Middle-Class Consumers Challenging the Diamond and Jewelry Industry

Aug 25, 2023
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Source: https://en.israelidiamond.co.il
Category: Marketing

In a recent article on Solitaire, an B2B gem and jewelry magazine published by India’s Gem and Jewellery Export Promotion Council (GJEPC), diamond analyst Paul Zimnisky explored the current challenges of the diamond and jewelry industry “as economic pressures weigh heavily on middle-class consumers.”


Zimnisky cites “rising inflation, restrictive central bank policies, and intensified competition” as leading to “tighter budgets and a shift in consumer behavior, leading to a decline in sales for mid-market retailers,” especially when it comes to middle-class diamond and jewelry consumers.


In the US, the middle-class is defined as earning within a 2/3 to 2x range of the median income, representing approximately 50% of the population according to government data. In China, the diamond industry’s second largest market, the middle class is estimated at approximately 30%.


Signet Jewelers, conceivably the largest “mid-market” diamond retailer in the world, has lowered sales guidance by 7% for the fiscal year ending January 2024, projecting sales of approximately $7.2 billion – a fall of 8% year-over-year. 


 So, while LVMH and Richemont, (parents of jewelers Tiffany and Cartier respectively) “have continued to produce outsized double-digit sales gains in 2023, which is on top of record years in 2021 and 2022,” brands such as Pandora, which “tends to cater to customers seeking lower priced jewelry” is guiding 2023 sales of “flattish.” Earlier this year Pandora noted “high inflation and rising mortgage rates” as factors that will impact its customers’ spending ability.

 

Likewise, the small outfit of Charles & Colvard has reported a fall of 32% in Q1 2023. The company attributed the results to a “challenging macroeconomic backdrop” along with “changing dynamics” in the lab-grown diamond market. 


Zimnisky also notes that the wholesale prices of lower and medium-quality natural diamonds, “those typically sold by mid-market jewelers, have taken a notable hit over the last year amidst the aforementioned strained middle-class consumer along with the growth of lab-diamonds competing at similar price points.” According to Paul Zimnisky data, an index of 0.5-2.0-carat SI-clarity, near-colorless goods are down almost 20% year-to-date 2023, which compares to a broader polished market index which is down less than 10%.

References


https://en.israelidiamond.co.il/diamond-articles/world/middle-class-diamond-and-jewelry-industry/

Comments


Middle-Class Consumers Challenging the Diamond and Jewelry Industry

Aug 25, 2023
124 views
0 share
Source: https://en.israelidiamond.co.il
Category: Marketing

In a recent article on Solitaire, an B2B gem and jewelry magazine published by India’s Gem and Jewellery Export Promotion Council (GJEPC), diamond analyst Paul Zimnisky explored the current challenges of the diamond and jewelry industry “as economic pressures weigh heavily on middle-class consumers.”


Zimnisky cites “rising inflation, restrictive central bank policies, and intensified competition” as leading to “tighter budgets and a shift in consumer behavior, leading to a decline in sales for mid-market retailers,” especially when it comes to middle-class diamond and jewelry consumers.


In the US, the middle-class is defined as earning within a 2/3 to 2x range of the median income, representing approximately 50% of the population according to government data. In China, the diamond industry’s second largest market, the middle class is estimated at approximately 30%.


Signet Jewelers, conceivably the largest “mid-market” diamond retailer in the world, has lowered sales guidance by 7% for the fiscal year ending January 2024, projecting sales of approximately $7.2 billion – a fall of 8% year-over-year. 


 So, while LVMH and Richemont, (parents of jewelers Tiffany and Cartier respectively) “have continued to produce outsized double-digit sales gains in 2023, which is on top of record years in 2021 and 2022,” brands such as Pandora, which “tends to cater to customers seeking lower priced jewelry” is guiding 2023 sales of “flattish.” Earlier this year Pandora noted “high inflation and rising mortgage rates” as factors that will impact its customers’ spending ability.

 

Likewise, the small outfit of Charles & Colvard has reported a fall of 32% in Q1 2023. The company attributed the results to a “challenging macroeconomic backdrop” along with “changing dynamics” in the lab-grown diamond market. 


Zimnisky also notes that the wholesale prices of lower and medium-quality natural diamonds, “those typically sold by mid-market jewelers, have taken a notable hit over the last year amidst the aforementioned strained middle-class consumer along with the growth of lab-diamonds competing at similar price points.” According to Paul Zimnisky data, an index of 0.5-2.0-carat SI-clarity, near-colorless goods are down almost 20% year-to-date 2023, which compares to a broader polished market index which is down less than 10%.

References


https://en.israelidiamond.co.il/diamond-articles/world/middle-class-diamond-and-jewelry-industry/

Comments


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