Market Overview

The U.S. retail jewelry industry is comprised of five main segments: bridal jewelry (30%), fashion jewelry (22%), watches (18%), precious stones (15%) and precious metals (15%). Bridal jewelry is less influenced by economic conditions than fashion jewelry, which is considered a luxury good. Precious metals include gold, silver, platinum and palladium.

The retail jewelry industry is highly fragmented, with the top ten jewelry chains comprising less than 25 percent of the market. No retailer claims more than 6 percent market share. Chains are prevalent in the industry, though independent retailers are firmly rooted throughout. Annual jewelry store sales run about $27 billion; wholesalers and manufacturers account for an additional $27 billion in sales.

There are nearly 50,000 stores engaged in jewelry retail, and the industry employs approximately 200,000 individuals. Wal-Mart is the largest retailer in the country. Next is Zales, the biggest specialty jeweler with over 2,000 stores and kiosks. U.S. retailers account for 15 percent of worldwide sales in the industry.

The demand for jewelry is largely determined by the disposable income of consumers. The increasing amount of affluent individuals, working women, double-income households and fashion-conscious men has kept jewelry sales strong through 2005. When raw material prices fall, jewelry becomes more affordable, and consumer demand rises. Renewed confidence in the economy has also played a significant role.

Over the past decade, online jewelry sales have risen steadily. This development has forced retail merchants to adapt and many have moved some component of their operations online. Increasing numbers of manufacturers and wholesalers are also conducting business online. Because jewelry is seldom branded, product differentiation is a key point of competition among retailers. Good designers are valued.

Jewelry sales are highest during the Christmas season and during the weeks proceeding Valentine’s Day. Mother’s Day sees a spike in sales as well.

Jewelry is expensive and difficult for consumers to evaluate. It is seldom branded and varies widely in design and quality. Purchases require professional expertise. Because of this, consumers tend to buy jewelry from merchants they perceive to be trustworthy. Large retailers such as Wal-Mart and Tiffany benefit from this industry peculiarity; local jewelers with community roots and good reputations benefit as well. Retailers generally purchase finished jewelry from manufacturers and wholesalers. In smaller retail stores, jewelers may be involved in all aspects of the work. Retailers may hold proprietary agreements with designers, who sell their designs exclusively through the company. Some retailers hold agreements with manufacturers to sell merchandise on consignment.

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