Speaking at the Antwerp World Diamond Centre (AWDC) Café - a monthly guest lecture series at AWDC - diamond industry analyst Edahn Golan addressed the latest trends in the U.S. retail jewelry market. Drawing on actual point-of-sale data gathered by NPD Group from thousands of retail doors in the U.S., including major jewelry chains and hundreds of independent jewelers, Golan notes that the industries tracked by NPD in the U.S. market grew 0.6% to $1.85 trillion in 2016, with the online market growing 7.2% to $138.4 billion, or approximately 7.5% of total sales. Concerning the jewelry market in particular, Golan finds that jewelry sales have continued their steady growth - a few declines notwithstanding - and topped $70B for the first time ever in 2016.
Average expenditure per person on fine jewelry rose to $220, or 3.8% year-over-year, despite the fact that Americans are spending a smaller percentage of their discretionary income on jewelry. Significantly, for the diamond industry he notes that while consumer spending may be on the rise, this is because they are simply buying more items, with spend per item declining. This is unwelcome news for the diamond industry. He sees it as part of cultural shift in mentality toward 'seasonality': consumers toss out the old and buy something new as the situation demands. This is not typically how people buy diamonds - or so one may think. In fact, the top selling jewelry items at Amazon were less than $100, with diamond engagement rings available for $300 at outlets like Wal-Mart. Meanwhile, specialty jewelers - where high-price items are more often sold - are losing ground. A trend like this may eventually play into the hands of synthetic diamond jewelry, as the cost of this tech-driven item will decline as production efficiency increases.
An important caveat for the latter conclusion is that bridal sales in particular are still the domain of natural diamonds. Golan points out that the share of U.S. synthetic diamond purchases declines markedly in February, May, November and December, as consumers do not deem synthetic items appropriate for 'romantic' and significant purchases. Looking to advise diamond retailers, Golan notes that branded diamonds are performing well, and also deliver higher margins for retailers. He also stressed the importance of keeping abreast of consumer preferences regarding shapes and sizes, for while the market may be stable, preferences shift rapidly: rounds retained 59% of market share, but fell nearly 10% compared to 2015; princess cuts lost 25% of their popularity to settle in at 14% market share; meanwhile, ovals, pears and squares became more popular, but represent a small segment.
Golan told The Diamond Loupe that overall, there is cautious optimism for the US economy in the coming year, but if diamond retailers wish to take advantage, they should find creative ways to adapt not only to preferences regarding shapes, but also to the major trend toward personalization, as other retail items have done. Branded diamonds will continue to shine, but the real key to success and survival is to invest in marketing. "It's time for diamond retailers to realize they have to do whatever it takes, even if the cost seems painful in the short term."