The all-important holiday season is, believe it or not, just around the corner. The sentiment in the New York trade is pretty terrible, and things are generally described as “quiet.”
But among the jewelers I’ve spoken to, the mood runs the gamut, sometimes surprisingly so. Overall, most don’t expect a blockbuster holiday, but very few expect a terrible one.
– Overall Christmas sales will be up, about 2 to 3 percent. No one is projecting a down holiday.
– There is an interesting disconnect between how consumers feel about the economy, according to measures like consumer confidence surveys, and how they are actually acting. Americans remain nervous about what’s happening—probably more than they should be. And yet, they have been continuing to show moderate increases in spending all year. Most think, barring some catastrophe, that should continue through the holidays. The recent (relatively) good economic news may also give things a boost.
– As should surprise no one, consumers will continue to comparison shop and hunt for deals. One sales tool many analysts mention: Coupons. It seems, thanks to the recession, and sites like Groupon, coupons are in:
Coupons are not just for down-at-the-heels penny pinchers, however. A poll of more than 1,000 U.S. consumers conducted last year by Harris Interactive found that coupon use is highest among well-off, educated city dwellers. According to the survey, 61% of adults with annual household incomes of more than $100,000 said they had redeemed a coupon in the preceding six months….
[N]otes Frédéric Brunel, a marketing professor at Boston University’s School of Management: “Even just a few years ago, coupons weren’t hip…. Coupons did not symbolize success or achievement; they were only a few levels above food stamps. But now, clipping coupons is a celebrated, cool, middle-class thing to do.”
– Companies that cater to affluent shoppers will likely do better than companies that cater to other income levels. But, again, that doesn’t mean the rich will spend freely. By all indications, they are also surprisingly budget-conscious. In fact, one recent survey rebuts familiar notions about discounting:
On the subject of discounting on luxury goods, 25% agree that such discount diminish the perceived value of a luxury brand. However, 19% said discounting actually improved their opinions. Another 28% said that heavy discounting boosted their spending while only 12% said they would spend less due to discounting.
– On the other end of the spectrum, discount stores (Walmart, Target) will likely continue to be hot.
– Another big factor this holiday: online. This may also be the first season where mobile shopping becomes a significant force.
One final note, related to jewelry: Diamond and metal prices have increased significantly since last holiday. So even if sales rise in dollar terms, the overall number of pieces sold may not grow, and retailers’ profits may stay stagnant as well (since they paid more for the pieces in the first place.) In fact, Idex’s forecast of 7 to 10 percent sales growth is largely based on increased material costs.
What’s everyone’s feeling out there?