US Jewelry Sales Down Despite 5% Rise in Average Expenditure

After two positive months, US jewelry sales posted a 1.6% decline in September. According to our most recent data, consumers purchased fewer jewelry items in September but their average expenditure per item increased 5%.

Also notable is the change in inventory levels. After several months of increases in the number of units held in inventory, retailers reduced the overall number of units on hand.

Natural diamond jewelry sales revenue – finished and set in-store – declined 3% year over year, despite a 2.5% rise in average expenditure per item. Lab-grown set and finished jewelry revenue increased 3.5% despite a 15% drop in average expenditure.

Finished Jewelry Revenue Down 2%

Finished jewelry sales declined in September, and retailers’ revenue from finished jewelry declined 2%. This revenue decline was the first serious fall since January, when revenue dropped 5% year over year.

Unit sales sank 6.5% year over year and included every jewelry category and nearly every sub-category. The one sub-category with increased unit sales was tennis bracelets, up 8.5%. Tennis bracelets have been in growing demand for quite some time, and the recent rise only further boosts that trend.

Gold jewelry, which did well in August, shrank 1.7% in September. However, the average expenditure increased to $1,432.

Natural Diamond Jewelry Down 5.5%

In September, retailers’ sales of natural diamond jewelry declined 5.5%. The deepest decline was in earring sales, down 21% by revenue and 8% by units sold. Dangle earrings were the hardest hit earring sub-category.

As with many other categories, the declines in unit and revenue sales are countered by a rise in average expenditure. In this case, a 1.1% rise in the average expenditure per unit.

Finished LGD Jewelry Sales: Mainly Rings and Earrings

Finished jewelry set with lab-grown diamonds posted a 23% jump in revenue in September and a 33% leap in unit sales. The average price fell 7% to $1,985.

More than half of the units sold were rings, and another 25% of units were earrings. Together, the two categories accounted for 82% of finished LGD jewelry revenue.

Engagement rings remain the top-selling LGD-set item. One of its main appeals is its price, about $2,900 per unit. Year to date, the revenue they generated was up 23.5% while the average price slid 1.7%.

Loose Diamond Sales Shrank in September

US retailers’ overall revenue from loose diamond sales shrank in September on a year-over-year basis. The decline is fully due to falling revenue from loose lab-grown sales.

Natural Diamonds: Not A Rebound, A Teeter-Totter

On a year-over-year basis, retailers’ revenue from loose natural diamond sales is fluctuating. After the deep declines in June and rise in July, they fell again in August, only to rise 2% in September.

This teeter-totter effect is not seasonal and only partially reflects the change in unit sales. More than anything, it reflects consumers’ willingness to increase average expenditure on natural diamond jewelry. Specifically, it highlights changes in average expenditure on engagement rings where the center stone is picked separately from the semi-mount.

In September, the average expenditure per diamond was up 8% year over year to $10,515. The average diamond size increased to an exceptional 1.41-carat diamond.

Over the years, we see a growing tendency on the part of consumers to buy larger natural diamonds. Since January 2020, just before Covid broke out, the average diamond size has increased a remarkable 21%.

On the downside, to generate sales, retailers are reducing their gross margins, currently down to 33%.

Lab-Grown Diamonds Revenue, Market Share Contracts

While the rise in units sold continues, loose lab-grown diamond revenue sank 14.5%. Even the bestseller, 2-carat rounds, suffered from a deep year-over-year decline in revenue, falling 27%.

As previously stated, the biggest issue lab-grown is facing is prices shrinking faster than unit sales rise. Year over year, the average expenditure declined 21.5%.

Year to date, revenue from selling loose LG declined 7%, while unit sales increased 6%.

In a way, retailers are ignoring the trend of declining revenue. This is evident from the ongoing trend of increased inventories. While the midstream is probably happy to see goods move to retailers, in the long-term this is not sustainable. At some point, retailers will wake up to this buildup and end it.

LGD growers and polishers continuing to churn out goods may find themselves stuck with a massive amount of goods. The response in the past to such buildups was reducing prices. That will only further boost the snowball effect.

In the past year, the number of lab-grown diamonds held in inventory by retailers increased 30%, while unit sales increased just 9%.

Another issue worth paying attention to is the decline in loose LGD market share. It happened occasionally in the past. However, in September it happened in units sold as well as revenue.

This is not a trend, but something worth following. Coupled with the decline in prices, this may turn toxic.

About Tenoris

Tenoris collects retail sales data from a broad representative sample of US jewelry retailers, which it uses to calculate average expenditure. Tenoris subscribers include retailers, manufacturers, miners, and financial firms. They use this data to study everything from broad market trends to price prediction, assisting them in identifying changing trends and opportunities ahead of their competitors.

Tenoris can help improve your business through a better understanding of the US jewelry market. Contact us to discover how our reports provide comprehensive insights of the US jewelry market and how you can gain access to this data.

Feature photo: Tech Daily