The Boom in Pearls

Pearl sales continue to rise despite the Japanese oyster scourge that started five years ago. To compensate for the dearth of akoyas—still consumers’ favorite, according to a new JCK poll—manufacturers are promoting Chinese freshwater pearls, exotic pearls like those from the California abalone (see the article starting on p. 142), and other relatively new varieties and colors.

So how are retailers faring in the rapidly changing pearl market? Quite well, thank you. Our poll respondents said their overall pearl sales shot up 16% in 1999 over the figure from the year before, and that their gross margins on pearls are running 50%. Our nationwide poll of retail jewelers, conducted in January, uncovered these and other interesting details about today’s booming pearl market.

Hot products. Despite recent publicity about Chinese cultured freshwater pearls and the growing popularity of Tahitians, 6-mm akoya strands remain retailers’ top-selling pearl jewelry item, according to our poll results. Devin Macnow, executive director of the Cultured Pearl Information Center (CPIC) in New York City, isn’t surprised. “The classic white akoya strand has been America’s ‘bread and butter’ item since the 1940s,” Macnow says.

The second and third most popular types of pearls are Chinese freshwater cultured rounds and South Seas/Tahitians. These two varieties are also growing fastest in sales. More than 52% of respondents said the Chinese pearls are the first runner-up to akoyas, while 28% said Tahitian and South Seas pearls are their second-best sellers.

Our findings mirror those of CPIC, which did a retail survey of its own last January (see p. 141): CPIC found akoyas are the biggest sellers, with Tahitian and South Seas, respectively, next in popularity. (Chinese pearls weren’t included in its survey.)

Akoya prices also have been reasonable for U.S. consumers despite the die-off in akoya oysters. “Akoya demand in Asia fell because of their poor economies,” notes Avi Raz, president of A&Z Pearls in Los Angeles. “Therefore, the Japanese had more pearls to offer to the United States.”

Chinese freshwater pearls are well-liked because they’re inexpensive and improving in quality—they’re larger and rounder than they used to be. While akoyas’ prices are too high for television-shopping channels and mass merchants, freshwaters are now more closely mimicking akoyas’ look for almost a third of the cost. “Customers of mass merchants can’t pay $1,500 for an akoya strand, but they can pay $400 for a Chinese freshwater pearl necklace,” observes Macnow.

Retailers interviewed for this article say their typical pearl sale is either a 4-mm to 6-mm white cultured pearl set in a 14k gold ring or two 6-mm white cultured pearls set in 14k gold earrings. Add-A-Pearl necklaces (from Juergens & Anderson Co. in Chicago)—with 2-mm to 6-mm natural and cultured pearls that retail for as little as $55 for a cultured and $63 for a natural pearl —are popular in blue-collar towns, says Steven Bartle of Bartle Jewelers in Mukwonago, Wis. The Add-A-Pearl program benefits gift-givers as well as recipients, Bartle says. “You always know what to give a person for a birthday, a graduation, or an anniversary,” he notes.

Although naturally colored Chinese freshwaters spice up jewelry in a way traditional white akoyas can’t, they’re slow to excite consumers. Designers love the natural hues of freshwaters because they provide an opportunity to add color to their creations. “Naturally colored dark peach and lavender freshwaters are most popular,” says Raz. But his phone isn’t buzzing with retailer requests for the product because consumers haven’t yet caught the excitement.

Our poll reveals necklaces are still the most popular jewelry types for pearls. Next are rings, bracelets, pins, cufflinks, and tie tacks, in that order. CPIC turned up similar findings: 66% of respondents to the CPIC survey said their best sellers are necklaces; 31% said earrings; and the rest said bracelets, rings, and pins. JCK’s data show that in necklace styles, consumers prefer the 17-in. to 19-in. princess length. Pearls strung on ultra-thin filament or Microcord were the least popular with consumers, the JCK survey found. In the CPIC study, choker necklaces (14 in. to 16 in.) were reported as most popular.

Wide range of prices. Pearl jewelry prices vary more than they did a year ago, according to jewelers surveyed by JCK. Our poll shows that prices currently range from $100 to $4,000, compared with last year’s average selling prices of $800 to $1,500.

There are several reasons for the widening price spread. On the lower end, there’s been an influx of less expensive Chinese freshwater cultured pearls. Moreover, increased production of Tahitian and South Seas pearls lowered prices of these goods by as much as 50% over the past several years. On the higher end, akoya prices continue to climb; they’ve risen between 10% and 20% over the past five years, according to some estimates. And increasingly affluent consumers are purchasing more expensive pearl jewelry of all types, according to retailers.

“You’ll never see an akoya pearl go down in price,” says Raz confidently. “But Chinese freshwaters can lose value because there is an ample amount on the market.”

Nevertheless, at last year’s Asian jewelry shows, freshwater farmers brazenly raised prices as much as 40%—although they produced massive amounts of the goods. In 1999, China produced more than 1,000 tons of freshwater cultured pearls. Only 60 tons of saltwater pearls were produced worldwide during the same year. Japanese pearl farmers harvested 29 tons in 1998, a 60% drop from their 1993 peak of 73 tons.

Retailers we polled told us pearls account for 5% of their total sales. They report that their normal gross margin on pearls is 50%. On the other hand, CPIC tells us the average markup on pearls is usually keystone and, in some instances, even triple keystone. “Pearls offer a ‘saleability’ and markup that other jewelry, such as diamonds, doesn’t have because they’re not as heavily price- shopped,” Macnow observes.

Other experts cite the absence of “pearl police,” or an internationally accepted grading system, to explain higher margins on pearls. “Jewelers can work on full markup because no list exists to dictate their actual value,” says Raz.

Other findings from our poll:

  • Only 6% of jewelers have lost pearl sales to the Internet. Nearly 80% of respondents said they weren’t sure if e-tailers were steering business away from brick-and-mortar stores.

  • Few retailers compete with department store pearl prices. More than 32% ignore department stores’ advertised sales, 31% explain their prices to customers, and 30% offer some discount but don’t match department store prices.

  • Some 56% of retailers said suppliers were meeting their need for fine-quality akoyas at the same level as they did a year ago. Only 15% said suppliers were meeting their needs better than they did last year, while 28% said suppliers’ ability to meet their demand had declined.

Boosting your sales. Perhaps the best way to increase pearl sales is through staff and consumer education, say experts. Follow the e-tailers’ example, Macnow suggests. “Look at all the information about buying and caring for pearls on the e-commerce jewelry Web sites,” he says. Use promotional material from manufacturers to train sales staff and inform customers, he urges.

Pearl-selling strategies from retailers include stocking better-quality pearls and offering a range of pearl jewelry (from low- to high-end pieces). Alan Walker of Walkers n’ Daughters Jewelers of Bismarck, N.D., says stocking Chinese freshwater cultured pearl items helps his stores retain less affluent customers. “As akoya prices increased over the years, we brought in Chinese freshwaters so we didn’t lose our bottom end,” he says.

The future looks bright for pearl sales, according to Macnow. Our nation’s current “pearl boom” will outlive its traditional 15-year life cycle, he predicts. Pearls, which had declined in popularity in the 1970s, started gaining ground again in 1984. This time around, their stay in the limelight may continue for three more years because of the ready availability of Chinese freshwater and Tahitian and South Seas pearls. These products are encouraging jewelry designers to “push the envelope,” Macnow says.

Who Are the Pearl Jewelry Shoppers?

Last November we reported the results of a survey of consumers who purchased any watch or piece of jewelry worth $100 or more over the previous year. Below, we’ve isolated the results pertaining to pearls. All figures are projections from the study.

Number of pearl jewelry purchasers: 4.4 million.

Gifts vs. self-purchase: Fifty percent of women give pearl jewelry as gifts; 50% of women also reported purchasing pearls for themselves.

Number of purchases: Eighty-three percent of pearl jewelry shoppers bought one piece, and 17% bought two.

Amount spent by product category: Fifty percent of pearl shoppers spent between $100 and $299, 29% spent $300-$499, 6% spent $500-$999, and 15% spent $1,000 or more.

Number of stores visited before last purchase (including Web sites): Seventy-seven percent of shoppers visited just one store before making a pearl purchase, 10% visited two, and 13% visited between three and five.

Preferences by age: Of all consumers, 12% say pearls are their favorite. Nine percent of 18- to 24-year-olds and 35- to 54-year-olds prefer pearls to other jewelry types, while 19% of citizens over 55 liked them best.

Most Popular Types of Pearls

January JCK Poll

  1. Akoya

  2. Chinese Freshwater Cultured Rounds

  3. South Seas/Tahitian

  4. Natural Freshwater

  5. Mabé

  6. Imitation

January Cultured Pearl Information Center Poll*

  1. Akoya

  2. Tahitian

  3. South Seas

* The CPIC study did not include Chinese freshwater pearls.

Most Popular Types of Pearl Strands

  1. Princess, 17-19 in.

  2. Matinee, 20-24 in.

  3. Choker, 14-16 in.

  4. Tin Cup

  5. Opera, 28-35 in.

  6. Collar, 12-13 in.

  7. Rope, 45 in. or longer

  8. Ultrathin Filament or Microcord

Source: JCK’s January poll. Questionnaires were mailed to 645 retailers. The number of responses was 221, or 34%.

Best-Liked Sizes of Pearl Beads

  1. 3-6 mm

  2. 7-8 mm

  3. 9-10 mm

  4. 10+ mm

Source: JCK’s January poll

Where Your Cultured Pearl Strands Come From
The top 10 countries supplying cultured pearl strands to the United States, 1998 and 1999

1998 Customs Value 1999 Customs Value
Japan $99,969,868 Japan $116,583,082
Hong Kong $19,054,447 Hong Kong $35,791,967
China $15,041,827 China $23,553,140
Australia $6,759,122 Australia $18,093,568
French Polynesia $2,750,954 French Polynesia $8,929,965
Indonesia $896,893 United Kingdom $7,753,478
Korean Republic $758,148 Switzerland $3,540,104
Switzerland $729,518 Indonesia $1,091,585
United Kingdom $552,157 Germany $611,955
French Guiana $358,336 Italy $609,279
Total $146,871,270 Total $215,658,123
Source: U.S. Census Bureau Foreign Trade Data Department

Where Your Cultured Pearl Jewelry Comes From
The top 10 countries supplying cultured pearl jewelry to the United States, 1998 and 1999

1998 Customs Value
Hong Kong $8,438,716
China $2,077,380
Japan $1,002,425
Canada $741,578
French Polynesia $398,874
United Kingdom $195,644
France $90,492
Italy $85,935
Australia $65,115
Korean Republic $47,058
Total $13,143,217
1999 Customs Value
Hong Kong $9,707,008
China (Mainland) $4,430,156
Italy $1,314,981
Japan $1,242,620
Canada $869,546
French Polynesia $716,911
Spain $388,010
Australia $308,703
China (Taiwan) $303,327
Pakistan $208,598
Total $19,489,860
Source: U.S. Census Bureau Foreign Trade Data Department

Where Single Cultured Pearls Come From
The top 10 countries supplying cultured pearls to the United States, 1998 and 1999. The government does not measure quantities and weights of pearl imports.

1998 Customs Value 1999 Customs Value
Japan $31,029,542 Japan $36,091,376
Australia $15,551,896 Australia $28,091,708
French Polynesia $15,704,950 French Polynesia $15,913,680
Hong Kong $11,261,700 Hong Kong $10,032,826
China $5,417,595 China $6,445,973
Switzerland $1,142,554 Switzerland $874,460
Germany $577,268 Indonesia $528,220
Canada $339,528 Germany $442,500
China (Taiwan) $111,202 Austria $357,358
Cook Islands $101,547 Italy $319,849
Total $81,237,782 Total $99,097,950

Where Natural Pearls Come From
The top 10 countries supplying natural pearls to the United States in 1999

Customs Value
Japan $6,201,485
Hong Kong $2,422,973
United Kingdom $1,286,883
China $696,860
India $520,571
French Polynesia $489,783
Australia $316,034
Austria $125,000
France $46,188
Switzerland $42,803
Total $12,148,580
Source: U.S. Census Bureau Foreign Trade Data Department

Where Natural Pearl Jewelry Comes From
The top 10 countries supplying natural pearl jewelry to the United States in 1999

Customs Value
Hong Kong $680,203
Taiwan $425,093
China $387,264
Switzerland $260,456
Pakistan $133,345
Japan $83,852
French Polynesia $48,058
Canada $28,418
United Kingdom $22,567
Singapore $10,750
Total $2,080,006
Source: U.S. Census Bureau Foreign Trade Data Department

Another Retail Survey

As reported in the accompanying article, the Cultured Pearl Information Center conducted a retail study around the same time JCK did. The survey was sent to 200 stores. Following are some of the findings, printed here with CPIC’s permission.

  • Sales of pearls and pearl jewelry, including the values of other materials such as precious metals, totaled $1.47 billion in the first two months of this year.

  • The average price point for pearl jewelry was $847, up nearly 37% from the previous year’s figure.

  • Best-selling pearls were: akoya, 53%; Tahitian, 16%; and South Seas, 11%.

  • Best-selling pearl jewelry by type was: necklaces, 66%; earrings, 31%; bracelets, 1%; rings, 1%; and pins, 1%.

  • The most popular jewelry types by size are: necklace, 16 in.; size of pearl, 7 mm; and size of pearl in earring, 7 mm.

  • Predictions for cultured pearl jewelry in 2000: 41% of retailers expect a 5% increase in sales; 19% expect a 10% increase in sales; 33% expect a 15% increase in sales; 1% expect a 5% decrease in sales; and 6% don’t expect sales to change.

  • Gender division of pearl customers: 79% women and 21% men. The average age of a female pearl buyer is 40, and the average age of a male customer is 48.