Why sales are expected to grow in the next four years.
According to some exclusive research by Euromonitor International luxury jewellery sales in the UK are expected to grow over the next four years. Rachael Taylor reports on how the sector fared in 2012 and reveals the trends forecasted to shape the market, such as a rise in women’s fine jewellery sales and an influx of fashion houses set to revolutionise retail.
Last year’s financial insecurities led to a swell in consumers choosing to save up their cash for considered luxury jewellery purchases.
According to data complied by Euromonitor International and shared exclusively with Professional Jeweller, the UK jewellery market as a whole contracted by 1% in 2012 but luxury jewellery sales, which account for about 25% of the UK jewellery market, delivered growth of 5%.
Luxury jewellery sales have been growing steadily since 2007, according to the report, and at the same time the total jewellery market has been slowly contracting. Last year luxury watch and jewellery sales hit £1.12 billion in the UK.
Euromonitor International said that the entrance of many fashion houses into the fine jewellery market has helped to raise awareness of the sector and boost desirability. It also believes that the rise of TV shows such as Made in Chelsea and Gossip Girl, which portray affluent lifestyles, has played a role in introducing a younger generation to the world of luxury brands.
A Royal Uplift
When it comes to inspiring a surge of actual jewellery sales it would seem that the Duchess of Cambridge has one up on the Queen. Women’s jewellery sales did enjoy a spike last year around the time of the Queen’s Jubilee but the rise was not as significant as the one caused by the royal wedding between Kate Middleton and Prince William back in 2011.
“Retailers recorded a boost in the sale of women’s jewellery in both the run up to and the short-term aftermath of the celebrations for the Queen’s Jubilee,” says Euromonitor International head of luxury goods Fflur Roberts. “However, the boom was not as strong as the one experienced in the previous year after the royal wedding. The large presence of blue sapphire rings still in the market is evidence of the impact of the royal wedding had on fashion trends of the jewellery market.”
Although sales growth was slower in women’s jewellery in 2012 versus 2011, the sector did actually benefit from the gloomy economy, according to Euromonitor International. “With the UK in a double-dip recession, consumers cut back on their spending habits, preferring to save up for an investment,” says Roberts. “With prices rising for precious materials, high net-worth individuals saw jewellery as a relatively low risk investment, which gave a boost to women’s luxury jewellery.”
Men and Jewellery
Men’s jewellery sales did not fare as well as women’s in 2012, with the sector delivering softer growth than the previous year as men became more cautious with their spending.
For those who were spending on jewellery, doing it quietly was a priority. “The banking scandals that were brought to the world’s attention during 2012 encouraged many high earners to keep a low profile and be more cautious with their spending,” says Roberts.
Male fine jewellery shoppers in the UK are still very traditional, according to the report, with the majority opting to spend money on a timepiece over a piece of fine jewellery. However, it did note that men are more open to wearing costume jewellery, they are just not ready to dig deep for precious metals outside of wedding bands.
“The affluent UK male remains traditional in his choice of jewellery, despite celebrity models like Cristiano Ronaldo and David Beckham promoting the image of successful men who wear jewellery from diamond earrings to chains,” says Roberts. “Men may have become more accustomed to wearing jewellery but the majority still opt for costume rather than luxury jewellery.”
When it came to precious metals in 2012, the year was a rollercoaster ride. “With the price of gold directly linked to the global economy, 2012 was a year of ups and downs for jewellers,” says Roberts. “Investors chose precious metals over unstable currencies and this resulted in a rise not only in the price of gold but also of platinum and sterling silver.”
Silver jewellery continued its meteoric rise over the 12 months. “Both the Tiffany sterling silver collections and the Links of London silver collections proved to be popular, especially among younger consumers,” says Roberts.
Euromonitor International expects the luxury jewellery and watch industry in the UK to continue to grow over the next few years, but forecasts that jewellery will outperform watches. It expects luxury jewellery in the UK to deliver a compound annual growth rate of 2% between 2012 and 2017 compared to 1% for watches.
“With economic uncertainty showing no signs of diminishing, the Eurozone crisis deepening and the UK in a second recession in five years, jewellery is expected to fare better than watches as consumers consider it more of an investment, especially with the price of precious metals increasing,” says Roberts.
Within the total luxury jewellery and watch sector Euromonitor International expects that women’s jewellery will be the overall biggest category in 2017, delivering £53 million in the UK between 2012 and 2017.
High End: A New Breed of Jewellery Retailing
Jewellery is one of the most traditional retail sectors and one of the ones slowest to latch onto new technology and multichannel strategies, but this could all be set to change as more slick fashion houses set their sights on fine jewellery.
Versace unveiled its first collection of haute joallerie in July last year, with the web store for the newly created collections going live in Europe in September. Euromonitor International believes that more fashion houses will follow in its footsteps.
Such an influx of powerful brands could well have an effect on the way that jewellery is presented for sale in the UK, with many luxury brands already active on social networking sites and more comfortable presenting high-end luxury goods to younger generations.
“Fashion brands already use more social media and e-commerce in their strategies than traditional jewellery brands, a trend which they can bring into their jewellery activities,” says Euromonitor International head of luxury goods Fflur Roberts. “Traditional jewellery brands have been the slowest of the luxury brands to adopt an online strategy, as they are primarily family or private businesses, which, in the majority, worry about losing the exclusivity factor if they go online. The entrance of fashion brands in the category could encourage more of the traditional jewellery brands to increase their online profiles and incorporate social media in their marketing.”
This feature was taken from the April issue of Professional Jeweller magazine. To read the issue online, click here.