Today's Jewelry Market
Today's jewelry market is a $39.5 billion industry at retail in 2001, with sales basically flat over the previous year's $39.8 billion. The stale performance in the jewelry market in 2001 is largely attributed to the post 9-11 trauma, which kept many customers out of stores through the critical third and the beginning of the fourth retail quarter that year.
Sales by fine jewelers will remain flat unless they expand their focus beyond traditional gift-giving occasions and weddings, where the man is the primary buyer. To grow sales jewelry companies must reach out to the self-purchasing woman and meet her in shopping venues where she is inclined to think about buying jewelry.
Moving Beyond Traditional Distribution Channels
Jewelry sales are concentrated among jewelry stores, with jewelers credited with 54 percent of total industry sales or $21.346 billion in 2001. Non-store retailers, including mail order catalogs, direct response marketers, direct sales, television and electronic retailers, are the second largest retail distribution channel, accounting for 11 percent of total industry sales. This channel is growing rapidly, up 13 percent in 2001 over the previous year.
Department store sales of jewelry continue to lag, down 31 percent from previous year, while sales through discounters and mass merchants, some $3.558 billion, and other general merchandisers, such as members clubs, totaling $3.162 billion, are the fastest growing channel for jewelry, up 18 percent and 10 percent respectively over previous year.
Channels of distribution in the jewelry market continue to shift away from traditional venues, such as jewelry stores, department stores and apparel stores, and into new formats, most notably the discount mass merchandisers and non-store retailers. Today Wal-Mart is the nation's number one jewelry retailer with estimated jewelry and watch sales of $2.3 billion. This shift is boosting not just Wal-Mart but Kmart, Target and Costco into the ranking of the nation's top 20 jewelry retailers.
Together television retailers QVC and HSN generate $1.4 billion in jewelry sales, as consumers respond to the strong emotional appeal of jewelry sold by passionate television spokespeople. Who would have thought television would be such a powerful medium to sell jewelry? And it isn't men buying it in front of their sets. It is self-purchasing women. Television retailers play to a fundamental emotional need of all women. Every woman, everywhere wants to be beautiful and wearing beautiful jewelry helps make her beautiful. Jewelry marketers need to get with the program and help fulfill women's beauty fantasies.
Jewelry Product Sales
Capturing the largest share of sales is diamond jewelry, at $11.7 billion in retail sales or 30 percent share of the total market in 2001. Second is karat gold jewelry, with $7.1 billion in sales or 18 percent of the total market. Costume and novelty jewelry makes up only 7 percent of the jewelry market, with $2.8 billion in retail sales.
About the Jewelry Consumer
In a survey conducted by Unity Marketing in April 2002 among a representative sample of 1,000 U.S. households, half of the consumers surveyed reported they or someone in their household had purchased jewelry in the past year, a jump from the 43 percent who reported the same in a 1999 survey. The purchase incidence of fine jewelry, defined as jewelry made from precious or semiprecious stones, 14K and above gold, sterling silver or platinum, was 39 percent while the purchase incidence for costume jewelry, i.e. jewelry made from base metal, plastic, wood, or not precious materials with sterling or gold plate and/or man-made stones, was 31 percent. Both categories had an up-tick in purchase from the consumer survey conducted two years before.
The demographic profile of the fine jewelry customer is a youthful female with above average income. Women purchase fine jewelry at a higher rate than men; 43 percent of women vs. 34 percent of men reported they bought fine jewelry in the past year. Purchase incidence of jewelry rises with income, with households with incomes of $75k plus having the highest purchase incidence. The costume jewelry customer is even more skewed toward women, with 41 percent of women as compared with 20 percent of men having purchased costume jewelry in the past year. Purchase incidence is highest among more youthful consumers, and unlike fine jewelry, costume jewelry buyers come from all income levels.
Strategic Implications: Sell to Emotions
Broadening the retail channels of distribution will be key to future jewelry marketing success. Marketers need to identify their best potential target markets and meet them where they shop. It is astonishing that television sells to only four percent of jewelry consumers, a tiny share of buyers, which nevertheless generates in excess of $1.4 billion in retail sales. Think of the opportunities here.
Think too about the vulnerability of the traditional retail channels, notably jewelry stores that largely ignore the fashion market and department stores that miss the mark in so many areas. Wal-Mart has uncovered a previously undisclosed need in the jewelry market to serve the bargain shopper with affordably priced fine jewelry.
It all comes back to a simple marketing strategy: sell to the emotions. Every woman at every income level, of every race or ethnicity, and at every age wants to be beautiful. Jewelry marketers can help these women fulfill new venues, new ways to reach and connect with their fantasies.
The Big Opportunity Self-Purchasing Women
The real opportunity in jewelry marketing is the self-purchasing female. Women present significant growth potential as every new outfit and every special occasion is an opportunity to sell jewelry accessories. Jewelry marketers can find exponential growth is bringing a new jewelry retailing concept to self-purchasing women, an innovation that is sure to reap huge rewards.
About Pam Danziger & Unity Marketing
Found in 1992, Unity Marketing (www.unitymarketingonline.com) is a marketing research and consulting firm that helps companies apply the concept of emotional marketing to corporate branding and marketing initiatives. Using its "why people buy" research strategy, Pam Danziger, company founder, president and author of Why People Buy Things They Don't Need (Ithaca, NY: Paramount Market Publishing, 2002), uncovers the motivations, desires and emotional needs that drive consumers to buy. This approach turns consumer insights into actionable marketing and brand strategies and gives executives "future vision" to plan the direction of their business. Unity produces market research studies that are essential business planning tools for executives competing in the luxury market, jewelry, art, home furnishing, gifts and collectibles, toys, personal care/cosmetics industries among others. Unity also publishes the Luxury Business and Gifts & Collectibles Business newsletters. Today Pam is at work on her next book, Let Them Eat Cake: Marketing Luxury to the Masses (as well as the Classes).