RAPAPORT... Italy’s prolific jewelry design and manufacturing industry is facing some challenging times. The sluggish global economy has influenced consumer spending and choice, while political wrangling and an over-regulated consumer landscape have contributed to the prevailing pessimistic mood in the country. Significantly, the industry is up against growing, and seemingly unfair, competition from mass manufacturing centers such as China and India.
While acutely aware of these challenges, local jewelers remain confident of their place in the market as Italy works to stay relevant as a center of excellence in jewelry design and quality product.
Indeed, the incessant emphasis by Roberto Ditri, president of Fiera Di Vicenza, on “The Future. Now” theme at this week’s VicenzaOro fair was telling. Italian design, while at the forefront of all things beautiful, needs to be aggressive today to maintain its position tomorrow.
“The Italian brand is still strong but we don’t know how to promote it,” Roberto Coin, CEO of Roberto Coin SpA, said in an interview with Rapaport News. “We have a rich history in jewelry. It’s in our DNA, so ‘Made in Italy’ is naturally associated with beauty. Our clients, and the consumer, expect to see beautiful things and quality product from Italy.”
The fair itself has played that up. For retailers, VicenzaOro is arguably more about observing design trends than buying inventory. The show, which ran from Saturday, January 19 through Thursday, January 24, saw relatively steady traffic in the vast jewelry pavilions – and significantly less in the small, and somewhat hidden, loose diamond section.
Design Versus Price
But while Coin and others stress that Italy is still driven by design rather than price, they have made a clear adjustment in the past few years to accommodate lower price points.
Exhibitors noted a strong trend toward silver jewelry and the use of lighter weight gold as precious metals prices have soared in the past few years. Similarly, diamond vendors reported that jewelry manufacturers are compromising on the quality of goods they use.
“Manufacturers are using fewer diamonds than before and have become scared to invest in diamonds,” said Joey Loloi, a manager at Taj Diamonds, a Milan-based polished diamond supplier. “Even when they do buy diamonds, their purchases have changed. SI clarity goods used to be the lowest quality we sold here, but now it is pique stones.”
Loloi added, however, that Italian buyers still tend to look for good-cut and nice-make stones and have also maintained their color requirements since “the color needs to effectively fit into the design of the jewelry.”
Many argue that price doesn’t necessarily influence the quality of the design. But it has changed the focus of the market.
Paola De Luca, forecaster and creative director at Trendvision Jewellery & Forecasting, notes that the rising “minimalist” consumer is influencing companies to refine their designs and cater to an increasing desire for individualism and differentiation.
Certainly, that need to be different was felt at VicenzaOro, with a diverse array of displays on offer as designers sought to attract passersby. De Luca, meanwhile, observed that diamonds used with color and set in unusual shapes are strong trends to look out for in fashion jewelry and suggested that diamonds paired with non-precious metals have become popular “because that’s where the margins will be this season.”
China & India
Clearly, price matters more than it used to as consumers are tightening their spending and new players enter the market. The exponential growth in jewelry manufacturing and design in China and India have challenged Italy, not only to fend off mass generic – and often copycat – jewelry production, but also to compete in those same growth consumer markets.
Exhibitors noted that respective import duties on gold jewelry in China and India put Italian jewelers at a disadvantage. The Indian government this month raised its duty on gold from 4 percent to 6 percent in an effort to reduce its trade deficit. China charges 25 percent duty and 17 percent value added tax (VAT) on gold jewelry imports, while gold (not in jewelry form) is duty free.
Despite this, there has been progress and China was among Italy’s top growth jewelry markets in 2012. Jewelry exports by volume to China rose 20 percent year on year in the first nine months of 2012, making it Italy’s fifth largest market and accounting for 5.1 percent of Italy’s total jewelry exports, according to a study conducted by the Vicenza branch of Verona University, citing data from Vicenza Chamber of Commerce and ISTA 2012.
Italy’s largest market remains Switzerland, accounting for 21.9 percent of total jewelry exports, followed by the United Arab Emirates (UAE) with 17.3 percent, the U.S. with 8.8 percent, and France with 6.8 percent. Italy’s role in India remains marginal and jewelry exports there fell 17 percent by value during the nine-month period. Italy’s total jewelry exports by value rose 8.1 percent but by volume fell 8.7 percent, the survey stated.
To maintain growth momentum, Fiera di Vicenza, which organizes VicenzaOro, has focused on building relationships in key markets over the past year. This month, the group formed a partnership with the Dubai World Trade Center to strengthen its position in the UAE. This came after it took the ‘Made in Italy’ concept to Dubai in November, enabling Italian gold and jewelry companies to present there. Similar trips are planned for India, Brazil and Dubai this year.
This week’s fair also had a significant international flavor with buyers from approximately 120 countries attending, many as part of organized buyers groups. In organizing its invitation-only AboutJ event in September in Venice, Fiera di Vicenza has set strict criteria and is looking for a geographically diverse set of buyers ranging from central and eastern Europe, central Asia and the Middle East to the U.S. and central America. “We are trying to create a hub that is active in all markets, and where all players can meet,” said Corrado Facco, Fiera di Vicenza’s executive director.
In a panel discussion at the fair’s opening summit, Ditri stressed that collaboration is the way forward. Other panelists agreed, especially for those key markets that are difficult to penetrate, such as China, India and Russia.
Diversifying to new jewelry consumer markets is essential for Italy, especially as growth in its more traditional markets, particularly in Europe, is weak.
In fact, the mood among Italians at the VicenzaOro Winter fair was one of frustrated confidence, and justifiably so. They appear skeptical about any pending changes and improved economic conditions after the February 24/25 elections and are annoyed by regulations that restrict consumer spending – local consumers can only make cash purchases up to EUR 1,000 as government seeks to monitor wealth and clamp down on tax evasion.
However, jewelers remain confident in their ability to create beautiful, quality products, and – as Cameo Diluca, of Cameo Italiano, stressed – tell a story through a piece of jewelry. “No one is able to do that quite like the Italian jeweler,” he said.
As the local industry faces today’s challenges head on, and adjusts to a changing global market, it has come to realize that it’s not good enough to just do what it does best – design beautiful, high-quality jewelry. It needs to tell its own story as well. Spreading the ‘Made in Italy’ message is essential to ensure the local industry’s long-term future and vital to secure the global industry’s position in the luxury space.
The writer can be contacted at firstname.lastname@example.org.
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