The JCK-Harrison Group Consumer Jewelry Study, Part II

When it comes to buying jewelry, it’s still a retailer’s world.

According to findings from the JCK–Harrison Group Consumer Jewelry Study, in an unaided-recall question about jewelry brands, consumers identified retail names, not product names, most often (see “The JCK–Harrison Group Consumer Jewelry Study,” JCK, July 2008, p. 65).

The study also shows that while the Internet has made major inroads with jewelry shoppers, consumers still prefer retail stores to online shopping by more than two to one. When asked where they purchased jewelry in the previous two years (multiple responses allowed), 87 percent of respondents had bought it from a retail store, while 42 percent had purchased jewelry online. Thirty-five percent indicated they’d purchased jewelry at a discount store, and 18 percent selected “other,” including TV shopping, catalogs, and other outlets. By contrast, in JCK‘s last consumer study, conducted in 1999, only 3 percent of respondents said they had shopped for jewelry online.

But how do independent jewelers stack up against jewelry chains and department stores? Although 57 percent of respondents’ first response to the unaided-brand-recall question was the name of a local jewelry store, when asked where they actually bought jewelry in the previous two years, the numbers were somewhat lower and equally divided (41 percent each) between a local jewelry or watch store, a chain jewelry store, and a department store.

At first glance, independent jewelers fared somewhat better in JCK‘s 1999 consumer study, while jewelry chain stores fared better in the 2008 study. In 1999, 53 percent of consumers indicated they had recently bought jewelry at an independent jewelry store vs. 41 percent in the 2008 study. In 1999, 43 percent checked “department store,” which is fairly consistent with the 41 percent who checked it in 2008. Thirty-one percent selected “chain jewelry store” in 1999, a full 10 percent fewer than the 41 percent who selected it this year.

That being said, however, these findings don’t necessarily portend doom and gloom for the independent jeweler. For one thing, there were more independent jewelers in 1999. More accurately, there were more retail jewelers, period.

According to the Jewelers Board of Trade, at the end of 1998—shortly before the 1999 study commenced—there were 27,256 retail jewelers in the United States. JBT’s most recent figures, as of June 2008, place the total number of retail jewelers at 22,830. (Note: JBT figures include all retail jewelers, both chain and independent. But each jewelry chain is counted as one firm, meaning the bulk of retailers accounting for the total figure are independents.) Additionally, in the nine years since the previous study, more avenues of distribution have opened up for fine jewelry, and more malls have been built, making mall-based jewelry chain stores accessible to more shoppers.

Analyzing the data by income, the findings held no surprises. Independents fare better among more-affluent shoppers; 48 percent of respondents with annual income above $125,000 said they bought jewelry at a local jewelry or watch store in the previous two years vs. 37 percent who chose a department store and 34 percent who chose a chain jeweler. Among respondents whose annual income was between $75,000 and $124,000, purchase incidence was almost evenly split—mirroring the lines of the total sample—while respondents whose annual income was between $50,000 and $74,000 had more recently bought jewelry at a chain jeweler (43 percent) or department store (32 percent) than an independent jeweler (35 percent). But while affluent shoppers are more likely to purchase from an independent jeweler, they’re also more likely than less-affluent shoppers to purchase it online. Forty-nine percent of respondents with annual income over $125,000 said they bought jewelry online in the past two years, compared with 39 percent in the $75,000–$124,000 group and 41 percent in the $50,000–$74,000 group.

In 2008, 35 percent of total respondents said they purchased jewelry at a discount store in the past two years. Of those, an actual discount store (such as Wal-Mart or Target) garnered the highest percentage of shoppers (22 percent), while 10 percent said they shopped in person at a warehouse club (such as Sam’s or Costco), 9 percent said they visited a wholesale jewelry district, and 4 percent bought jewelry from a warehouse club’s online site.

The percentage of shoppers who have bought jewelry from a discounter has more than doubled since JCK‘s last study (35 percent in 2008 vs. 16 percent in 1999). The JCK-Harrison study found that the most common responses to the question, What one word comes to mind if asked to describe what you think about jewelry stores? were “overpriced” and “expensive,” so the inclination of shoppers to go bargain hunting for jewelry is not surprising.

But in the nine years between the two studies, consumer attitudes also have changed significantly about discount shopping in general. Mixing high and low has become commonplace in both apparel and home decor, and the proliferation of “cheap chic” stores such as Target, H&M, Ikea, and Zara have made “cross-shopping” commonplace. In their 2003 book Trading Up: The New American Luxury (with revised editions in 2005 and 2008), authors Michael J. Silverstein and Neil Fiske analyze why American consumers are willing to spend big—even beyond their means—for certain premium products. The 2006 sequel, Treasure Hunt: Inside the Mind of the New Consumer, by Silverstein with John Butman, looks at the other side of the story and identifies how consumers trade down on some purchases to be able to afford other splurges. According to the authors, bargain shopping has gone from being a stigma to a badge of honor. It’s an indication of a shopper’s hunting prowess when they’re able to get a coveted item for less.

In 1999, 16 percent of respondents said they’d bought jewelry at a discount store like Wal-Mart, but only 5 percent said they’d bought it at a warehouse club. By 2008, the warehouse club had gained traction—14 percent of shoppers bought jewelry from one, whether in the store or online. (JCK‘s 1999 study didn’t break out in-store vs. online warehouse club purchases.) Among discount shopping channels, affluent shoppers were the least likely of respondents to have shopped in a discount store, but the most likely to have gone to a warehouse club or wholesale jewelry district.

In the nine years between the two studies, the percentage of total jewelry buyers choosing TV shopping sites and catalog shopping declined. Ten percent of respondents to the 1999 study vs. 7 percent in 2008 bought jewelry from a TV shopping site, and 11 percent bought it from a catalog in 1999 vs. 5 percent in 2008. Allowing for population increases, however (281.4 million people in 2000 vs. 301.6 million in 2007, according to the U.S. Census Bureau), it’s likely that actual numbers have increased.

In 1999—not surprisingly—only 2 percent of respondents selected “Internet retail site, non-auction,” and 1 percent said they’d bought jewelry from an online auction site (such as eBay).

In 2008, after the 41 percent of respondents each selecting independent and chain jewelers and department stores, the next-highest purchase incidence was the 18 percent of respondents who checked “national branded jewelry or watch store,” 15 percent “upscale specialty store,” 13 percent “fashion boutique or other local store,” and 9 percent “antique or collectible store.” Interestingly, among respondents who selected “national branded jewelry or watch store” or “upscale specialty store,” the purchase incidence was significantly higher among males than females.

When it came to online purchasing, females significantly outnumbered males in selecting “Internet auction site,” whereas males significantly outnumbered females buying from a jewelry-specific site or a brand’s own site.

These findings, when analyzed against other established studies of male and female shopping behavior, correlate the fact that men tend to have a very specific plan for shopping (hunter) whereas females tend to have more patience for finding what they want (gatherer). Here, for example, the results show females are willing to take the time to monitor an auction site, whereas a male wants to get online, make his purchase, and log off. Or, in the case of brick-and-mortar retail, the higher incidence of men vs. women shopping in branded shops or upscale specialty stores suggests the man is looking for a specific product—likely at the request or recommendation of a female recipient.

FOR WHOM THE JEWELRY’S BOUGHT

When asked to identify jewelry acquisition methods (bought jewelry for themselves, bought for someone else, or received it as a gift) over the past two years, the greatest number of respondents (85 percent) said “purchased jewelry for someone else.” But a significant number—70 percent—also said they’d purchased it for themselves. Sixty-eight percent had received it as a gift. Not surprisingly, a significantly higher number of women than men indicated they’d bought it for themselves (81 percent vs. 58 percent), while more men than women (95 percent vs. 74 percent) had bought jewelry as a gift for someone else. Correspondingly, a higher number of women than men (85 percent vs. 50 percent) received it as a gift. The incidence of self-purchase was highest among younger respondents (79 percent of respondents ages 25–34, vs. 68 percent of respondents ages 35–44, 66 percent of respondents ages 45–54, and 67 percent of respondents ages 55–65.

Among those buying jewelry for a gift, the most common recipient was a spouse or significant other, with 62 percent of respondents indicating they’d bought a jewelry gift other than an engagement, wedding, or commitment ring for their spouse or partner. The next most frequently named gift recipient, with 55 percent of respondents checking it, was another family member. That was followed by a friend (23 percent); a fiancée/partner receiving an engagement, wedding, or commitment ring (15 percent); a colleague (2 percent); or “other” (2 percent).

JCK‘s 1999 study didn’t track who gift recipients were, though it did track gift vs. self-purchasing. The 2008 results tracked higher in self-purchase incidence, and the figures for younger consumers vs. older consumers—and women vs. men—is something jewelers should keep tracking carefully. They should adjust their marketing, shopping experience, and merchandise mix to ensure those customers keep returning to their stores.