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Diamond & Jewelry Sales Down 11%, Loose LGD Capture 50% of Sales

August 10, 2023 /

In July, overall jewelry and diamond unit sales declined 5.1%, further declining from the 2.8% decrease in June. The combined value of jewelry and diamond sales were down 10.8% year over year, adding to the 8.7% decline in June.

But while sales declined nearly across the board, loose LGD gained a 50% share of units sold.

Jewelry Sales Continued to Sag in July

July jewelry sales continued to demonstrate weakness versus July of 2002. Unit sales declined 5.4% year over year while sales value declined 6%. Year to date, sales declined 5.7% by unit and 6.8% by value. Making things tighter at retail in July was a 1.3% decline in retailer margin to 51%.

Performance by product category showed large differences. Year over year, necklaces were up 0.7% in units and 6.5% by value. Bracelets declined 0.4% in units and went up 3% in value. Pendants dipped 1.9% in unit sales and 2.2% by value while earrings declined 5.7% by units and 12% by value.

Rings dropped 9.2% in units and 7.4% in value, dragging the market down. The highly watched engagement rings segment continued to show weakness, down 9.1% by units sold and 17.7% by value compared to July 2022.

Performance by retail price range was buoyed by the very high-end of the market with items in the volatile over $100,000 price range displaying a 25% increase in units sold and a 34.8% increase in retail sales value. All other price ranges showed declines in both units and value.

Diamond jewelry dropped 7.7% in units and 7.3% in retail value. Jewelry set with natural diamonds was down 9.9% in units and 9.1% In value. The share of LGD-set jewelry sales increased to 6.2% from 3.8% in July 2022. Year over year, LGD unit sales rose 51.9% while by value they increased by 31.6%.

Jewelry Sales Increased the Most in the West

The buying patterns of the US consumer is not neatly defined by a single national perspective. A dive into regional performance shows very different buying activity by regional market.

Year over year jewelry sales by region in July were as follows:
West – unit and value of sales rose 5%,
Midwest – units down 1.3% value up 0.2%,
Southwest – units down 5% value up 4.7%,
Southeast – units down 9.6% value down 9.1%,
East – units down 14.3% value down 21.1%.

Diamond jewelry sales exhibited similar buying trends:
West – unit sales down 1.5% value up 3.4%,
Midwest – unit sales down 4.2% value up 0.6%,
Southwest – unit sales down 7.3% value down 3.6%,
Southeast – unit sales down 11.7% value down 11.4%,
East – unit sales down 13.3% value down 20.3%.

Diamond jewelry sales bolstered the overall value of jewelry sales in the Midwest, while it had the opposite impact in the Southwest. Diamond jewelry sales in the East appear to be a significant indicator of the region’s performance.

The tightening of retailer margin provided insight into retailer behavior. Here are the margin trends by region (the numbers reflect percent change in margin, not change in margin points.):
West – down 4.8%
Midwest – down 1.8%
Southwest – down 1.2%
Southeast – down 4.6%
East – up 2.3%

This shows that East coast retailers protected profits by increasing gross margin in the face of sharply lower sales. The opposite appears to be the case in the West where more attractive retail pricing drove increased sales at the expense of a reduced margin.

Regional insight provides wholesalers with inroads into understanding of managing product and sales. We will drive more into product differentiation by region in future reports.

US Jewelry Sales chart - Jan 2020-July 2023 - Source Tenoris

Diamond Bifurcation Continues in July

While natural diamond sales continued to sag by nearly every parameter, lab-grown diamonds rose by most parameters, except price. The significant news is that after months of gradually nearing each other, natural and lab grown reached the 50/50 share of unit sales in July.

Natural Diamond Sales Fall 10.6% Year Over Year

Natural diamond unit sales declined nearly 30% year over year, after recording a 14% decline compared to June. By value, natural diamond sales dropped 34% year over year, as the average transaction value slipped 2.1% in July.

The top selling item remains 1.04 carats, SI/GH, rounds selling in the $2,500-$5,000 price range.

The average retail price of sold loose, although declining 2.1% on a year-over-year basis, fell 6.5% month-over-year to $9,713.

Here are some indications to the hardship this sector is facing: in 2022, loose natural diamonds were held in stores’ stock for 13 months on average, just over a year. In July, goods sold were in stock 19 months, more than a year and a half. This produces a tremendous impact on cashflow.

After declining 3% in May, diamond inventories increased in June and July, with units rising 1.1% last month. The value of loose diamond inventories held by US specialty retailers rose 2.4% in July.

Another sign of the times is the sustained rise in memo goods. In July it stood at 26.5%, up from 18% in 2022.

Average Retail Price & Cost of loose natural diamonds Jan 2020-July 2023


Loose Lab-Grown Diamond Prices Keeps Sliding

In July, the average retail price of sold lab-grown diamonds declined 3.6% month over month. The decline is driven by pressures all along the value chain, from producers, through manufacturers to consumers. Each contributing their share of price pressure.

In another sign of the continuous decline in average transactions value, year to date sales rose 55.5% by units sold and 20.9% by value. The other takeaway from the YTD figures is that consumer demand has kept rising so far this year.

Gross margins kept rising, hitting a record 62.7% in July.

Also inching up is the average size of sold LGD, now up to 1.94 carats. Two carat items remain a sought-after item and as that trend continues, we expect to see three-carat LGDs in growing demand, pushing up the average size of sold loose LGD.

The price decline comes on top of a to a 5.7% decline in unit sales compared to June. It’s worth paying attention to this decline. This is not a loss of consumer interest, but a seasonal decline. Traditionally, July suffers from a slowdown in jewelry demand, and that’s what is dragging down LG sales.

The importance of this is a return to normalcy. COVID is gone, the post-COVID period has subsided, and now – for better or worse – jewelry demand is back to its past ebb and flow.

Average Retail Price & Cost of loose lab grown diamonds Jan 2020-July 2023

Market Share of Loose Lab-Grown Diamond Hits 50%

We first expected it in May, then for June and were off by a month, but it happened. The share of loose lab-grown diamonds sold by US specialty retailers is at the tipping point. Of all the loose diamonds sold in July, 49.9% were lab grown. Natural diamonds accounted for 50.1%.

Lab grown diamond sales reached the 50% Tipping point chart - Tenoris July 2023

This may fluctuate over time, but the trend for the coming year is one of growing LGD sales while natural diamonds remain at a relatively steady supply and demand, by which LGD gains share.

At the same time, it should be noted that by value, the share of lab-grown diamonds is just 25.2% of diamond sales.

Tenoris Diamond & Jewelry Reports Update

The Tenoris Diamond Report was refreshed, and a number of small tweaks were made to improve functionality. The report’s Loose Price & Cost page now has an expanded metrics table. They now provide a more detailed view prices on a of retailer loose diamond sales and purchases.

If you want to better understand the US jewelry retail landscape, contact us for a deeper and comprehensive understanding of the market and how Tenoris can help improve your business.


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