And why the jewelry trade is less vulnerable than others to online disruption
Millennials are getting married later, but that may have a silver lining for the jewelry trade, according to a recent report from Bank of America Merrill Lynch Global Research.
While the overall marriage rate has fallen, particularly among millennials, the sheer size of that generation should make up for it, the report says. (By 2020, the U.S. population of people between the ages of 20 and 39 will be 13.5 percent higher than it was in 2004, the report says.) It predicts that the overall number of weddings will remain flat or slightly down through 2020.
While the number of bridal sales may stay static, the average price may rise, the bank’s analysts say: “People who opt to get engaged later in life often have greater disposable income to spend on engagement rings.”
The report further posits that jewelry retailers are less at risk than other sectors for “disruption” by online retailers.
“Jewelry items have unique properties, making the category less conducive to online purchase,” it says. “While many view diamonds as a commodity because of the extensive certification process, it is difficult to appreciate factors like size and color without seeing the actual stone. Jewelry purchases tend to be a bigger ticket than apparel, particularly with engagement, and we think the higher price means customers will want to view the product in store before buying.”
Signet has only 5 percent e-commerce penetration, while Tiffany has 6 percent. By contrast, Restoration Hardware has 50 percent, Urban Outfitters has 29 percent, and Abercrombie & Fitch has 22 percent, say the Bank of America Merrill Lynch Global Research analysts.