Rapaport Magazine

A winter’s sale

Jewelry retail is looking good after an unprecedented year, though competition from other categories is ramping up as Covid-19 worries recede.

By Lara Ewen

Image: Background: Stocksy; From left: Gismondi, Harvey Owen, Beauvince.

Pandemic-weary retailers are ready to wrap things up this holiday season and are hoping consumer sentiment stays upbeat.

Early reports are encouraging. Some 29% of US consumers plan to spend more on holiday shopping than they did in 2020, according to a September report from the NPD Group. “Holiday spending will rise 3% during the traditional November and December holiday shopping season, and 5% when the season is expanded to include October and early January,” the market research company projected.

Jewelry retailers may exceed those numbers, suggests Ellen Fruchtman, president of Toledo, Ohio-based Fruchtman Marketing, which specializes in the industry. “I think we are looking at another good year,” she says, predicting that many retailers will be up at least 10%.

General indicators seem to corroborate that outlook. “The macro environment is generally favorable for the jewelry sector,” says Marie Driscoll, managing director of luxury and fashion at advisory and research firm Coresight Research. “The US consumer has enjoyed various forms of government support since the onset of the pandemic, which, along with limited options for experiences in the past 18 months, has propelled the growth of luxury goods and jewelry.”

Among the factors boosting consumers’ willingness to spend on fine jewelry are the “shift to products from services as travel and entertainment spending remain muted [due to] continued Covid-19 concerns, [as well as] a growing self-purchasing trend and the category elevation in a work-from-home, Zoom environment,” Driscoll states.

Reluctance to spend

Nevertheless, there’s cause for caution.

“We expect this holiday season to be challenging,” says Jonathan Sharp, managing director at consumer retail consultancy Alvarez & Marsal. “US consumers are wary, and they do not feel overly confident about household incomes in the next six months. They are nervous about shopping in the ways they used to, and they are discerning about where to spend, or not.”

This came through in his company’s Fall 2021 Consumer Sentiment Survey, which Sharp coauthored. In August and September, “58% of respondents told us they expect to have the same or less money in the next six months,” he relates. “In 15 of 18 categories surveyed, they expected to spend the same or less in the next six months. They also told us they planned to spend more on basic needs and less on gifts or indulgences.”

Jewelry ranked 16th out of the 18 categories in terms of net desire to spend more in that half-year period, Sharp adds. He foresees “serious competition for jewelry retailers in the next few months. As they emerge from Covid-19, consumers are prioritizing basic needs and experiences instead.”

Fruchtman points to vacations as one such competitor. “People are starting to travel. There’s some pent-up demand, [but] there’s still a lot of hesitation, especially from the 55- to 60-plus-year-old crowd.”

Bridal jewelry, too, may take a hit as other wedding expenses come back into the picture and make couples reevaluate their budgets. Fruchtman predicts a potential decline in the average outlay on engagement rings this year compared to last, adding that “honeymoons may affect this as well.”

Early and in person

On the bright side, says Sharp, “younger and wealthier consumers did tell us [in the survey that] they intended to spend more on gifts, and younger consumers also showed positive intent on indulgences spending.”

Customers who do plan to spend will likely start early. Another NPD report, this one from October, found that “51% of US consumers plan to start their 2021 holiday shopping before Thanksgiving Day, up slightly from last year. Of those early shoppers, more than two-thirds planned to start checking off their gift lists in October or sooner.”

This is good news for brick-and-mortar stores that already have inventory, since customers can buy in person without worrying about shipping delays. “As other categories are impacted by supply chain disruptions, jewelry is well positioned to pick up additional gift-giving opportunities,” says Driscoll.

What about digital?

While larger and more recognizable brands, such as James Allen, Brilliant Earth, and Blue Nile, may see more digital and less in-store buying, smaller retailers with a focus on brick-and-mortar selling won’t see that shift, posits Fruchtman. “Local retailers are marketing digitally to their local markets. People in local markets still prefer to feel and touch prior to making a big purchase. We’re not seeing [in-store] traffic counts going down for our clients. In fact, just the opposite.”

Driscoll echoes that sentiment: “Shoppers are venturing back to physical shops, eager to touch, feel and try on merchandise as well as interact with informed and engaging sales associates.”

Still, she emphasizes the need for creativity. “We see retailers and brands testing livestreaming and social selling to connect and engage with younger consumers, and the use of limited-duration exclusives and collaborations to increase brand awareness and create brand heat.”

In it for the long haul

These kinds of innovative retailing tactics may be crucial to reaching customers whose shopping patterns have likely shifted for good.

“Retailers should be aware that the changes wrought by Covid-19 and lockdowns are largely here to stay,” says Sharp. Among the survey respondents, 85% “said they intended to stick with or accelerate some or all of the changes they made to shopping behaviors during the pandemic.”

In particular, customers are reluctant to go back to in-store buying due to their “continuing health concerns, a dislike of the current store environment, and concern over rising prices,” he elaborated. “It seems clear from our research that consumers are returning to functional, need-based shopping, but the experiential leisure trip to stores is still not back as an attractive idea for many consumers.”

With so many elements still at play, it’s difficult to make long-term predictions. “It’s a complete roller-coaster,” says Fruchtman. “But by and large, the general public is getting back to as normal as [things] can be at this point. [People] want a normal holiday. They want to travel to be with family. They are starting to attend larger gatherings and events.... Covid-19 has scared and scarred many people, so I don’t think we will be back to [pre-pandemic] thinking for a while. [But] the notion of being in the now and celebrating the people in your life is still a message that is resonating.”

Top tips for engaging with holiday shoppers

  • Focus on selling the basics. Staple items and larger diamonds continue to lead sales, according to Ellen Fruchtman of Fruchtman Marketing.

  • Make use of your digital footprint. “Consumers will have their minds made up even more prior to walking in the door,” says Fruchtman. “That’s a trend we see happening, which is why the website is so important.”

  • Get rid of gender norms. “Fine-jewelry sales increasingly are driven by self-purchasing as well as gift-giving purchases for both women and men, and men’s jewelry is rapidly expanding,” says Coresight Research’s Marie Driscoll. “Another recent trend where we see momentum is gender-neutral jewelry that is attracting a broader consumer base of new shoppers. The category has enjoyed growing prominence during the pandemic as a source of joy and experiences, and the current momentum is likely to continue through the holiday.”

Article from the Rapaport Magazine - November 2021. To subscribe click here.

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Tags: Lara Ewen