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Jewelry Retail Sales: Less For More Per Item

September 9, 2023 /

Overall US fine jewelry and diamond retail sales were mixed in August. Year over year, sales rose 0.5% by value and fell 4% by quantity of units sold.

Despite the modest rise in consumer expenditure in August, year to date sales declined 7.4%. This is impacting nearly every category of fine jewelry and diamonds.

August Was Mixed For Jewelry

In August, unit sales were down 4.9% year over year while total retail sales revenue increased 2.0%. The value increase was driven by retail sales in both the $50,000 to $99,999 (+13.2%) and the $15,000 to $19,999 (+6.5%) retail price ranges.

All other price ranges showed decreases in both unit and retail sales value, except for the $100K and higher range where units increased, and value decreased.

Year to date, unit sales were down 5.4% and retail value declined 5.5%

Bridal Sales Engagement Ring Prices Declined

Bridal jewelry sales declined 5.6% year over year by units sold and 9.7% in value. Regionally, the Midwest showed slight unit growth of 0.5%. The East (-3.6%), Southwest (-5.7%), Southeast (-14%), and the West (-17.4%), all showed declines.

Engagement rings began showing signs of activity, but at a much lower average price. Unit sales were down 2% while retail sales value declined -8.2%. This was driven by a 15.1% year-on-year decline in average sales price to $3,544.

Natural diamond jewelry sales posted a 9.4% decline in units and 3.4% in value.

Lab grown diamond jewelry sales posed a unit sales increase of 45.7% and a 37.2% increase in retail sales value.

Lab grown jewelry accounted for 6.3% of all unite sales in August. This is up from 4.0% of sales in August of 2022.

Average Unit Price Up for Natural Diamond Fashion Jewelry

The disruption of the natural diamond bridal market has been well chronicled. From the remarkable growth in lab grown to the contraction in the number of weddings, the market has declined significantly. However, the bridal market, while both a key driver of current revenue and a data point in future projections is not the largest sales value generator in the fine jewelry market.

Fashion jewelry represented 64% of retail sales value of fine jewelry in August. Bridal fine jewelry sales represented 46% of sales value. (Tenoris tracks loose diamond sales separately.)

The natural diamond fashion jewelry segment recorded a 9.1% decline in unit sales and a 0.3% decrease by value in August. That meant that the average value per unit was up 4.9%.

Jewelry Opportunities

A look at product category, married to changes in consumer preferences in gold color, demonstrates a range of performance for natural diamond fine jewelry sales. Additionally, a look at mounting options shows areas of opportunity.

Bracelets year-on-year unit sales declined 4.6% in August with retail sales value up 0.6%. The average price per unit sold was $3,538, up 8.4%. Unit sales of bracelets set in yellow gold were up 8.4% year-on-year. Yellow gold unit sales in the $2,500 to $4,999 retail price range were up 16.2%.

Earrings posted year-on-year unit sales of -9.5% in August with retail sales’ value down 0.9%. The average retail price per unit sold was $2,245, up 2.9% over last year. Unit sales of earrings set in yellow gold were up 6.2% year on year. Yellow gold unit sales in the $1,500 to $2,499 price range were up 25.1%.

Necklaces posted year-on-year unit sales of -0.1% in August with retail sales value up 30.9%. The average retail price per unit sold was $2,148, up 18.0% over last year. Unit sales of necklaces set in yellow gold were up 13.5% year-on-year. Yellow gold unit sales in the $2,500 to $4,999 price range were up 24.9%.

Pendants posted year-on-year unit sales of -6.2% in August with retail sales value up 0.8%. The average price per unit sold was $1,147, up 9% over last year. Unit sales of pendants set in yellow gold were up 16.5% year on year. Yellow gold units in the $1,500 to $2,499 price range were up 31.7%

Fashion rings posted year-on-year unit sales of -13.3% with retail sales value down -1.1%. The average price per unit was $2,118, up 6.8% over last year. Unit sales of rings set in yellow gold were up 5.9% year on year. Yellow gold unit sales in the $7,500 to $9,999 price range were up 20%

About That Gold

Some 59% of natural diamond jewelry is set in white gold. This is down 14.8% from last year. Following, 34.3% of natural diamond jewelry is set in yellow gold. This is up 11.3% from last year. This indicated a shift in consumer preferences from white to yellow gold.

As the natural diamond jewelry market continues to face challenges, identifying consumer demand by product, price point and material composition is essential in identifying both weakness and opportunity in the market.

US retail jewelry sales chart - Jan 2020-Aug 2023 - Source Tenoris

Diamonds Show Signs of A Return to Pre-COVID Trends

The total value of loose diamonds sold by US jewelers declined in August year over year. However, the monthly trends may indicate a return to the kind of demand trends not seen since 2019.

Historically, US jewelry sales rise in February, May, August, and in the fourth quarter. The reasons are Valentine’s Day, Mother’s Day and at the end of the year due to the holiday season. In August it is tourism that pushes up sales.

Since the COVID outbreak, we didn’t see a pickup in sales in August. However, after very sluggish sales in July, sales leaped in August. True, the diamond industry may not identify it yet, but it was there.

While share is still around 50/50, there are clear differences between loose natural and lab-grown sales. In August, natural diamond unit sales grew more than those of lab grown. That is something we haven’t seen in many years.

Natural Diamond Sales Down YoY, But Rise 19% MoM

In August, year-over-year sales of natural diamonds declined 15%. By value, August sales dipped 9.6%.

While the year-over-year figures highlight a gloomy trend for the industry, there are a few positives. Month over month, natural diamond sales soared after taking a deep dive in July. Unit sales rose 20% while soaring 33% by value compared to July.

The jump in sales highlights two trends. One, consumers rushed to take advantage of declining prices, opting for larger goods. This drove up total average spend per diamond by 6% month over month and by 4.3% compared to August of 2022. The average diamond size rose from 1.14 carats to 1.22 carats.

The second trend is that of the return of tourism and the traffic it generates at jewelry stores. Tourism buyers tend to be less price discriminating, pushing up average price per unit.

Traveler purchases may also explain why natural sales outpace lab-grown sales. Lab-grown diamonds are very much an American product. Asian buyers, as well as tourists from other countries, are less inclined to buy lab grown.

The average retail price of sold loose, rose to $10,508, while retailer gross margins shrank to 33%.

Another sign of the times is the continued rise in memo goods. In August, memo goods were 27% of sales, up from 26% in July and just 18.5% in August 2022.

Inventories held by US specialty jewelers declined in August, down 2% in value and nearly one percent in units.

Average Retail Sell Price & Cost of loose natural diamonds Jan 2020-August 2023 Source: Tenoris.bi jewelry retail sales data

Loose Lab-Grown Diamond Prices Down 28% Year Over Year

Year over year, lab grown diamond sales are growing dramatically. Unit sales leaped 51.5% but the total value of sales increased by a more modest 9%.

Compared to July, unit sales grew 14% and 10% by value. The slower value growth is a result of relentless dropping prices.

In August, the average retail price of sold lab-grown diamonds declined 3.5% month over month, adding to the long-term price drop of 27.7% year over year. Several LGD growers started to state that they are operating at near cost plus.

Manufacturers continue to see good margins; however, they are eroding too. Retailers, on the other hand, while in fact paying a wide premium, are only widening their gross margins. This while reducing consumer prices, almost habitually.

Gross margins were up again last month, rising to 64%, achieving a new record high. Also inching up is the average size of sold LGD, now up to 1.97 carats, up from in July.

While two-carat items remain the most popular lab-grown diamond size, three-carat LGDs are gaining share of sales. In 2022, 3 caraters were just 5% of stones sold. In January of this year that share rose to 8%. In August they already captured more than 10% share. One in out of every 10 loose LGDs sold weighed 3 carats.

Average Retail Sell Price & Cost of loose lab grown diamonds Jan 2020 - August 2023 Source: Tenoris.bi jewelry retail sales data

Lab Diamonds Cost Consumer a Quarter of Natural Diamonds

The price gap between natural diamonds and lab-grown diamonds is wide and growing. In January 2020, the retail price of a one carat round LGD was 35% less than a comparable natural diamond.

Currently, the price gap is 76% even as the price of natural diamonds is declining. Natural diamonds, with all their fluctuations, are a relatively steady commodity. Lab grown prices, on the other hand, sink like a stone in water. In this case the body of water is the consumer market.

For LGD to continue to be a viable consumer product, some perceived value needs to be created. Until then, the LGD pipeline is driving fast into a dead-end.

LG & Natural diamonds average retail sale price Jan 2020-Aug 2023 - Edahn Golan & Tenoris jewelry retail sales data

Tenoris Reports Update

The Tenoris reports were updated to improve usability, including added functionalities to the diamond report’s Best Sellers page.

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.

Photo: Sabrianna

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