The jewelry and watch business should get set for its strongest season since the recession, says a new survey of affluent consumers conducted by Time Inc. and market research firm YouGov.
Jim Taylor, vice chairman of YouGov, predicts the jewelry business will experience a comeback this holiday—and gives JCK seven reasons why jewelers should expect a quite-merry Christmas.
1. Consumers no longer feel luxury shame—more like luxury pride.
The recession hit the industry like a hurricane not just because panicked consumers tightened their belts, Taylor says. Many upscale consumers felt skittish about flaunting their wealth at a time when so many others had trouble getting by. “There was a problem with the concept of jewelry as a symbol of success,” he says.
But in the six years since the roof fell in, American consumers have turned into unexpected models of fiscal probity, tidying up their balance sheets by paying off their debts and saving substantially. So they no longer feel shame about big purchases, but see them as a reward for their years of penny-pinching.
“It is now possible to purchase at a high level without guilt or apprehension,” Taylor says. “They they have saved enough to afford something nice.”
Thirty percent of survey respondents said they plan to spend more on luxury goods than last year. And 21 percent plan to splurge on loved ones this holiday—up from 15 percent the prior year, and a measly 9 percent in 2011.
2. Self-gifting is up.
The idea of a reward is particularly strong when people buy for themselves, Taylor says. Some 45 percent of those surveyed hope to scoop up a self-purchase while holiday shopping.
Among those in the mood to self-splurge, 33 percent hoped to buy a piece of jewelry or watch—up from 20 percent in 2012.
Jewelry has become “the number 1 way people reward themselves,” Taylor says.
3. Jewelry is perceived as holding its value.
Consumers remain picky and a little paranoid, Taylor says, and like the idea that that jewels can be traded in when times get tough.
“There is a really complex and interesting psychological rebirth of the inherent value of jewelry,” he says. “People understand that jewelry holds its value, particularly the metal content. It is a significant factor in justifying the purchase of an expensive piece of jewelry. It will be there for you down the road and doesn’t amortize its way out of existence, like a car.”
4. The gold price has fallen.
“Consumers can buy items at a higher level of quality than they might have expected,” Taylor says.
5. Consumers want meaningful purchases.
After a few tough years, “people are searching for gifts the really communicate how they feel in a relationship. The value of jewelry as a metaphor for how they feel has returned to the table. There is a search for something with special meaning.”
6. Jewelry is now a novel purchase.
For many husbands, jewelry was always the go-to holiday gift, says Taylor.
“It had become such a regular purchase that it had lost a bit of its meaning,” he says. “It had become common, it became ritualistic, it had lost its value.”
But after so many years of avoiding jewelry stores, the category “has gotten its novelty back,” he says. “It’s unexpected, and that makes it meaningful.”
7. Everyone is time-pressed. They need a watch.
During the recession, 1.1 million affluent jobs disappeared and have yet to come back. “Everyone absorbed those jobs,” he says. “And so everyone’s jobs became more demanding. Time itself has become a substantial issue.”
As far as what jewelers can do to capitalize on all this, Taylor gives the following tips:
• Sell your items with a story.
Consumers want meaningful gift, and retailers should talk about what makes each item unique and special.
“Tell stories about where the diamond comes from, who the designer is,” Taylor says. “Those stories animate purchases.”
• Don’t neglect your workers.
Jewelers “need to understand how unhappy the recession made their salespeople,” Taylor says. “They can’t assume that salespeople feel as good about their jobs today as they did in 2005. For people who live on commissions it’s been a bad five years.”
He says jewelers need to go back to their old ways of motivating employees, such as sales contests and incentives.
• Target the young.
“Most jewelers don’t talk to teens,” he says. “But teenagers talk to their moms. If I was running Tiffany, I would have a whole teenager site where I’d explain the Four C’s, explain how they value gold, let them learn the terminology of jewelry shopping.”
He adds that there are many quite-affluent millennials, with well-off grandparents gifting substantial sums to their grandchildren.