The European jewellery industry has been waiting for this winter season with a mixture of expectations and fear. 2015 is, according to consumer forecasts, a key year. The European Union is now out of the crisis, and bound to a low and steady growth in the long term. With no major economic changes on the horizon, the behavior of consumers during this season is therefore likely to be a model for future years. While official Christmas sales figures will be available only in February-March, interim results are already showing some important new trends.
So far, Christmas sales have been moderately positive across the Eurozone. The decision in September by the European Central Bank of keeping the Deposit Interest Rate at an all-time low of minus 0.2 percent throughout the year has contributed into bringing money out of saving banks and into the physical market. As a result, consumers are looking at ways of investing their money on products that better hold their value, including gold and diamond jewellery.
In Europe those countries that grew the most in economic terms, such as Germany, the Netherlands and Poland, also registered the best results in jewellery sales, with figures up to 2-4% better than the previous year. In France, Italy and Spain increases were more modest, due to consumers having a lower purchasing power. But the fact that for the first time in years a plus sign has been registered is, by itself, good news. It should also be considered that in France sales have also been adversely affected by the tragic effects of the Paris terrorist attacks, which caused a temporary slowdown in the usual pre-Christmas shopping, with thousands of tourists cancelling their reservation. More in general, the tense and uncertain international situation has contributed in curbing Christmas sales levels in Western Europe, even though not by much.
This year saw the definitive affirmation of a new generation of buyers: the so-called “millennials”. Millennials are generally young adults born between the late 1970s and the early 1990s, who are now in the first stages of their professional careers. Their preferences in terms of jewellery are substantially different from those of the American and European “baby-boomers” in the 1950s and 1960s, and even from those of the “generation x” twenty-thirty years ago. Millennials are less impulsive than previous generations when it comes to buying jewellery, probably due to their experience with the economic crisis and the prospects of low economic growth. Their choices are most often the result of an informed judgement, which involves consulting friends and the internet for reviews and opinions before any substantial purchase. In practical terms, this means that luxury brands cannot rely anymore on the “shock and awe” effect of window displays and aggressive media advertisements to attract customers, but are required to spend more time into providing accurate information on their collections, both inside the stores and online on their website and social media platforms.
Surprisingly enough, the use of technology by millennials is not producing a sensible rise in e-commerce sales for jewellery. A study realized by Altagamma-McKinsey in 2015 shows that only around 4.1% of jewellery sales take place online. Most often, the internet is used to gather information on technical specifications, price, and availability before proceeding with in store purchases. The demand for experts in the sector of jewellery sales is therefore still strong.
New consumers and declining purchasing power have produced dramatic changes in consumer product preferences over the last seven years. During this short period of time, the European jewellery market went through at least three separate phases.
The first phase, which coincided with the height of the global recession, prompted consumers to reject all non-essential expenses, including jewellery pieces. The industry in Western Europe was caught wrong-footed as sales came virtually to a complete stop, causing massive losses among major companies and chain defaults in small businesses.
The second phase saw the rise of the so-called “economy fashion”. This term refers mainly to mainstream retailers offering fashion products at low-end price. Big names in the business are Zara, H&M, Primark and Monsoon Accessorize. Those companies managed, among other things, to fill the gap left by the jewellery industry by launching the concept of “design costume jewellery”. Contrarily to old-fashion costume jewellery, the new products do not try to imitate precious materials, but offer a nice looking complement to casual and business outfits at competitive price. In the 2009-2012 period, costume jewellery represented a new and serious threat to the jewellery industry.
The third and final phase saw jewellery brands striking back by launching the concept of “affordable luxury”. This new trend, also called “mid-priced jewellery” has its roots in the idea by some of the big names in the business to launch new entry-level jewellery collections mixing precious with semi-precious materials, while keeping at the same time top-quality designing and finishes. Today most haute jewellery brands, including Dior, Bulgari, Pomellato and Damiani have at least one collection below the 1,000€ level. Many of these collection even include small diamond stones, combined with silver or ceramic rings and necklaces.
Some companies, like Tiffany are now relying heavily on their 100-500€ collections for the success of their Christmas sales, showing that there is still room for improvement at the lower-end of the market. Affordable jewellery has certainly won the favour of consumers and dealt a serious blow to the costume jewellery market. As an example, costume jewellery giant Monsoon Accessorize recently saw its profits sliding around 19%, suggesting that the precious jewellery industry might be on the right path.
Photo Nudo from Pomellato for Net-à-Porter