[dropcap cap=A]s figures continue to rebound for most jewelers across the U.S., we focus this month on comparing two key areas of the jewelry market -- the traditionally successful diamond area, and the less popular, but more varied colored stone category.[/dropcap]
One of the more obvious signs of the economic recession was the fall in the percentage of sales coming from diamond jewelry - which shrank from around 47 percent of total sales at a typical jewelry store to less than 40 percent.
Interestingly however, May has seen some stronger sales from diamond product, particularly in those stores we track that have sales in excess of $1 million per year. The average store in this category gained more sales from diamonds in May than the rest of its departments combined, with diamonds accounting for 51 percent of total store revenue. This level has not been achieved for quite some time. Stores achieving lower sales per annum were still relatively quiet in diamonds, with around 38 percent of their May sales coming from this product.
Given the key role that diamonds have traditionally played in jewelry sales, these figures are encouraging for the future, and given they are on the back of increasing store sales numbers, it is a good sign that customers are beginning to look at higher priced items again.
As the chart shows, this sales surge has had a positive impact on rolling YTD diamond sales, especially since March, and we now see diamond jewelry providing an extra 3 percent of store sales compared to January.
By comparison, things haven't looked as rosy for colored stone jewelry. Sales have been in a freefall, in terms of percentage contribution to overall sales, and are showing no signs of turning the corner. From a high of 13 percent in June 2008, colored jewelry has been bouncing along at around 7 percent of total store sales ever since. This represents a fall of 6 percent of total sales, not much different to that experienced with diamonds, but given the relative starting point, it is closer to half the percentage contribution it used to be, unlike diamonds, which are down only 15-20 percent. When you consider that most stores' sales are lower than they were in 2008, then colored jewelry is bringing in less than half the total sales dollars than in the past.
Part of this may be fashion related, as colored jewelry can wax and wane in terms of favor with the buying public. But the other factor that has likely contributed is the increase in the popularity of silver and beads. The typical colored stone jewelry item has a much lower average price than the typical diamond piece, and as such it is having to compete with other lower priced items such as beads for a share of this market. Given that most stores have experienced an increase in sales units, but a drop in average sale, it's noticeable that coloreds have not benefitted from some of this switch away from diamonds. The only other area that has suffered a decline during this period, in terms of percentage of contribution to overall sales, has been gold - understandable given the increase in prices.
At this point there is no noticeable change in the market's demand for colored product - diamonds however, seem definitely on the move.
Watch this space for further developments...
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