Is the industry resilient because jewellery is an irrational purchase, or is the industry robust because consumers are irrational about jewellery?
Competition for the consumer dollar has become ever-more increasing. In recent years, experience-based purchases such as luxury travel, fine dining and home entertainment are some examples of things that have become more important to consumers, forcing many in the trade to question jewellery’s place in the minds of today’s consumer.
All the while, pandemic-induced unemployment figures keep rising and belts tighten as we brace ourselves in for recessionary times. This begs the question: What is the future of jewellery?
After all, jewellery is largely just ‘rock and metal’. Indeed, some would say it’s an irrational purchase given that there have been times of famine in history where a bowl of rice was seen as valuable as gold bullion.
In an era where consumer satisfaction is measured by a product’s performance, usefulness and eco-friendliness, justifying a jewellery purchase can feel irrational and gratuitous, particularly during a recession. “In the past 100 years, empires and conglomerates have come and gone, but many local fine jewellery retailers are still standing today.”
So it would make sense if people stopped buying jewellery and jewellers shut-up shop… right? Wrong.
When compared to other retail categories there’s ample evidence that many fine jewellery retailers have remained resilient during the COVID pandemic and economic crisis.
Globally, Pandora and Tiffany stock prices are on the upwards trajectory, while Hong Kong retailer, Chow Tai Fook, has seen its shares rocket back to its 2018 heydays. The shares of both Michael Hill International and the US chain, Signet Jewelers, are recovering since the huge sell off in the depths of the crisis and LVMH stock prices are back to what they were last November.
Closer to home, Retail Edge, the jewellery management consultancy firm, released reports of increased sales across 450 customers in Australia and NZ. In fact, there was a 23 per cent increase in September sales compared to last year, despite Victoria remaining on Stage 4 lockdown.
While the number of items purchased fell, the data shows that the value of each sale increased, which indicated that consumers weren’t too shy about pandemic spending.
Given the current economic conditions and consumer sentiment, this is no ordinary feat. Behind the clouds of doom and gloom, this is a distinct silver lining.
Recent trends in the increase of jewellery repairs, along with valuations and remodelling of a family heirloom, are not new. The jewellery trade has thrived in tough times owing to this work and which few other retail categories can achieve, with such valuable custom and unique foot traffic.
It helps that jewellers can also smelt unused stock – a luxury not afforded other retail categories! These behaviours and trends have contributed to the survival of jewellers for hundreds of years.
Indeed, Jeweller’s own State of the Industry report revealed that Australian fine jewellery chains have remained resilient over the past decade despite the saturation of fly-by-night fashion jewellery chains.
In fact, Australia is home to more than a dozen jewellers that have long celebrated their centenary and are older than Chopard and Bulgari. In the past 100 years, empires and conglomerates have come and gone, but many local fine jewellery retailers are still standing today.
So what makes fine jewellery so resilient, and what does this say about consumers?
By default, humans yearn to be surrounded by things that are beautiful, unchanging and meaningful. This sentiment seems to be magnified in turbulent times, which may very well explain our attraction to fine jewellery that is an object of permanence flying in the face of modern-day impermanence.
From a signet ring engraved with the family crest to a grandfather’s old wind-up watch, these portable totems take on significance with each new generation.
In turn, they often increase in sentimental value, something that cannot be measured in dollars.
For example, I recently heard a story about a specialist watchmaker who was asked to quote a job to refurbish a customer’s great- grandfather’s pocket watch.
Given that the watch had no brand, was in dire need of major repair, and parts would not be easily accessible, the retailer quoted the work at around $5,000, believing that the owner would not proceed with the job given that the watch was only ‘worth’ $30.
Much to the watchmaker’s surprise, the repair job was approved, and the owner was ecstatic with the final outcome.
I did mention that jewellery can be irrational!
While Australia’s population generally has a high discretionary income, there is a cultural shift towards recycling and recycled products, in an attempt to curb consumption. While this may not bode well for lower-priced fashion jewellery, it could be the perfect opportunity to educate and encourage consumers about the benefits of locally manufactured, bespoke fine jewellery.
In an ironic way, COVID has taught us that we greatly value human contact and emotion. These things only become obvious when we don’t freely have access to them; lockdowns have only demonstrated that the need for human connection won’t change. Given human irrationality, there may even be a strengthened desire for these things given we now know what we miss.
Moving forward, people will only seek to make more meaningful purchases, have more memorable experiences, and build stronger relationships. For centuries, jewellers have been at the forefront of assisting with these human desires, and if historical trends are anything to go by, jewellers may well be here for many centuries more.
From where I’m standing, the future of the jewellery industry is bright.