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A look at the latest jewelry industry statistics

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<h2 id="h-a-look-at-the-latest-jewelry-industry-statistics">A look at the latest jewelry industry statistics</h2>

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In a village of La Mancha, the name of which I have no desire to call to mind, there lived not long since one of those gentlemen that keep a lance in the lance-rack, an old buckler, a lean hack, and a greyhound for coursing.

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<p><strong>By Harold Dupuy, FGA</strong></p>

<p><em>(Originally published May 2019)</em></p>

With 2018 in the rearview mirror, there are some lessons to be learned. First, it was a year of two parts. Allow me to explain: In my January column, I stated that September was the first negative growth month for jewelry stores, but the year-to-date September 2018 sales were still tracking at an amazing 10.4 percent over the comparable period for 2017. Although the holiday season was not expected to maintain this frenetic pace, what lay ahead was unexpected. After 10 months of very strong performance, the headwinds suddenly appeared. November fell relatively flat (0.7 percent), followed by December with a meager 2.5 percent increase. This resulted in a jewelry store holiday sales growth rate of 1.9 percent, far below the 10 percent pace of the previous 10 months.

<p>With 2018 in the rearview mirror, there are some lessons to be learned. First, it was a year of two parts. Allow me to explain: In my January column, I stated that September was the first negative growth month for jewelry stores, but the year-to-date September 2018 sales were still tracking at an amazing 10.4 percent over the comparable period for 2017. Although the holiday season was not expected to maintain this frenetic pace, what lay ahead was unexpected. After 10 months of very strong performance, the headwinds suddenly appeared. November fell relatively flat (0.7 percent), followed by December with a meager 2.5 percent increase. This resulted in a jewelry store holiday sales growth rate of 1.9 percent, far below the 10 percent pace of the previous 10 months.</p>

<h3><img src="https://mjsa-site-assets.s3.amazonaws.com/2019_MJSA_Journal/May2019/Bus_Trends_519_Header.jpg" alt="Business Trends Chart May 2019" width="800" height="480"></h3>
<h3>Holiday Trends</h3>
<p>It will take some time to determine the forces that underlie such a dramatic decline in sales growth (and the Feds will issue subsequent minimal revisions to this preliminary data). But looking outside the jewelry space, we can see some possible influences that could have affected consumers’ jewelry purchasing habits.</p>
<p>First, from September 1 to December 24, the U.S. stock market declined by double digits—the S&amp;P was down 15 percent, the Dow declined 17 percent, and NASDAQ was down 23 percent.</p>
<p>Next, concerns about the looming trade war with China, the impending federal government temporary shutdown, the November midterm elections, and the Fed’s rising interest rates all may have combined to create headwinds for consumers.</p>
<p>One long-term factor influencing holiday sales is the shifting seasonality of the jewelry business. More than 15 years ago, the holiday season accounted for approximately one-third of a total year’s retail sales for jewelers. Today, that percentage has declined to 27 percent with the difference of 6.5 percent shifting to the spring/summer timeframe.</p>
<p>Jewelry wasn’t the only category affected by the holiday downturn. Many other retail verticals exhibited the same holiday downturn, including clothing stores, department stores, restaurants, furniture stores, hardware stores, and, surprisingly, online shopping.</p>
<p>However, there is the good news that overall, 2018 was a very good year. Jewelry store annual sales increased by a robust 7.8 percent. Excluding the recovery after the 2008-2009 recession, this is the best performance in 14 years!</p>
<h3>Industry Issues</h3>
<p>Lab-grown diamonds (LGDs) continue to be front and center in many industry conversations. This disruptive product continues to gain market share as more companies add them to their offerings. Along with the growing interest in LGDs comes the need for protecting the supply chain through adequate screening and separation of these stones from natural mined diamonds. This proves no easy task and requires gemological training. The increasing number of screening and detection instruments has expanded with an estimated 40 companies producing devices.</p>
<p>To help you determine the right instrument for your needs, the Diamond Producers Association (DPA), along with Signet, undertook a major study last year of approximately 20 detection instruments. The study, titled “ASSURE,” involved scientists from GIA, the American Gem Society, the International Institute of Diamond Grading &amp; Research, and several other major labs. UL (a third-party testing laboratory) conducted the actual testing. They released the initial results for 11 of the instruments on March 15, and the results for the remaining devices will be shortly forthcoming. You can see the results posted on the DPA website (<a href="https://diamondproducers.com/assure/" target="_blank" rel="noopener noreferrer"><em>diamondproducers.com/assure/</em></a>).</p>
<h3>Industry Shrinkage</h3>
<p>We continue to read in the trade media about the jewelry industry shrinking. According to the Jewelers Board of Trade, a total of 832 entities ceased operations in 2018: 706 retailers, 78 wholesalers, and 48 manufacturers. But this 4 to 5 percent contraction tells only one side of the story. As these businesses left the industry, revenue for the total jewelry industry grew by approximately $5 billion (from $77 billion to $82 billion) or about 7.5 percent. Jewelry stores accounted for 42 percent of total sales, but managed to capture 45 percent of the growth, increasing by approximately $2.5 billion or 7.8 percent over 2017. The jewelry store sector’s growth ranked ninth out of a total of 64 different retail categories reported by the U.S. Department of Commerce. Needless to say, the jewelry business is healthy and growing!</p>
<p><em>Harold Dupuy, FGA, is the vice president, strategist analysis for Stuller Inc. in Lafayette, Lousiana.</em></p>

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<h3><img src="https://mjsa-site-assets.s3.amazonaws.com/2019_MJSA_Journal/May2019/Bus_Trends_519_Header.jpg" alt="Business Trends Chart May 2019" width="800" height="480" /></h3>
<h3>Holiday Trends</h3>
<p>It will take some time to determine the forces that underlie such a dramatic decline in sales growth (and the Feds will issue subsequent minimal revisions to this preliminary data). But looking outside the jewelry space, we can see some possible influences that could have affected consumers’ jewelry purchasing habits.</p>
<p>First, from September 1 to December 24, the U.S. stock market declined by double digits—the S&amp;P was down 15 percent, the Dow declined 17 percent, and NASDAQ was down 23 percent.</p>
<p>Next, concerns about the looming trade war with China, the impending federal government temporary shutdown, the November midterm elections, and the Fed’s rising interest rates all may have combined to create headwinds for consumers.</p>
<p>One long-term factor influencing holiday sales is the shifting seasonality of the jewelry business. More than 15 years ago, the holiday season accounted for approximately one-third of a total year’s retail sales for jewelers. Today, that percentage has declined to 27 percent with the difference of 6.5 percent shifting to the spring/summer timeframe.</p>
<p>Jewelry wasn’t the only category affected by the holiday downturn. Many other retail verticals exhibited the same holiday downturn, including clothing stores, department stores, restaurants, furniture stores, hardware stores, and, surprisingly, online shopping.</p>
<p>However, there is the good news that overall, 2018 was a very good year. Jewelry store annual sales increased by a robust 7.8 percent. Excluding the recovery after the 2008-2009 recession, this is the best performance in 14 years!</p>
<h3>Industry Issues</h3>
<p>Lab-grown diamonds (LGDs) continue to be front and center in many industry conversations. This disruptive product continues to gain market share as more companies add them to their offerings. Along with the growing interest in LGDs comes the need for protecting the supply chain through adequate screening and separation of these stones from natural mined diamonds. This proves no easy task and requires gemological training. The increasing number of screening and detection instruments has expanded with an estimated 40 companies producing devices.</p>
<p>To help you determine the right instrument for your needs, the Diamond Producers Association (DPA), along with Signet, undertook a major study last year of approximately 20 detection instruments. The study, titled “ASSURE,” involved scientists from GIA, the American Gem Society, the International Institute of Diamond Grading &amp; Research, and several other major labs. UL (a third-party testing laboratory) conducted the actual testing. They released the initial results for 11 of the instruments on March 15, and the results for the remaining devices will be shortly forthcoming. You can see the results posted on the DPA website (<a href="https://diamondproducers.com/assure/" target="_blank" rel="noopener noreferrer"><em>diamondproducers.com/assure/</em></a>).</p>
<h3>Industry Shrinkage</h3>
<p>We continue to read in the trade media about the jewelry industry shrinking. According to the Jewelers Board of Trade, a total of 832 entities ceased operations in 2018: 706 retailers, 78 wholesalers, and 48 manufacturers. But this 4 to 5 percent contraction tells only one side of the story. As these businesses left the industry, revenue for the total jewelry industry grew by approximately $5 billion (from $77 billion to $82 billion) or about 7.5 percent. Jewelry stores accounted for 42 percent of total sales, but managed to capture 45 percent of the growth, increasing by approximately $2.5 billion or 7.8 percent over 2017. The jewelry store sector’s growth ranked ninth out of a total of 64 different retail categories reported by the U.S. Department of Commerce. Needless to say, the jewelry business is healthy and growing!</p>
<p><em>Harold Dupuy, FGA, is the vice president, strategist analysis for Stuller Inc. in Lafayette, Lousiana.</em></p>

Snapshot: May 2019

A look at the latest jewelry industry statistics

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