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Articles from DIAMOND JEWELLERY (984 Articles), RINGS - GENERAL (949 Articles), STERLING SILVER JEWELLERY (867 Articles)

The report noted that jewellers who anticipate and capitalise on industry trends will find success
The report noted that jewellers who anticipate and capitalise on industry trends will find success

Report predicts ‘glittering future’ for jewellery

Continued growth of global brands with opportunities in fine jewellery are the key predictions for the jewellery industry, according to an international report. 
Management consulting firm, McKinsey & Company, has released the findings of its extensive review into the jewellery industry, not only forecasting positive growth for brands and retailers but describing the industry as having a “glittering future”. 

The report – titled, A multifaceted future: The jewelry industry in 2020 – analysed publicly available data, studied companies’ annual reports and interviewed 20 executives at global fine jewellery and fashion jewellery companies and industry associations, and determined strong similarities to the evolution of the apparel industry over the past 30 years.

However, it did warn that the industry was “dynamic and fast-growing” and so the “companies that best anticipate and capitalise on industry changing trends will shine brighter than the rest”.

Pleasingly, it noted that global sales of €148 billion (AU$225 b) are expected to grow at five to six per cent per year, demonstrating that the demand for jewellery is as strong as ever.

Growth of branded jewellery
The report found that while branded jewellery still currently only accounted for around 20 per cent of the overall market, its share had doubled in the last decade. Interviewees all believed that share would continue to grow; however, there were differing views as to the extent, with most expecting a share of 30 to 40 per cent by the year 2020.

The continued growth of branded jewellery would clearly have effects throughout the industry, with the authors suggesting that companies would need to strengthen and differentiate their offerings through distinctive designs and personalised services if they wished to compete. 

In addition, the report predicted that large companies would have the capability to out-muscle smaller competitors through marketing and distribution to increase their presence. It did note however, this also provided an opportunity for smaller players who can specialise in supporting up-and-coming designers and unique product offerings to stand out against competitors.

Higher and lower
In recent years, the apparel market had grown at the higher and lower ends, while the mid-level market had stagnated, according to the study. Mass-market production had actually pushed the cost of basic apparel down (or steady against inflation), whilst premium brands were selling well above the inflation rate. 

The report suggested that the jewellery industry was following the same trends in the fashion industry, stating that it had, in part, “been brought on by consumers’ tendency to trade up and down at the same time”. In simple terms, people want to spend as little as possible on every day wear, but are prepared to spend money for prestige or premium items.

Indeed, the report stated, “trends that have unfolded in the apparel sector over the last three decades appear to be playing out in the jewellery sector, but at a much faster pace”.

This opens opportunities for jewellers to cater for niche markets. By concentrating on the high-end customer, and backing that position through advertising, in-store experience and customer service, a retailer or brand could find a dedicated audience. 

The sales channel
By analysing trends in other industries, jewellery suppliers and retailers are able to obtain some valuable advice and lessons. 

The growth of online sales has been significant in apparel, for example, but predominantly in the lower price bracket items. 

The authors believe that while online jewellery sales would never quite reach the same levels as apparel, the comparisons between high and low point items should be considered similar. Affordable branded jewellery, where the consumer is aware of exactly what they will be getting, is likely to be the biggest growth area for online sales, while expensive items are likely to stay the domain of bricks and mortar stores where the consumer can physically touch and feel the merchandise. 

As such, jewellers that are looking to increase online sales may want to concentrate on standardised affordable brands, while in-store retailers should look to high-ticket and unique items, and support the product with a quality experience for the consumer.

It was also noted that consumers were more likely than ever to research items online prior to any purchase and so a web-presence was recommended.

Apparel and jewellery
It is obviously impossible to predict exactly how any industry will play out over the next five years, but this report suggested that jewellers and jewellery brands could learn a lot from studying the trends in apparel. 

According to the study, the growth of truly international brands had swept through apparel and the signs were similar in jewellery. The effects of large companies with good cash reserves could be significant for those who are not prepared. Growth in higher and lower end products appears to be consistent in both industries, while sales channels need to become fast and direct, or personalised and intimate. 

At the heart of it, McKinsey & Company predicted growth for the jewellery industry but reported those involved needed to stay ahead of the trends and establish how best to work within the market. As the apparel industry has demonstrated, there will be many opportunities, but it appears the industry needs to be proactive in working with them.

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