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Soft Consumer Demand Dragged Sales Down 8.7% in June

July 10, 2023 /

Updated June 15, 2023

Jewelry and diamond unit sales were down 2.8% year over year in June as the US consumer market decreased its total expenditure. The combined value of jewelry and diamond sales were down 8.7%.

In the first six months of 2023, unit sales declined 5.5%, shrinking 8.6% by value.

The decline in consumer demand is so far reaching, that even loose lab-grown diamonds experienced a massive drop in June.

Jewelry Sales Declined

June fine jewelry unit sales declined 3.2% Year over year. Total retail value declined 6.2%. The considerable drop in value was driven by the high end of the market where all retail price points over $15,000 showed a total decline of 12.4% with unit sales down 9.6%.

Retail price points in the higher volume $1,000 to $5,000 price ranges showed more moderate declines, down 3.3% in units sold and 3.4% in total value.

Diamond jewelry unit sales declined 5.8% with value down 7.8% year over year. Pendants and bracelets were relatively flat. Earrings and necklaces both showed unit sales declined more than 4% and value declined of 7.3% and 8.3%, respectively. Ring sales were down 7.3% in units and 7.4% in value.

Bridal was down 6% in units and 10.6% in value. Diamond bridal was down 6.2% in units and 11.6% in value.

First Half 2023

In the first half of the year, fine jewelry unit sales were down 5.9% with value down 7.1%. Performance remains segmented by retail price point. The collective price ranges under $10,000 posted unit declines of 5.8% and value down 4.8%. Price ranges over $10,000 posted a 13% drop in unit sales and 14.8% by value.

Diamond jewelry unit sales were down 9.7% with value off 9.3%. Natural diamond sales, with a 94.6% share of the units sold, were down 11.7% in units and 11.4% by value.

Sales of jewelry set with lab-grown diamonds, with a 5.4% share of units sold, were up 53.8% in units and 43.9% in value. The lab-grown diamond share was up from 3.1% for the same period in 2022.

Bridal sales were down 10.1% in units and 11.2% in value year to date.

Diamond Stud Earrings

Stud earrings accounted for 7.6% of all diamond jewelry units sold and 8.5% of total retail revenue in the first six months of 2023.

Total units are down 11.2% and total retail revenue is down 13.7% compared to the first six months of 2022. The year-to-date average price was $2,277 with a gross profit of $1,047 per sale. Retailer margin has been 46%, down 3.4% from 2022.

The June results were moderately better than the year-to-date numbers with units down 6.5% and value off 4.3%. The average retail price was $2,487 with a gross profit of $1,159.

Studs are one of the most popular lab-grown-set jewelry categories. Lab-grown diamond studs were 16.7% of all units sold and had a 11.5% share of LGD jewelry sales by value in June.

Retailers are taking three specific actions to protect their natural diamond stud earring sales:

  1. Carat Weight Inflation: We have seen the carat weight size increase that accompanies lab-grown diamond sales. The average carat weight of lab-grown diamond studs increased 33% from June of 2022 to June of 2023. What we may have been paying less attention to is that the average carat weight of natural studs increased 35.8% over the same time period.
  2. Margin Compression: Retailers appear to be using their increased gross margin from lab-grown diamond sales to support natural diamond earring sales. Lab-grown diamond studs sold at a gross margin of 56% for retailers in June of 2023. This is up from 53.7% in June of 2022. Natural stud earring sales recorded a gross margin of 45.4% in June of 2023. This is down from 48.2% in June of 2022.
  3. Quality Shift: Quality Shift: There is a slight but noticeable shift in the quality of natural diamonds set in stud earrings. In 2022, 62.5% of all stud earrings were in the HIJ and SI-I1 ranges. This number increased in 2023 to 66.8%.


The largest value share of stud earrings is the $2,500 to $4,999 retail price range. The trends identified in the entire stud earring category are amplified at this price point:

  1. Carat Weight Inflation: The average carat weight of lab-grown diamond earrings has increased 50.3%, from 2.04 carats to 3.07 carats from June of 2022 to June of 2023. The size of natural diamonds set in studs has increased 48.8%, from 1.13 total carat weight to 1.69, over the same time period.
  2. Margin Compression: gross margins of stud earrings set with lab-grown diamonds has increased 9.5% to 57.2% in June. Over the same period, natural diamond studs’ margin has decreased 4.1% to 48.8%.
  3. Quality Shift: In 2022, 62.5% of all natural stud earrings were in the HIJ SI1-I1 ranges. The share of these goods declined in 2023 to 60%.

 

The impact of lab-grown diamond stud earrings in the market is shifting both the size and quality of natural goods set as studs as well as forcing retailers to reduce gross margins.

US Jewelry Sales chart - Jan 2020-June 2023 - Source Tenoris Analytics Edahn Golan


Diamond Sales Declined

It’s not surprising that diamond sales have been declining in recent months after an exceptional post-COVID run. The surprise is how this impacted loose lab-grown diamond sales in June.

Natural Diamond Sales Fall 22.3% Year Over Year

Natural diamond sales are on an ongoing downward trend. Year over year, unit sales fell 19.7%. By total value, sales fell 22.3% versus June 2022.

In the first six months of 2023, natural diamond sales were slashed nearly 20% by value and volume.

And yet, in June the average retail price per carat of sold natural diamonds increased 3.1% year over year to $10,456. The average carat size was 1.20 carats.

Retailer margins are also shrinking. If in the past their margins on natural diamonds were around 36%, in June they averaged 35.5%, a 3.5% year-over-year decline.

The average retail price of 1-carat rounds, a bellwether item, inched up 0.1% month over month to $5,743

Memo supply remains high at 24.2% of items sold.

The best-selling natural diamonds in June were 1.20-1.29 carat, oval-shaped, D color/SI2 clarity diamonds, with an average retail price of $7,769.

Average Retail Price & Cost of loose natural diamonds chart Jan 2020-June 2023. Source Tenoris analysis Edahn Golan

Lab-Grown Diamonds: Consumer Demand Keeps Growing

In June, lab-grown diamond unit sales maintained their fast-paced growth with unit sales rising 7.8% month over month.

By value, sales rose 4.7% month over month, and 28.9% compared to June 2022.

In the first half of 2023, the value of lab-grown diamond sales rose 23% compared to the January-June period of 2022. By units sold, demand rose 57.8% year over year.

The average retail price of lab-grown diamonds continued to decline in June. The average price per carat declined 2.2% compared to May, and down a massive 22.9% year over year.

The battle retailers are fighting against the consumer price erosion is hidden in the gross margin. As lab-grown diamond prices decline, retailers maintain a considerable gross margin. In June it stood at 62.4%, rising from 52.1% in June 2022.

The top selling item in June was 2.00-2.24 carat Round F/VS1. This additionally serves as a sign of how consumer demand is focused on color and clarity. Seven of the ten best-selling items were all two carats or larger. That highlights a significant part of the lab-grown diamond allure.

LGD Average Retail Price & Cost chart Jan 2020-Jun 2023. Source: Tenoris. Analysis Edahn Golan

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.

June 15, 2023 edits include updated June figures.
Photo: Jungwoo Hong

 

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