The US jewelry market is experiencing a major shift in consumer behavior. Nearly a year into this jewelry retail reality, consumers are making different choices about where and how they spend, driving fewer unit sales but higher average purchases.
The US jewelry market is experiencing a major shift in consumer behavior: buyers are purchasing fewer pieces while spending more per item. Nearly a year into this new jewelry retail reality, this shift has become the defining force shaping the market. Declining unit sales combined with higher average spending are driving overall revenue growth, a positive development for much of the industry.
According to Tenoris, overall jewelry sales revenue rose 11% in July despite a 4% decline in the number of jewelry items sold. The increase was driven by a 16% rise in average spending per item.
Average spending on natural diamond jewelry, including loose diamonds set in-store at consumer request, increased 17%, slightly outperforming the overall jewelry market. Finished diamond jewelry performed even better. Retailers are capturing this shift in demand in several ways, including through a steady expansion of gross margins.
Average spending on jewelry set with lab-grown diamonds was flat year over year, while unit sales continued to rise, especially for items priced below $500, according to Tenoris July data.
This is the great divide between natural and lab-grown diamonds. One is gaining traction at lower price points, while the other is benefiting from growth at the higher end. Both are firmly established in the mid-market.
What Does This Change in Consumer Behavior Mean for the Market?
Retailers with a strong bridal jewelry focus are seeing sustained demand for engagement rings after nearly a year of improvement. The trend appears to be holding. While many consumers are choosing lab-grown diamond engagement rings to save money, others have returned to pre-COVID budgets and are opting for larger stones.
Retailers built around volume shifted quickly toward lab-grown diamonds, but continued price declines have forced them to reassess their business strategies. Looking ahead, some may increase their focus on lower-color, included natural diamonds. Much of today’s natural diamond marketing is moving toward brown diamonds and stones with “a story”, diamonds with character and visual appeal rather than only traditional expectations of brilliance.
Traders are benefiting from improved cash flow. Careful inventory and financial management helped many survive the downturn. Maintaining that discipline remains essential.
Miners are in a more complicated position. While diamond sales are improving, demand for a broad range of run-of-mine production remains weak. To keep mines economically viable, producers need stronger returns from higher-value goods. Whether consumers will accept those higher prices remains an open question.
The contradictory path seen at retail is now echoing through mining. Although diamond revenue is improving in consumer markets, miners are closing or slowing production at operations around the world. Part of this reflects the natural depletion of mature mines, but some of it is tied to changing consumer demand, which is affecting the economic viability of certain deposits.
The jewelry retail reality is changing how success is achieved. Connect with Tenoris to access data-driven insights into consumer behavior, retail trends, and the shifts redefining the jewelry industry.
