Economists Foresee Bright Holiday Season
October 17, 2016
While jewellery sales have been fairly flat in the U.S. this year, the National Retail Federation (NRF) is predicting a strong 3.6% increase for all retail in the coming holiday season. The NRF said consumer confidence is on the rise, jobs have become more plentiful and incomes have been climbing. All of these factors will push growth higher than the 10-year average of 2.5%.
Economists at financial institutions are even more optimistic about the season, the Centurion newsletter reported. The accounting firms of Deloitte and PriceWaterhouseCoopers (PWC) both anticipate strong gains. PWC is calling for a 10% increase, citing a consumer survey that also found consumers favouring independent stores and local brands.
U.S. jewellery retailers need this good news. In the first half of the year, Tiffany & Co. same store sales were down 9%, Blue Nile sales were flat and Signet Group (Kay, Zales, Jared Galleria) sales were down 2.5%.
Worldwide, luxury sales have been struggling with Swiss watch demand showing monthly declines for over a year, especially at the higher end. Richemont (Cartier, Van Cleef & Arpels, and several luxury watch companies, including Baume & Mercier and Vacheron Constantin) was down 16% in the first half of the year. LVMH (De Beers retail and Bulgari) offered some hope, showing a 4% gain, mainly from the introduction of several watch lines.
U.S. President Obama removed the ban on imports of ruby and jade from Myanmar (Burma) on 7 Oct during a visit by State Counsellor of the Republic of the Union of Myanmar Aung San Suu Kyi. The move may contribute to a revival of ruby mining in Mogok and Mong Hsu, which reportedly declined significantly after the 2008 ban was enacted.
There was no real consensus among dealers on how this action will affect the ruby market. Many believe the Burmese deposits have been winding down and that the ban (at least for Mogok stones) had been widely ignored in the past few years. Others maintain that the ban, coupled with production cuts, sharply curtailed ruby supplies in the U.S. and prompted some prominent retailers, Tiffany & Co. in particular, to stop selling the gemstone.
NGOs protested the decision, noting that human rights in Myanmar are still threatened by the military clique that still has a grip on much of the country’s economy, and the continuing violence against the Shan people, an ethnic minority concentrated in the Mong Hsu region.
De Beers sold $485 million (£390 million) worth of rough diamonds in its 26-29 Sept cycle (previously called a sight), raising prices by 1% to 2% on goods that would polish out to a carat or larger and lowering them slightly for melee-sized stones. The total was slightly larger than expected given the continuing credit problems in the diamond industry and the upcoming Diwali holiday in India, where manufacturing operations close for two weeks or more.
Russia’s Alrosa sold $454 million (£365 million) worth of rough and $18.9 million (£15.2 million) in polished in September, nearly double the August total for rough diamonds, which was $243 million (£195 million). August polished sales were $12 million (£10 million). Alrosa’s second half sales are 58% above comparable 2015 levels, which were marked by oversupply and buyer revolts over high rough prices. First half sales were 23% higher by value, 21% higher by carat volume.
Russell Shor is senior industry analyst at GIA in Carlsbad.