On Thursday morning, Rapaport Research’s Ken Gassman spoke to a room full of jewelers eager to learn about the 2003 holiday sales season. Gassman first delved into factors that fuel jewelry demand, including economic, environmental, and internal considerations.
Gassman said the three most important factors affecting jewelry sales are gross domestic product (GDP), personal income, and the U.S. stock market.
“The gross domestic product tracks beautifully with jewelry sales,” said Gassman, while showing attendees a chart illustrating the point. Gassman also reminded jewelers that while the current market may appear glum, they should consider that America’s stock market outperforms all international ones. That’s due in part to American consumers’ reliance on credit: “About half of all jewelry is bought on credit, and the average credit ticket is two and a half to three times higher than cash transactions,” he said.
He also pointed out that Friedman’s Jewelers has been outpacing all of the industry as far as jewelry stocks. One reason for Friedman’s success is that it requires credit customers to come into the stores to make payments—it doesn’t mail monthly statements. In this way, the company aspires to have 28% of those customers make purchases at the time of making installment payments.
Gassman also pointed out that consumer confidence and jewelry do not correlate. “People’s mouths and wallets do not work together,” he said. Meaning, even if consumer confidence is high, that doesn’t mean that jewelry sales will be high—unlike the correlation between jewelry sales and GDP. And while jewelry sales may initially drop off immediately after a significant event, such as a terrorist attack in the United States, historically, sales do pick up within six months.
Looking ahead to Christmas 2003, Gassman forecast sales increases of 5%-8%, citing the Bush administration’s tax plan as being “good for jewelry demand” this year.