UK jewellery and watch industries worth GBP5bn

Retailers' optimism has soared to its highest levels since 2002, according to a new CBI survey.

Latest report from Key Note reveals consistent year-on-year growth.

Market intelligence provider Key Note has released a new report based on the UK jewellery and watch industry, revealing "consistent" growth between 2009 and 2013 and a market now worth more than £5 billion.

It is understood companies whose data has been used to help compile the report included Aurum Group, Beaverbrooks, Claire’s Accessories, DCK Concessions (costume jewellery supplier to high street retailers), Cartier, Pandora and Graff Diamonds, Signet, Rhone Products and Tiffany & Co.

The report from Key Note describes how, over the course of the review period between 2009 and 2013, the total market’s size increased by 10.2%, driven primarily by the high growth in the watches sector.

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It says despite concerns regarding financial stability during the economic recession, the market still witnessed growth of 1.8% in 2009 before more significant growth occurred in the following years, with consumers continuing to buy watches and jewellery even during the period of austerity when other non-essential purchases suffered.

Key Note believes the industry has been bolstered by the growth in fashion and costume jewellery, with lower prices driving growth in the sector.

A statement from the report says: "Real jewellery purchases have increased at a lower rate due to the higher costs of precious metals and gemstones. Consequently, although consistently being by far the largest of the two market sectors, the share of the market accounted for by the total jewellery sector declined from 71.9% to 71.1% as sales of watches rose at a more rapid rate. Sales of watches grew by 13.4% between 2009 and 2013, thus increasing the sector’s share of the total jewellery and watches market to 28.9% in 2013."

In 2013, the UK jewellery industry sales based on retail selling prices totalled £3.57 billion, with watch sales totalling £1.45 billion, together marking 3.8% growth in sales compared to 2012.

The UK Jewellery Sector
The total jewellery sector is the largest of the two sectors within the UK jewellery and watches marketplace by a significant margin. Despite this, Key Note explains that the jewellery industry has experience slower growth rates than watches, with the market share of jewellery declining 0.8% between 2009 and 2013, accounting for 71.1% of all UK sales of jewellery and watches in the latter year.

Overall, the total jewellery sector — consisting of the high-priced, luxury, real jewellery subsector and the trend-driven, fashion and costume jewellery subsector — has increased in value in each consecutive year throughout the review period. With a total five-year growth of 8.9% between 2009 and 2013, the jewellery industry in the UK currently stands at a value of £3.57bn. The most significant growth occurred in 2013 with a rate of 3.3%, as improvements in the economy are giving consumers greater confidence in spending.

Real Jewellery vs Costume Jewellery
Key Note defines two sub-sectors within the industry as real jewellery – items made in percious metals and set with precious gemstones – and costume and fashion jewellery.

As expected, is findings show that real jewellery accounts for a much greater proportion of all jewellery sales in terms of value compared with sales of costume and fashion jewellery items, as the cost per unit is significantly higher for real jewellery. However, although being the larger of the two subsectors in terms of value, real jewellery has increased at a slower rate than costume jewellery sales as consumers are increasingly purchasing low-cost, fast-fashion items.

In total, the real jewellery sector was worth £3.07 billion in 2013 based on retail prices, while the costume jewellery sector was valued at £501 million. In terms of growth, the costume jewellery sector was worth £405 million in 2009, revealing growth of £96 million over the research period.

The real jewellery sub-sector sales rose by 6.8% between 2009 and 2013, though sales growth has been somewhat slower in comparison to the costume jewellery subsector, indicated by the volume of hallmarked items decreasing over the five years.

A Key Note explains, the high costs of luxury jewellery items "deterred consumers during the recession and, although consumer confidence is returning, hence the higher growth rate in 2013". The report states that "consumers are less likely to purchase expensive real jewellery pieces when they can purchase fashion jewellery items for a fraction of the price", adding that as jewellery trends become increasingly merged with the latest fast-fashion trends, consumers are not as willing to spend high amounts on a jewellery piece that may go out of fashion.

However, says Key Note, as luxury jewellery items are regarded as investment pieces they have continued to generate sales with some consumers showing a preference for purchasing a single, expensive investment piece rather than several disposable pieces or real jewellery items which fall into the mid-market price band. A move away from the mid-range price bracket of jewellery items has caused consumers to either opt for high-cost luxury goods
or low-cost fashion pieces.

The fashion and costume jewellery sub-sector is considered a fast-growing area within the total jewellery industry, as jewellery becomes a more focal domain within the UK fashion industry.

Statement fashion jewellery pieces have become as important in buying into a new trend as the likes of other accessories such as handbags. Jewellery styles have become more diverse, and bold, statement pieces made from a broad range of materials including Perspex and wood have entered the marketplace.

Says the Key Note report, fashion jewellery is no longer merely an imitation of luxury jewellery pieces, but it now also represents new fashion styles and trends. Furthermore, at a time of austerity, fashion and costume jewellery is not only less expensive than real jewellery items but is also a low-cost means of updating an outfit to fit in with a new fashion trend or style, rather than purchasing more expensive clothing items.

As the fashion industry is developing more male-specific trends and styles, male fashion jewellery has also been on the rise, thus opening up a new marketplace for costume jewellery brands; meanwhile, many fashion retailers have expanded their product ranges to incorporate fashion jewellery lines to complement their main clothing lines.

Consequently, the value of the UK fashion and costume jewellery sub-sector has risen by a significant value between each year over the review period. With a total increase of 23.7% from £405m in 2009 to £501m in 2013, the fashion and jewellery sub-sector has increased its share of sales within the total jewellery sector by 1.7 percentage points over the course of the 5 years, reaching a 14% sector share despite jewellery pieces in this sub-sector generally having much lower retail price points than real jewellery items.

Other data in the report focuses on exports of British-made jewellery and watches as well as imports, and also takes a closer look at the recent developments in the industry and the impact it has had.

According to Key Note and figures from the Office of National Statistics’ latest publication of UK Business: Activity, Size and Location released on 3rd October 2013, there were 1,415 enterprises engaged in the manufacture of jewellery and watches in the UK in 2013.

The vast majority of these were small companies generating low turnovers. 69.6% of these manufacturing enterprises recorded a turnover of less than £250,000, with just 20 companies (1.6%) generating a turnover of £5m or more.

There is a much lower volume of companies engaged in the manufacturing of fashion and costume jewellery, that is defined as imitation jewellery and related articles. Just 105 enterprises were defined as being engaged in the manufacture of these items in 2013, with 71.4% of these enterprises generating revenue of less than £250,000. None of the businesses manufacturing imitation jewellery recorded sales of £5m or more, and just five companies were found to generate revenue above £1m.

Read more about the report in the next issue of Professional Jeweller, or find out how to purchase the report from Key Note online, here or via telephone at 0845 504 0452.
 

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