In the past decade, Americans spent less of their income on diamond jewelry. While nominally, the typical American household is spending more on jewelry in general and on diamond jewelry as a specific category, it represents a smaller percentage of their overall income.
The sad truth is that jewelry is losing market share, and diamond jewelry is losing market share at an even quicker pace. An analysis of American household income and spending compared to jewelry store sales reveals that between 2001 and 2011 the average spend on jewelry declined by 3.1 percent.
What is more alarming to the diamond trade and jewelry retailers is the decline in average household spending on diamond jewelry – down 13.5 percent in that period. In 2001, the average American household spent $219 on diamond jewelry. In 2011, ten years later, that figure only increased to $222 per year. Indeed, this is a nominal increase in spending, up 1.6 percent, however the average income of Americans increased by 19.7 percent in this period. Americans earned more, but their spending on diamond jewelry did not keep pace.
It gets worse, because we must consider inflation. The average American household spending on diamond jewelry has in fact declined. $100 spent in 2001 had the purchasing power of $126.66 in 2011. Americans had to spend 26.7 percent more to buy the same product they bought 10 years before and therefore, real spending on jewelry has declined, and real spending on diamond jewelry in particular has declined even further.
Delving into the figures even deeper, they are not as encouraging as I would have hoped when I started analyzing them. For example, the average American is spending 13 percent less of their income on jewelry, and 22.4 percent less on diamond jewelry. The figures are disturbing.
Problems & solutions
The decline is a leak in a bucket – it still holds water, but you don’t want to keep pouring more water into it just to see it drip away. The bucket needs to be fixed or replaced. The U.S. is the most important diamond jewelry market, and a replacement is not what we should be after. A fix is required.
Why are Americans spending less on diamond jewelry? Are diamond rings and earrings suffering from a better competing product or are Americans simply spending less because they have less discretionary income? Maybe the issue is marketing, a shift in cultural tastes or a change in diamond jewelry perception…
Clearly, diamond jewelry can benefit from more advertising, but the decline may expose that something deeper, more fundamental, is at play. If so, it must be flushed out, understood and then addressed. The sooner this happens, the better – we know that the world is changing at a faster pace, and that that demands a fast response. We don’t want to see diamond jewelry lose favor just because we failed to respond to change.