The jewelry business will further consolidate in coming years, with big fashion brands grabbing greater market share, consultants from McKinsey & Co. predicted in a recently released report: “A Multifaceted Future: The Jewelry Industry in 2020.”
The analysis, which was released on Feb. 13 and can be accessed here, noted that, while branded jewelry currently represents only 20 percent of the market, that number has doubled since 2003. Using the apparel industry as a template, it predicted branded items could account for as much as 30 to 40 percent of sales by the end of the decade, with much of this growth coming from fashion brands, such as Dior, Hermès, and Louis Vuitton, entering the business.
It also foresaw greater consolidation, with the biggest names in jewelry doubling their market share, mostly by acquiring smaller local brands.
Other points the report touched on:
– The future looks bright. The jewelry trade looks ready to experience strong growth, with demand increasing 5 to 6 percent a year. But the consultants cautioned that the industry needs to become more attuned to the prevailing winds.
Jewelers “can’t simply do business as usual and expect to thrive,” the report warned. “They must be alert and responsive to important trends and developments or else risk being left behind by more agile competitors.”
– Local brands will go international. Just two jewelers—Cartier and Tiffany & Co.—made Interbrand’s recent ranking of top global brands, the report found, because most big jewelry brands are local names, like Christ in Germany or Chow Tai Fook in China. But that could change as more brands spread their wings internationally, with Swarovski cited as a possible global player.
– Online will grow—then level off. Industry executives estimated that Internet jewelry sales now account for about 4 to 5 percent of the market. That might grow to 10 percent by 2020, they thought, but not much beyond that, since most customers still want to touch and feel the merchandise. However, online fashion jewelry sales could reach 10 to 15 percent of that market by 2020, particularly affordable branded jewelry.
– Monobrand boutiques will grow. More brands will go retail, the report said, citing the increasing number of boutiques from Pandora (from 200 stores in 2009 to more than 800 today) and Swarovski (from two boutiques in 1990 to 860 today). So-called multibrand boutiques—a growing trend in apparel—may also represent a way forward.
– More blurred boundaries. The industry’s traditional demarcation between fine jewelry (defined as using precious metals and stones) and fashion jewelry (built around plated alloys and crystals) is getting fuzzier, with established fine names like Lanvin and Roberto Cavalli offering fashion items. It also suggested fine jewelers offer low-price items to give younger consumers “an entry point into the brand,” though it admits that could muddle the positioning of high-end names.
– More fast fashion. In apparel, it now often takes a month for a product to go from concept to store shelf. Innovative jewelry players might emulate that, the report said, by reacting to trends quicker and cutting product development times.
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