Market Place

DIAMONDS RULE SUPREME IN JEWELERS’ FORECAST

If America’s jewelers are right, 1998 is going to be the Year of the Diamond.

Don’t talk to these jewelers – members of JCK’s Retail Panel – about scant diamond margins, shortages of fine large stones, fracture filling or lasering problems or about De Beers’ less certain control of the market. They could care less. They’re convinced their sales of diamond jewelry and loose diamonds will be just fine as they go into spring and summer.

They’re convinced their overall business will be just fine, too. More than half the panelists say business in the first six months of the year will be either excellent or very good. You’d have to look back 20 years or so to find such optimism.

Part of their enthusiasm may be a reflection of the nation’s general feel-good attitude, of the confidence that the ’90s boom is really different from all others and that there is no end in sight. Part also comes from success in 1997. As a group, panelists recorded median sales increases of 8% for all of 1997 over 1996 and 10% for December over December a year earlier.

The good times continued into the first month of this year. While the median gain for January was only 5% over January 1997, one in five of the panelists had January sales gains of 30% or more from the year before.

Figures just reported by Jewelers of America underscore these strong sales performances. Almost three out of four of the 1,000 jewelers polled by JA reported sales increases for 1997, with an average gain of just over 15%. December figures were pretty heady, too, with two-thirds of the stores polled reporting increases for the month with an average gain of just over 20%.

As they look at the business outlook for the first half of this year, JCK’s panelists seem to be pinning their hopes on diamonds to an enormous degree. Diamond solitaires, diamond studs, diamond engagement rings and diamond anniversary bands are mentioned again and again as likely best sellers. There’s also a strong feeling that loose diamonds will sell well (often to be mounted in an engagement ring) as will large diamonds, those of two carats and more.

Somewhat amazingly, considering all the talk about diamonds becoming a commodity, panelists give more 1 and 2 votes to loose diamonds as strong sellers than to any other jewelry store product. They top out diamond jewelry by a small margin and come well ahead of such other products as karat gold, cultured pearls, colored stone jewelry and watches.

Chains, bracelets and earrings are likely to dominate in karat gold. In colored stones, tanzanite gets many mentions and Tahitian blacks score well in the pearl market. Panelists also show real enthusiasm for high-end watches. They’re named as probable best sellers by many stores, with Rolex getting most mentions.

Soaring Consumer Confidence in February

The Conference Board reports that consumer confidence jumped to a 30-year high in February. After registering a sharp drop in January, the Consumer Confidence Index leaped 10 points in February to stand at 138.3 (1985=100). The widely-watched barometer was 118.9 a year earlier.

While both components of the index rose, increasing confidence about current economic conditions propelled the sharp gain in February. Confidence about the present situation climbed more than 13 points, hitting 172.5 in February. The six-months expectations index rose nearly 8 points to 115.6.

“Neither domestic nor foreign dilemmas are weakening the consumer’s faith in the American economy” says Lynn Franco, associate director of The Conference Board’s Consumer Research Center. “Balanced strength in the U.S. economy, combined with a rosy job outlook, are major factors in lifting consumer spirits. Consumer confidence is now closing in on its historical high of 142.3, set in October 1968.”

More than 40% of all consumers rated current business conditions as “good,” compared with under 36% in January. Less than 13% said jobs are “hard to get,” down from more than 16% in January. This was only the second time in the history of the survey that the job figure fell below 13%.

More than 18% of consumers expect the economy to improve during the next six months, up from about 16% in January. Nearly 16% anticipate more jobs will be available during the coming months, up from less than 15% in January.

The latest consumer survey also shows a strong gain in consumers’ income expectations. More than 26% expect their families’ incomes to rise over the next six months, up from less than 24% in January.

The board’s Consumer Confidence survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted by NFO Research Inc.