Jewellery market posts increasing growth in 2017
According to Euromonitor International data, value sales of jewellery in Eastern Europe are set to record double-digit growth of 10%, to reach total sales of USD8.2 billion in 2017. This represents only 3% of global jewellery sales and ranks Eastern Europe fifth of seven regions worldwide in total value terms. Custom jewellery, by far the largest product area in volume terms, accounts for 21% of total jewellery sales in Eastern Europe, while fine jewellery accounts for 72% of total value sales.
In 2017, per capita spending on jewellery in Eastern Europe is USD25, which is almost twice lower than the world’s average and almost seven times lower than the average spending in North America – the region with the highest per capita spend on jewellery.
Source: Euromonitor International
Such differences in spending on jewellery between these regions is determined by a few factors, not least economic and cultural preferences. The importance of media and advertising, as well as personal adornment accordant with different nations’ religious practices, cultural beliefs, and social habits, directly influences demand for jewellery. Economic considerations include a country’s level of per capita disposable income, the cost of basic necessities, and the price and availability of the items. Historically, jewellery has been a symbol of wealth, social status, and power; however, it is now affordable to a wider range of people than ever before.
Go green – lab-grown diamonds
Fine jewellery, particularly diamonds, is enjoying rising popularity among Eastern European countries. They are particularly valued by female consumers, especially for important occasions such as engagements, birthdays or wedding anniversaries. These products are most often purchased by affluent people, but also by consumers with medium purchasing power. Diamonds will always be a popular setting in rings, necklaces, bracelets and charms; the luster, sparkle and beauty of a diamond will always be admired.
Lab-grown diamonds have been getting considerable attention lately because they are visually identical to mined diamonds but are sustainable and eco-friendly. There is a growing movement of people who are trying to live a more sustainable, greener lifestyle. Consumers are watching what they buy and where products are sourced. Having jewellery that is beautiful yet does not strip the planet of natural resources is an attractive alternative. Though lab-grown diamonds are a new trend, more people seem to be interested in wearing them because of the reduced costs and their identical properties.
However, this is not an indicator that traditional diamonds are going away anytime soon; the jewellery industry does not seem to be fully embracing lab grown diamonds quite yet. The response of the industry to the threat of synthetics has been through branding, certification and documentation of mined and synthetic diamonds. The industry in Eastern Europe has not embarked on public education campaigns, as this carries the risk of making the public more aware of the options available. Therefore, lab-grown diamonds may represent a threat in the future, but probably a slow growing threat. They may appeal to certain consumers but natural diamonds will continue to have their place. This looks like a problem for the industry in ten or fifteen years’ time, not an immediate threat.
Trend towards fast fashion seen in apparel industry increasingly evident in jewellery
By way of contrast to fine jewellery, costume jewellery is characterised by more frequent purchasing. It is generally inexpensive and strongly influenced by the latest style trends, motivated by consumer tastes and designer fashions. Costume jewellery does not compete directly with fine jewellery. It is a marginally complementary product group due to significant differences in price, materials used and target customers. This type of jewellery is usually purchased throughout the year by younger consumers. Due to low pricing, in many cases these items are worn only once or twice, and many more items are purchased, which explains the higher volume sales per year.
Jewellery has traditionally been seen as a more durable purchase compared to clothing but a number of changes in the market now indicate that the fast fashion trend is coming to the jewellery industry too. It is partly a response to customers’ expectations but also reflects technological changes such as 3D printing, laser welding, cutting and engraving, and computer-aided design that can help speed the manufacturing process. Moreover, established fast fashion clothing retailers are adding more jewellery into the mix of products they offer. Companies like Zara, H&M and Bershka are growing fast; they get the product offering right and make good use of social media to share their ideas.
Moreover, the emergence of crafts marketplaces such as Etsy and widespread social media sharing of ideas, particularly through Instagram and Facebook, also mean that emerging trends can be spotted and can spread quickly to new audiences. Style bloggers and celebrity culture also quickly spreads ideas around the world, stimulating customer expectations and consumption urges. This is rapidly escalating the role of jewellery as a fast fashion commodity.
In 2017, the most popular types of custom jewellery in Eastern Europe remain neckwear and earrings, followed by rings and wristwear. Multi-layered necklaces, statement pendants, choker necklaces, as well as single earrings and ear cuffs are among the most popular new products to enjoy growing popularity among consumers in Eastern Europe. Likewise, statement pendants accessorised with large stones and rough designs are increasingly popular. Stones represent one of the biggest trends, and come in many colours and a multitude of shapes, from round or flattened to square, rectangular or oval shapes. These accessorise necklaces, earrings and bracelets, as well as rings.
In the majority of Eastern European countries, neckwear and earrings were the most popular product types in 2016 and 2017. In Poland, for example, earrings held the largest value share of 34%. Neckwear, rings and wristwear hold similar value shares and the reason for the comparable popularity of the three types is low pricing, which makes it possible for the consumer to collect items from different categories, yet comprising a full set of decorative pieces. For instance, the wristbands of the Reserved brand can be purchased for less than USD2.50, which is affordable for most local consumers.
A variety of materials are used for custom jewellery in Eastern Europe in 2017. They typically comprise non-precious metals as well as being plated with silver, pearls, wood, leather, minerals, epoxide resin or beads. Such products attract consumers as they allow them to create different styles. Also, the range of handmade jewellery available is increasing, with extensive offers on numerous websites. One of the big success stories for this return to handmade is the website Etsy – a marketplace for all things handmade.
The more technology advances, the more it is integrated into people’s daily lives. The same thing applies to jewellery: Consumers have multiple channels in which to shop, whether they are shopping in a store, from a computer, over the telephone, or via their smartphones. Tech-savvy consumers are increasingly turning to online jewellery shopping because of the benefits, such as a wide range of product assortments, easy return policies and cash on delivery option. Retailers need to be adept at all these different shopping opportunities. At present, this is something at which the industry, as a whole, seems to be failing, as it continues to treat its offline and online sales differently.
While some leading companies, such as Tiffany & Co and Swarovski, are highly successful in combining high online visibility with plenty of offline presence in shops, outlets and department stores, at airports, malls and fairs, the majority of jewelers are not. More companies need to offer their customers the ability to shop how and when they want. To achieve this, they should focus on integrating their point-of-sale and inventory control systems with their websites so consumers have up-to-the-minute information regarding inventory levels, whether they are shopping online or in the store. In addition, jewelers need to stay on top of the preferences of online consumers, such as offering customers the option of having the item shipped directly to them or being able to pick it up at the store. In addition, social media presence and mobile compatibility are a must. For example, Bulgari’s Instagram campaigns as well as Tiffany & Co’s Instagram activities are vital in maintaining high visibility.
Emerging opportunities within the jewellery industry in Eastern Europe
According to Euromonitor International data, Eastern Europe is expected to be ranked second among seven regions over the next five years, with the highest growth (4% CAGR, at constant 2017 prices). Gradual economic recovery in the largest Eastern European countries will drive regional sales.
Moreover, the development of the jewellery market will benefit from growing consumer confidence and levels of disposable income. The rise of the internet as a research tool, particularly for price comparability, and also as a purchase channel, is expected to drive sales; consumers will become increasingly comfortable with making online purchases, as cyber security and delivery and return policies are set to improve.
In addition, more retailers who are present with physical stores are expected to develop an omni-channel distribution strategy, generating a greater convergence between sales offered through their stores and through web-shops. This is set to increase the importance of the store image and generating higher levels of impulse shopping, whilst providing more convenience for consumers such as offering them the possibility to collect products ordered online at the nearest shop on the same day or by customising, designing and creating their own products.