Industry Analysis

Jewellery Sales Show Modest Rise; Higher End Soars


Two people walk past a Kay Jewelers shopfront.
Retail traffic was down across the board ‒ though sales were up ‒ this past festive season. Photo by Russell Shor/GIA

Jewellery sales during the US Christmas season increased slightly from 2018 on average, with higher-end independent jewellers far exceeding that average, according to various surveys. Online buying surged, while foot traffic in retail stores slowed.

A MasterCard survey reported that online jewellery buying increased 9% over 2018, while overall jewellery sales were up less than 2%. The National Retail Association Federation mid-season survey found overall retail sales to be up about 2.1%, half of the higher end of the estimated 3.4% to 4.2% it had predicted.

Preliminary results from Tiffany & Co., which reported sales declines in each of the past three quarters, rebounded to show a 2% to 4% festive sales increase in North America and 1% to 3% worldwide ‒ with a steep drop occurring in Japan. Signet Group, which includes Kay Jewelers, Zales and Jared, said it expects a 2% to 4% decline in same store sales when it announces its quarterly earnings later this month.

Some retail analysts attributed the sharp decline in foot traffic in 2019 to an abnormally short shopping period between Thanksgiving and Christmas, saying it shifted a lot of business to the Internet.

“Due to a later-than-usual Thanksgiving holiday, we saw retailers offering omnichannel sales earlier in the season, meeting consumers’ demand for the best deals across all channels and devices,” said Steve Sadove, senior adviser for MasterCard, in a press statement.

Independent jewellers in the US had one of their best years ever, according to a recent survey in The Centurion newsletter. It found that 81% of jewellers saw increases, with more than half of that group posting hikes of 6% or more. Only 7.1% of those surveyed said they saw real declines in business and the remainder stayed even. A mid-season survey found a much higher percentage running behind last year, but a flurry of final-week business pushed most of them into positive territory.

“Although the season started slowly for many high-end jewellers, the end result was well worth it, with more than 80% of respondents to The Centurion's Holiday Sales Success Index reporting sales gains over last year's already-solid season,” says Hedda Schupak, editor of The Centurion newsletter. “But jewellers in the Midwest are not feeling as much love as their peers. With the exception of a few outliers who cited specific reasons for a drop ‒ such as losing either a coveted brand or a key top-performing salesperson ‒ those jewellers reporting steep year-on-year sales declines were mainly located in the Midwest.”

One low in the survey: business from millennial shoppers was down ‒ millennials accounted for 18% of jewellers’ seasonal sales compared to 25% in 2018.

JEWELLERY AUCTIONS

The top auction houses Sotheby’s and Christie’s ended 2019 somewhat below the record years of the past decade, totalling an estimated $750 to $800 million (£570 to £610 million) for the year, with Christie’s holding the larger share at about $430 million (£330 million).

Sotheby’s year-closing 12 Dec New York sale featured a GIA-graded 7.55 ct cushion-cut Type IIb, Fancy Deep greyish-blue diamond that sold for $6.6 million (£5 million), 10% above its low estimate. A 20.16 ct Fancy Deep brownish-pinkish-orange diamond sold for $2.8 million (£2.1 million), well above its estimate. The sale totalled $43 million (£33 million).

At Christie’s New York auction a day later, a brooch featuring an 11.20 ct Burmese ruby surrounded by emeralds and diamonds sold for $9 million (£7 million), more than double its pre-sale estimate. The brooch belonged to the Du Pont family. The sale also included a GIA-graded 3.07 ct Fancy Vivid blue diamond, Type IIb, that sold for $3.4 million (£2.6 million) and a Kashmir sapphire and diamond ring with a combined weight of 30.14 cts that attracted $3 million (£2.3 million). That sale totalled $67.5 million (£51.7 million).

JAPANESE RETAIL

Larger jewellers in Japan, the world’s fourth largest jewellery market, are bracing for a sales hit after the government added a 2% increase to the national sales tax that had been delayed two years. In 2012, the government voted to double the consumption tax to 10% in two stages. The first stage in 2014 raised the tax to 8%, which sharply curtailed retail spending and caused the nation’s economy to fall into recession.

The nation’s economic difficulties caused the government to delay the second stage, originally scheduled for the following year, until last October, when it raised the consumption tax from 8% to 10%. The tax has begun to dampen spending on high ticket items. To reduce the economy-dulling effects of the tax, the government is offering 5% consumer rebates on purchases made to smaller retailers, including independent jewellers, by electronic payments. Some economists believe the 5% rebate will mitigate some of the negative effects on the economy.

Japan accounts for 10% of the world’s spending on luxury goods, which is dominated in Japan by international firms and large retail chains that are not eligible for the rebate programme. Tiffany & Co. in Japan, for example, has already felt the effects: sales plunged 12% to 14% between 1 Nov and 31 Dec 2019.

Russell Shor is senior industry analyst at GIA in Carlsbad.