December 2022 jewelry sales activity softened against an exceptionally strong 2021. With it, holiday season sales and annual sales were down as well. However, there were pockets of improved activity, especially in higher-priced items.
In the 2022 holiday season, sales declined 10%, while average price per unit remained steady.
Jewelry Demand in December and 2022
Year over year, US specialty jewelers declined in December, as the American market is slowly moving away from its record high expenditure on jewelry. Partially, this decline is a result of a return to the historic, should we say ‘normal’ level of bridal demand.
December 2022 jewelry sales declined 9.7% by units and 7.1% by value. Market performance continued to be segmented by price point. Unit sales for items selling for less than $1,000 declined 10.2% year over year. Unit sales of items retailing between $2,500-$7,499 were down 4.1%. Sales for items priced $50,000 and higher rose 6.9%.
Every jewelry category suffered from a decline in sales during the month. Yet, bracelets and necklaces suffered from it less. Bracelet sales were down 4.2% while total value of sales was up 1.3%. This was driven by consistent performance in most price ranges above $1,000, which pushed up the average spend per unit.
Necklace sales were down 5.6% while sales by value up 0.3%. This driven by a rise in sales in the $2,500 to $7,499 retail price range.
Bridal Down, Except for the Higher End
As expected, bridal continued to show weakness with December unit sales down 18% and sales value down 17.4%. Bridal weakness was across the board in very retail price range except for the $10,000- $12,500 and $50,000-$99,999 price ranges, up 2% and 2.3% respectively.
Natural Diamond Jewelry under-performed the market in December. Unit sales were down 15.6% and value of sales down 10.4%. Declines were across all retail price ranges with the exception of items priced at $50,000 and higher.
Lab-grown diamond jewelry share totaled 4.7% by units sold and 5.1% by value of all diamond jewelry sales in December. This is an increase from 2.8% and 3.1% in December 2021.
A developing trend is that of engagement rings set with lab-grown diamonds. In December they held a share of 15.7% of all engagement rings sold. Their share of sales were especially high in the $7,500-$9,999 retail price range, clenching capturing 22.5% of unit sales. In December 2021, LG-set DER held a 7.9% share and having a 11.1% share of the $7,500-$9,999 retail price range.
For diamond-set stud earrings, 11.4% were lab grown, capturing a 19.7% share of sold units in the $1,000-$1,499 retail price range.
Gross Margins Up at December 2022 Jewelry Retail
Retailers offset declines in sales volume by increasing their gross margins. Gross margins increased 0.6% to 51.3%.
2022: Started High, Then Declined
Full year 2022 started off strongly with January through April sales tracking to the extremely high sales levels of 2021. From June forward, unit sales continued to show weakness in comparison to the historic highs of the previous year.
In 2022, jewelry sales declined 6.6% by units sold and up 0.8% in sales value. The value of sales increase was driven by a 2% increase in the average transaction value as the mid and high end of the market continued to show strength.
Unit sales in price points under $1,000 declined 9.1%. Items sold in the $1,000-$14,999 price point ranges were essentially flat, down 0.5%. Sales of items priced $15,000 and higher rose 2%, as the trend of higher average spend seen in 2021 continued into 2022.
Holiday season diamond sales declined 26% year over year, while LG leaped 29% in the November-December period. This concluded a year that started with continued growth until mid-year.
Although the holiday season started positively for natural diamonds, by the end of December it softened significantly. Unit sales rose 66.3% from November, far less than the typical +80% seem in previous years. Average retail prices were practically flat versus November (+0.4%) but increased 2.2% year over year.
For the year, the decline in sales was expected. Although sales in the first half of 2022 were ahead on a year-over-year basis, the rise kept shrinking until they fell behind starting in June. From that point on the lead eroded continuously.
Year over year, demand for round shape natural diamonds declined in December and the average weight decreased too. Ovals, the second most popular shape in the market after rounds, did relatively better by total sales and a rise in average size of sold item: 1.37 carats.
Over the years we are also seeing a decrease in memo, standing at just 17.4% in 2022, down from 18.7% in 2020.
During 2022 there were signs that branded diamonds are doing better after a decline in consumer demand in 2021. But, looking at the whole of 2022, branded diamond sales were slashed in half by number of items sold, and total value down by 32.3%.
Lab Grown Diamonds
Demand for lab grown diamonds kept growing throughout 2022. In December, 38% of diamonds sold were lab grown. The total value of retail sales rose 31.6% while the average value declined 11%.
In 2022, lab grown had a 33.4 share of unit sales and 11.8% of diamond sales by value, up by more than a third year over year.
The top selling item was F color, VS1 clarity items weighing 2.00-2.24 carats. This is a significant departure from the GH/VS2 1-carat items that headed the list just two years ago. And while the average spend on the top selling lab-grown diamonds was between $2,500-$5,000 in 2020 and 2021, last year it rose to $5,000-$7,500 per item.
Retailer’s gross margin increased to 54.5% in December, higher that the annual average of 52.6%. This is part of an ongoing trend of rising retailer margins on their loose LG sales.
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Featured photo: Kenta Kikuchi