding bands, attendants’ gifts – represent up to 40 percent of a mass market jeweler’s annual sales. For high-end jewelers, bridal sales represent about 30 percent of annual sales.
Today, diamonds and weddings are inextricably intertwined. About three quarters of all brides in the U.S. market receive a diamond engagement ring.
Graph 8 illustrates the seasonality of weddings by month in the U.S. market. Contrary to popular opinion, the traditional “June bride” is a myth; August is the biggest month for weddings, followed by July and June which tied for the second largest number of weddings during the year.
There is some seasonality to the purchase of a diamond engagement ring, with a bias toward December. Many men want to surprise the bride-to-be with a diamond ring under the Christmas tree. Graph 9 illustrates diamond engagement ring sales by month.
The average ticket for a diamond engagement ring continues to rise at a rate that has significantly exceeded the rate of inflation for jewelry, including diamond and precious metals jewelry, over the past decade. Further, the average ticket for a diamond engagement ring ($3,210) in the U.S. market is about ten times as high as the average ticket ($350) for a mass market jeweler.
Graph 10 illustrates the average price of a diamond engagement ring in the U.S. market since 1990.
In addition to diamond engagement rings, more brides are opting for a diamond wedding band. The Diamond Promotion Service (DPS) says that 52 percent of all brides (and some grooms) received a diamond wedding band in 2006. This level of penetration has been rising for the past decade.
The average ticket for a bride’s diamond wedding band is about $1,485 in the U.S. market. The average ticket has been rising significantly each year for the past decade, as graph 11 illustrates.
Same-Sex Weddings Offer Potential
As more and more same-sex couples say “I do,” the wedding business is benefiting. The most recent U.S. population census showed that there were roughly 600,000 same-sex couples living together. However, estimates by Commercial Closet, an online resource for the gay and lesbian market, estimates that there are 14-16 million lesbian and gay adults in the U.S. – roughly 5 percent of the population.
Some jewelers have reported a rise in demand from same-sex couples looking for wedding bands. Based on a small research sample, jewelers say that same-sex couples spend about 10 percent more on wedding bands than heterosexual couples. Tiffany & Co. has long been ready for the trend of same-sex partnerships; it changed its wedding registries to be non-gender specific several years ago.
Median Age At First Marriage Stable
The media and others have been saying that couples are waiting later – sometimes much later – to get married. However, the statistics do not support that theory.
In 1920, the average male was 24.6 years old and the average female was 21.2 years old when they first married. Based on the latest statistics, the average male today is about 26.8 years old and the average female is about 25.1 years old when they first marry.
In the intervening years, there has been some variation in the average age of the first marriage. For example, in the late 1940s and early 1950s, many young soldiers returned home from both World War II and the Korean War, and the first thing they did was marry their sweethearts. Therefore, the average age for first-time marriage dipped notably, only to rebound slowly over the next 40 years.
Wedding Anniversaries Are Important to Jewelers
Wedding anniversaries are an important occasion for jewelers. According to the DPS, a wedding anniversary is one of the three major occasions to give diamond jewelry, as graph 12 illustrates.
The average ticket for diamond jewelry purchased to commemorate a wedding anniversary was about $1,200 in 2006, the highest average ticket for all non-bridal diamond occasions.
Birthdays Are Appropriate for Jewelry Gift-Giving
Believe it or not, there is some seasonality to the birth rate; hence, birthdays do not occur evenly across the year, as graph 13 illustrates.
About 17 percent of all diamond jewelry is given in honor of someone’s birthday.
About 12 percent of all diamond jewelry is purchased with “no special occasion” in mind, while another 23 percent is purchased for “other occasion” which is often translated to an “I-just-want-it-now” occasion.