Jewelry Demand Sinks 11% in October, But Do Not Fret!

Jewelry Demand Sinks, But Do Not Fret - Edahn Golan featured image Elena Taranenko
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Most jewelry retail sales figures were in the red in October on a year-over-year basis. However, US jewelry demand is still relatively high, reflecting ongoing elevated consumer interest in the category.

But don’t let the declines create an impression of a down market. Compared to 2019, the last “ordinary” year the jewelry industry had, sales this year outperformed 2019 every single month. This is a positive outcome for the market

Let’s start with the figures, and then see what we can determine from them.

Jewelry Demand jewelry Sales chart - Jan 2019-Oct 2022 - Source Tenoris Analysis Edahn Golan

Jewelry Demand in October and Year to Date

Following an exceptionally good 2021, jewelry sales declined for six consecutive months. The value of sales fell 11.1% in October, while the number of units sold declined 12% year over year.

In the first ten months of 2022, jewelry demand rose 4% year over year. The rise in consumer expenditures on jewelry was mainly a result of increased average spend per item. Year to date, the average per unit spend increased 9.3% year over year.

As these numbers indicate, jewelry sales volume, as counted by the number of units sold, declined 5.2% in the January-October 2022 period.

Jewelry Sales chart of jewelry demand - Jan 2020-Oct 2022 - Source Tenoris

Jewelry Market Trends: Chains and Fashion Rings

According to our analysis, the two most important jewelry market trends so far this year were chain necklaces and fashion rings.

Chains were the best-selling sub-category, capturing a 13.7% market share of units sold in the first ten months of the year. They were also the best-selling item in October.

By generated revenue, fashion rings were the best performing jewelry item, generating 13.5% of total jewelry sales during the period.

Diamond Market Analytics

Specialty jewelers keep loose diamonds on hand to set them in jewelry based on client demand. This allows us to track loose diamonds separately.

Retail diamond sales of these diamonds declined 19.3% year over year in October. As with jewelry, this is the sixth month in a row of year-over-year declines. By volume, sales declined 11% in the month.

Following an excellent start of the year, diamond retail sales are flat on a year-to-date basis. Measured by units, sales are down 8.4%.

The current diamond market is split throughout the pipeline by natural and lab-grown diamonds, and their trends are radically different.

Natural Diamond Sales Declined

Year-to-date sales of natural diamonds were down 5.2%, falling 25.4% year over year in October alone. Retailers responded to this decline and cut back unit purchases 46.4%.

Retailers also lowered diamond prices, resulting in a 1.1% decline in the average price of round, one-carat diamonds. It remains to be seen if changes in diamond supply will have an impact on prices.

US Natural Diamond Sales chart - Jan 2020 - Oct 2022 - Source Tenoris Analysis Edahn Golan

Lab-Grown Diamond Prices Falling

For lab-grown diamonds, two key trends continued in October: prices continued declining, and sales kept rising.

Lab-grown diamond sales soared 41.8% year over year. At the same time, lab-grown diamond prices were down on average 4.4%.

Year to date, lab-grown diamond sales were up more than 37% – very impressive growth rate.

US Lab Grown Diamond Sales chart - Jan 2020 - Oct 2022 - Source Tenoris Analysis Edahn Golan

Change in Inventory in Line with Jewelry Demand

The decline in retailer purchases was balanced with sales. The number of units held in inventory was up a small 2.6% compared to September. This is reasonable, especially as retailers headed into the holiday season with its expected pickup in jewelry demand.

For natural diamonds, inventory levels were flat. However, retailers did find themselves with a rise in lab-grown diamond supply. By the end of October, their lab-grown diamond inventory level was up 6.6% month over month.

Were retailers overly optimistic about consumer demand for lab-grown diamonds, or did consumers cut back on their spending, waiting for further price declines in the November-December holiday season?

Whatever prompted the rise in inventory, lab-grown diamonds’ quick turn will make sure there won’t be excess goods around for long.

2022 vs. 2019 – Jewelry Demand Trends Up

With the exception of March, April, and May of 2020, US jewelry demand in 2020 outpaced 2019 every month. In 2021, jewelry demand consistently outpaced 2020 every single month.

However, in 2022, jewelry demand fluttered. In the first five months of the year, sales increased every month over 2021. Since June, sales mostly have declined year over year, with the sole exception of August.

The two trends that emerge from this are that consumer jewelry demand is starting to return to its historical cycle – down in the summer months, but up in August, down in September and October, only to rise in November and December.

The second trend is an overall growing jewelry demand. It is far better than before the pandemic. Americans possess a renewed appetite for jewelry.

Year over year Change in US Diamond & Jewelry Demand sales chart - Jan 2021-Oct 2022 Edahn Golan

Forecast: Jewelry Market Trends Favorable

A number of forces are impacting holiday jewelry sales. They include the above-mentioned increased interest in jewelry, the positive impact the mid-term election results have had on the mood of large city consumers, and the high cost of international travel.

On the downside, a reduced number of weddings in 2022 compared to 2021, rising inflation, and growing energy costs are pressuring down jewelry demand.

Combined, these forces are expected to result in a mid-single digit year-over-year decline in holiday sales. But then again, compared to 2019 (aka, the last normal year), holiday and annual jewelry demand will be much, much higher.

About the Author:

Edahn Golan
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Edahn Golan has 20 years of experience as a diamond industry analyst. He has a unique ability to provide a global view with context to the exclusive granular data he shares. The New York Times, Wall Street Journal, Business Insider, and other leading publications quote him regularly.

Are you interested in how our trends break down on a jewelry item-by-item basis, or do you need detailed lab-grown data? Would this data be invaluable in your decision making? We can answer these and many other questions related to the diamond and jewelry economy.

For more details on jewelry demand and the specific data behind these trends, please contact us.

Photo: Elena Taranenko

The Lab-Grown Diamond Contradiction

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