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Committing to Valentine’s Day
Editorial
Feb 13, 2015 4:25 AM
By Avi Krawitz
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RAPAPORT... Valentine’s Day exposes both the weaknesses and strengths of the diamond and jewelry market. For a product so driven by the idea of commitment and relationships, the holiday should be a coup for the industry, a second Christmas if you like. At the same time, one cannot help but feel that the industry doesn’t take full advantage of its potential.
The diamond industry naturally looks toward gift-giving seasons and occasions to boost sales. In the clearest example, an estimated one-third of diamond jewelry sales are geared toward the engagement and wedding market, while the typical retailer makes about 30 percent of its annual sales in the run up to Christmas during November and December.
Extending that to other gift-giving holidays, a recent chart published in the De Beers Diamond Insight Report showed a slight bump up in jewelry sales for Mother’s Day in a typical year and a smaller spike around Valentine’s Day.
At least in theory, Valentine’s Day is perfectly positioned in the calendar for jewelry to perform better. For one, it coincides with engagement season in the U.S. Also, fresh after Christmas, consumers might be looking for ways to use those gift cards received in December, or avenues to spend their end of year bonuses.
Still, jewelry ranks surprisingly low in consumer preferences for the day. In fact, jewelry barely features as a gift of choice for those planning a romantic night out. A survey by the Georgetown Institute for Consumer Research, sponsored by KPMG, showed that the top five gift categories that women expect to receive for Valentine’s Day are candy or chocolates, flowers, cards, a meal and something non-material, all well ahead of jewelry. Similarly, men expect to receive cards, non-material gifts, a meal, candy or chocolate, or something homemade.
Another survey by Statistic Brain Research Institute estimated that 17.3 percent of consumers planned to buy jewelry for Valentine’s Day, falling behind cards, candy, dining out and flowers in the ranking of most popular gifts. The National Retail Federation (NRF) found that 21 percent of respondents to its Valentine’s Day survey planned to make a jewelry purchase while only 11 percent of shoppers planned to visit a jewelry store to make the purchase.
Part of the challenge may be that Valentine’s Day is not a very widely celebrated holiday. Just 51.4 percent of respondents to the Georgetown Institute’s survey said they planned to purchase gifts at all for Valentine’s Day. And of those, 23 percent of men said they plan on giving their significant other jewelry as a gift, while 4 percent of women had jewelry in mind.
It’s not all bleak however, as the NRF forecasted that jewelry sales would reach $4.8 billion this Valentine’s Day. IBISWorld expects spending on jewelry to rise 5.6 percent to $1.6 billion with total retail spending forecasted to improve 3.8 percent to $19.56 billion this holiday.
Therefore, while jewelry is far from the gift of choice during Valentine’s Day, sales are growing. However, growth is typically driven by low-priced items. Silver jewelry, for example, is said to be popular during the holiday.
Perhaps Valentine’s Day is not serious enough to inspire a stronger desire for diamond jewelry. After all, there is a kitsch component to the day that lends itself to candy and flowers. In addition, or consequently, the average price of spending is relatively low during the holiday, making diamond jewelry appear somewhat out of reach. The Georgetown Institute survey estimated that consumers plan to spend an average $96.49 on a gift this year, significantly up from the $66.09 of last year’s survey.
At least, unlike during Christmas, jewelry is not competing with electronics, apparel, leather products or other high-end items for its share of the consumer wallet during Valentine’s Day. Then again, that’s really where it should be competing in the greater scheme of things. Diamonds belong in the luxury space rather than next to chocolates and roses.
It is little wonder then that jewelers tend to discount heavily in the lead up to Valentine’s Day. A random click on a typical jeweler’s website this past week revealed “special deals” of 20 to 30 percent off until February 14.
Even at discounted prices, diamond jewelry seems to be a difficult sell when it really should not be. After all, if diamonds and Valentine’s Day are about commitment and love, then surely jewelry should be the obvious gift.
Instead, the commercial nature of the holiday is perhaps not the ideal fit for diamond jewelry as it forces the industry’s marketing efforts in the wrong direction. Rather than raising consumer desire for diamonds, we see jewelry retailers discounting heavily to entice consumers to buy, cheapening the product for the remaining 364 days of the year.
This surely strengthens the call for a generic diamond marketing campaign. That the industry is struggling to sell diamonds as an aspirational product on Valentine’s Day is a clear sign of weakness. By losing its ability to harness a holiday that diamonds are truly all about – love, relationships, symbolism and commitment – maybe it’s time for the diamond industry to commit itself to its product again.
The writer can be contacted at avi@diamonds.net.
Follow Avi on Twitter: @AviKrawitz and on LinkedIn.
This article is an excerpt from a market report that is sent to Rapaport members on a weekly basis. To subscribe, go to www.diamonds.net/weeklyreport/ or contact your local Rapaport office.
Copyright © 2015 by Martin Rapaport. All rights reserved. Rapaport USA Inc., Suite 100 133 E. Warm Springs Rd., Las Vegas, Nevada, USA. +1.702.893.9400.
Disclaimer: This Editorial is provided solely for your personal reading pleasure. Nothing published by The Rapaport Group of Companies and contained in this report should be deemed to be considered personalized industry or market advice. Any investment or purchase decisions should only be made after obtaining expert advice. All opinions and estimates contained in this report constitute Rapaport`s considered judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Thank you for respecting our intellectual property rights.
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Tags:
Avi Krawitz, diamonds, Jewelry, NRF, Rapaport, Valentine's Day
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