By Lukas KIKŪNAS
In 2021, the jewelry industry made headway, recovering some of the losses brought on by the COVID-19 pandemic. Although travel restrictions continue to take their toll, growth is the new normal once again.
Consumer sentiment is recovering worldwide with the greatest net changes observable in Europe.
E-commerce has flourished during the pandemic, which was especially felt by retailers of costume and demi-fine jewelry. The reopening of physical stores had done little to turn back the tide of digitization in the jewelry markets that was accelerated by lockdowns.
Driven largely by generational change, ethical considerations are already an increasingly important factor in shaping purchasing decisions.
The second-hand market, particularly for fine jewelry, has grown substantially over the last few years.
JUST WHAT THE DOCTOR ORDERED
Although the recovery of the jewelry markets is still somewhat subdued by the slow reopening of international travel (which is especially true in geographical markets, which are more tourist-oriented), it’s safe to say that it is well underway. Last year, the global jewelry market rose by 9.2 percentage points and is poised to continue its climb to pre-pandemic levels and beyond.
Much of the jewelry sales slump that began with the COVID- 19 pandemic has been due to the postponement of purchases. This was especially true of fine jewelry, which fared worse than its cheaper alternatives. Such caution implies that consumers still prefer to pay for more expensive pieces in-store, where they can inspect and try them on in person.
Postponement is not the same as dissipation though. The foregone purchases constitute pent-up demand, which we are now seeing being released in many geographic markets. Not incidentally, the fine jewelry segment is forecast to outpace costume jewelry in growth over the coming years.
Consumer sentiment regarding economic recovery and reported intent to buy jewelry is also improving. The change is most apparent in Europe, where initial concerns over the pandemic last year were at some of the highest levels worldwide. Meanwhile, in the Asia Pacific region, which accounts for over a 60 percent share of the total global jewelry market, the moods are particularly optimistic.
IS THE FUTURE OF JEWELRY COMPRISED OF ONES AND ZEROS?
During lockdowns, the online environment has been more accommodating to sellers of costume and demi-fine jewelry. Nonetheless, high-street jewelry producers have actively sought to bridge the gap by investing in e-commerce. They brought their considerable resources to bear: from promoting products more actively through social media campaigns, to as far as utilizing 3D videos and augmented reality to recreate the conditions consumers have in brick-and-mortar stores.
Percentage-wise, only 8.1% of global jewelry sales were made through the e-commerce channel in 2018. In 2021 that number was 12.9%, having fallen a mere 0.4% from the previous year despite the vaccine rollouts and consequent reductions in quarantine measures worldwide. These figures already suggest that consumers have become more accustomed to the digital avenue and are more likely to use it for jewelry purchases moving forward. In some regions, this is exceptionally pronounced. Most notably, Eastern Europe and Latin America saw e-commerce jewelry sales more than triple during the pandemic, while in North America they now make up a staggering 27% of all jewelry sales. Yet in places like Africa and the Middle East - where e-commerce sales stand below the two-percentage mark - only minor increases were reported.
TIMES THEY ARE A-CHANGING
Some trends - such as the increased price sensitivity of less affluent customers - have been introduced into the jewelry markets solely by the entry of the pandemic onto the scene. Other trends are slower moving, however, and can be attributed to generational change. Take the increasing importance of ethical jewelry, for example…
With the coming of age of Gen-Z’ers, and rising disposable incomes of millennials, concerns over sustainability acquire an ever more important role in the mind of the consumer. McKinsey estimates that by 2025 up to 20-30 percent of jewelry purchasing decisions will be influenced by ethical considerations. Correspondingly, practices such as the use of recycled materials in jewelry-making and increased supply chain transparency are already in vogue.
A fascinating intersection of the two aforementioned trends can be seen in the used jewelry market. Not only are older pieces “recycled,” so to speak, upon resale but also present themselves as a value-for-money alternative to new jewelry pieces at a time when uncertainty has induced caution in consumers. In this way, ethical awareness and cost-consciousness have become unlikely bedfellows, in tandem fueling the growth of the second-hand jewelry market.