While some retail sectors seem to be struggling, jewelry is one of the areas that is booming. Recent jewelry industry predictions suggest that 2016’s annual global sales of industry $182 billion are expected to continue to rise at between 5-6% a year.
Why is jewelry so successful? There are several reasons:
- While jewelry sales were suppressed by the global recession, they have recovered faster than other, less attractive industries.
- Jewelry’s ability to hold or even increase in value makes it attractive as an investment.
- Modern jewelry appeals to wider target audiences than ever before: including baby jewelry and men’s accessories.
Jewelry Trends - the e-commerce advantage
Jewelry (or jewellery as they say in Europe) is not just a fast-expanding retail sector, it’s also a dynamic industry which is being impacted by two different forces - consumer behaviour and industry activity. Both these forces have been accelerating both the design and production of innovative jewelry and the requirement to market sensitively to a customer base that has a high degree of segmentation. Within these two forces there are a number of key trends that must be understood to succeed in this potentially lucrative sector.
The internationalization of the jewelry sector
Thirty years ago, jewelry retailing was a geographically bounded business; today it has fully globalised. While some established retailers have succeeded in rising with the trend - eg Hugo Boss now sells 80% of its accessories outside Germany and Swarovksi has long outpaced its Austrian origins, other former national leaders like Marks and Spencer in the UK have lost substantial market share. This trend is one that really supports the entry of new players into the sector because as long as they have an omnichannel approach and recognise the need to master the key elements in jewelry ecommence, they are as likely to achieve rapid growth as the already established players.
Consolidation has a part to play in the jewelry industry story
While few brands actually make it to the fully global level (Cartier being an exception) there is currently rapid churn in the market with surprising mergers taking place. One of the most interesting effects is the number of American jewelry chains being bought by other national groups such as Ultra Diamonds being purchased by UK used Signet Jewellers and Swatch picking up Harry Winston. This all means that the jewelry sector is dividing into two: large internationalized businesses and small agile retailers, with the middle level, nationally known chain operation becoming less and less competitive.
Multi-channel marketing for jewelry
One area where online sales have lagged a little is jewelry retailing. There are a number of reasons for this:
- Fine jewelry is unlikely to grow much in non bricks-and-mortar channels as it tends to be a touch and try on purchase.
- Branded jewelry has been slow to move from an up-sale purchase with another branded product (usually up-selling takes place in-store) to a discrete purchase through multi-channel vending.
- - Wide regional variations affect the global market (eg Indian wedding jewelry is generally a group purchase with several relatives involved often taking place with vendors visiting the family home).
However online jewelry sales are currently around 4-5% of the market, and this is expected to at least double by 2020, with fashion or costume jewelry sales online reaching 15% of the total market. This is a substantial amount of market share up for grabs.
An established behavior in apparel is currently emerging in jewelry: polarized purchasing. This is where consumers specify where they will spend high (eg holidays, weddings, experiences) and where they will spend low (eg own-brand cereals, cleaning products, cars). The middle of the market tends to be flattening which is why we’re seeing the collapse of department stores in most American states, and several European countries; they trade in middle-cost purchases. In many parts of the world, carat increase is being recognized in engagement and maternity rings, with the classic one carat diamond now becoming anything up to four carats. On the other hand, online jewelry e-commerce trends make clear that fashion and costume jewelry are part of a global price war where the ability to up-sell and make enticing offers are generating substantial new customer bases amongst the people who buy from Zara, Boohoo, Need Supply Co etc.
The brand effect on jewelry
There are massive variations in the way brand has affected online jewelry sales. For example over 60% of watches sold worldwide are brand items, but in other sectors such as earrings, brand consumption is still as low as 2-3%. Branded jewelry is only around 22% of the total jewelry market, but given that this market share has doubled in the last decade, branded jewelry is likely to become a substantial driver of online jewelry commerce in the next decade. So who’s buying brand jewelry:
- Men - around 30% of brand jewelry sales are generated by male purchasers, this is a huge increase in purchasing from a section of the population that has generally been under-represented and still remains low in traditional buying channels.
- Emerging market buyers - from China to the UAE, consumers in emerging markets are keen to engage with established brands which they recognize as being both aspirational and trustworthy.
- Younger consumers - nearly 50% of people are now buying their first piece of jewelry online, thanks to the growth of omnichannel jewelry stores and the astute marketing of pre-teen jewelry at affordable price points.
This means that jewelry companies need to differentiate their offering both through unique designs and through websites that reflect the kind of purchasers and brand groupings that they are seeking to sell to.
Nothing has affected the jewelry and accessory market quite as much as the entry into the marketplace of top level brands that previously had little or no put to the jewelry sector. While Dior has always been a major player in the costume accessory market, companies like Louis Vuitton which had previously focused on luggage and leather goods are increasingly offering jewelry. Even non-adjacent brands like Harley Davidson and Ferrari have become substantial entrants into the jewelry sector. This has two effects - first it increases the grey market in counterfeit goods and those being offered outside of licences and second, it drives new consumer markets into the sector. For example few men ten years ago were buying keychains for themselves but receiving them as gifts but today not only are more men making these purchases but they are repurchasing on a seasonal basis, often replacing a keychain, a watch strap and a phone cover annually.
Putting Jewelry Ecommerce Trends into practice
Any jewelry brand can use digital media to sell goods, but there are three other ways to communicate with potential buyers that need to be factored into the equation to achieve success:
- Information sharing - in areas like accessory spread, information is crucial. It gives potential customers a reason to identify with the purchase and allows them to research their options. Multichannel marketing is essential as many of these potential customers will browse on a tablet or laptop, but purchase on a mobile device, often when they are in a setting (with friends, when purchasing another item to complement the jewelry purchase) that consolidates their call to action.
- Creating brand identity - this may be the jewelry brand itself or it may be retailer brand. Curating or collating brands that work for a particular customer base means creating webpages that have relevant themes and appeal to niche consumers. For example, being able to separate business to business from business to customer purchasing on different sites supported on the same software platform or offering niche product lines on specially themed sites that may be time limited or event related to support maximum sell through during specific time frames.
- Building relationships - few jewelry customers make a single purchase in their lifetimes. This sector, above all, is one that is ripe for the same kind of brand loyalty that is inspired by fashion brands. Some jewelry brands are succeeding in distinguishing themselves and creating the return relationship (for example Pandora has turned the charm bracelet into an annual purchasing event) but most still have plenty of scope to capture customer data and turn into into repeat sales.
Shopping Cart Elite - your partner in jewelry retailing
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