Luxury Tastes Benefit Jewelers in 2006

In 2006 jewelry consumers’ taste turned more upscale, and this was good news for specialty jewelry stores, according to a recently released report. After losing market share for several years to discounters and other more mass market retailers, jewelry stores regained a full 50 percent share of the $62 billion jewelry and watch market.
“Jewelry stores made a come back in 2006,” says Pam Danziger, president of Unity Marketing, which published the Jewelry and Watch Report, 2007. “Jewelry shoppers, in their search for higher-quality merchandise and more fashion-forward designs, found that the service and expert advice available in jewelry stores was exactly what they needed. They were willing to trade up for service and experiences that they couldn’t find in discount and warehouse retailers.”
Danziger points to industry-leading Sterling Jewelers, reported 14.9 percent revenue growth in their most recent fiscal year to reach $2.7 billion in sales and valuted them into the nation’s top jeweler. The company operates more than 800 Kay Jewelers, 135 luxury-leaning Jared The Galleria of Jewelry stores, and 341 regional chains.
“The company’s Jared stores were particularly noteworthy in contributing to corporate growth,” Danziger said.  “Jewelry shoppers looking for a more luxurious experience appreciate a number of Jared’s practices that set it apart from others in the jewelry retail space. For example, the stores offer dedicated managers for the diamond, watch, and gold and other jewelry departments, who provide specialized service and expertise to the customer. They also use such distinctive selling methods as “white glove” presentation of watches, which makes the buying experience memorable for the customer.”
The shift toward more luxurious jewelry was good news not only for independent and chain jewelry stores, according to the report. Department stores, especially those targeting the luxury space, such as Neiman Marcus, Saks, and Nordstrom, and Internet, mail order, television, and other non-store channels also benefited from the trend. On the other hand, discount department stores and other stores that couldn’t deliver on jewelry shoppers’ service expectations lost ground last year.
“Specialty jewelry stores are aggressively pursuing the jewelry marketplace, giving the consumer the individualized treatment, access to experts, and selection of unique merchandise they crave. This is something that consumers just aren’t finding in the cookie-cutter selections at discount department stores,” Danziger said. “This is both an opportunity and a cautionary tale for those who hope to compete for a slice of the jewelry and watch market. Only by studying why people buy in this category and what successful jewelry retailers are doing well can other retailers hope to compete.”