Rapaport Magazine

Trend to Big Continues

US Retail Market Report

By Kate Rice
RAPAPORT... U.S. jewelry retailers were reporting good momentum as summer turned to fall, with bridal sales doing well and Journey and other Diamond Trading Company (DTC) campaigns helping to spur consumer interest.

Peter Engel, president of Fred Meyer/ Littman Jewelers, said their stores were doing well in two areas: bridal and Journey jewelry. And, customers are buying bigger and better. Engel said that the company continues to reinforce its strength in bridal — taking the path of offering unique, unusual product — and consumers are responding.

“The average ticket is higher and customers are looking for better color, better clarity and bigger sizes,” Engel said. Fred Meyer/Littman has spring and fall bridal books. This fall’s book includes five rings with center stones of 1 carat or more — a first. The spring book came out with only one such ring and response was so good that the company expanded ring offerings sized above 1 carat for the second bridal book.

Fred Meyer/Littman is breaking down its products by price. It had a “great” response to a $4,999 piece and is now advertising pieces with prices ranging from $5,000 to $7,000. The company reports that consumers are willing to spend that much on the right piece. Engel said that Fred Meyer/Littman is responding to consumer demand by keeping colors to near colorless.

Journey Jewelry Is Moving

On the subject of Journey, Engel said the line started off strong for Christmas 2006 and has been “huge.” It did well at Valentine’s Day, was strong for Mother’s Day, and maintained that strength through the summer.

“We believe this Christmas will be equally as strong as last year,” Engel said, explaining that his company is incorporating Journey marketing into its own product marketing for the holidays.

David Sternblitz, vice president and treasurer of the Zale Corporation, said that Journey is driving pendant sales, which he sees as the hottest jewelry category right now, and that it is also driving circles to a lesser degree. On the bridal side, multistone engagement rings are the biggest trend. Sternblitz reported larger carat weights in both bridal and fashion categories, with better-quality solitaires also doing well. Zale Corporation intends to support the DTC beacon programs for fall, including Journey, right-hand rings, three stones and basics such as solitaires.

Average Stone Size Growing

Joel David Wiland, owner of J. David Jewelry, Broken Arrow, Oklahoma, said that his customers are buying increasingly larger stones, with the most common size ranging from 1.25 to 1.75 carats. Engagement rings are his store’s strongest category, followed by solitaire earrings, Journey pendants and past, present and future rings. Wiland includes the Journey and three-stone jewelry in his advertising campaigns.

Color diamonds have yet to resonate with Wiland’s customers. White settings prevail, although he’s seeing a shift back toward yellow. He’s seeing a decrease in princess cuts and a shift to emeralds, as well as a surprising demand for marquise recently. He’s getting the diamonds he needs in a timely manner, although he said that the supply of larger diamonds seems to be decreasing, causing prices to increase. Despite that, he said that margins have actually increased.

Meryl Manin, owner of Grono & Christie Jewelers, Milton, Massachusetts, said that 1 carat also has become too small in her area for engagement rings; the average size she sells now is 1.25 to 1.75 carats. Her biggest diamond sale was a natural yellow 7.7-carat ring. Her customers go for yellow and blue color diamonds. Many are happy to buy heat-treated stones because of their price advantage, although these are usually sold in cluster-type rings.

Manin is in a competitive market and, as a result, stocks many more diamond bands and earrings than loose diamonds. Her supplies are good — her network of dealers provides overnight service. She’d like better margins, but “there are too many dealers who prostitute their stones for tiny profit margins, making it harder for us to compete at a fair price.” She uses three-stone ads and some Journey ads, but said that the right-hand ring has never caught on as a style or a campaign.

Earrings, Pendants In Demand

Merel Heggelund, owner of Mann’s Jewelers, San Jose, California, reported that earrings have been his top sellers this year, with diamond solitaire earrings — mostly 1.50 carats and above — leading the way. Colored stone pendants are a close second. For his store, the typical clarity rating is VS and color is F to H.

“We love to sell colored diamonds,” he said, adding that black and white combinations do best, with yellow coming in second.

Heggelund, too, is getting the merchandise he needs, but would prefer better pricing. However, he said that taking advantage of early-pay discounts has had a positive effect on his bottom line. He’s using Journey and three-stone ring ads, but none for right-hand rings.

The Marketplace

• Consumers are willing to pay more for better, bigger diamonds.
• Diamond sizes up to 2 carats are becoming typical.
• White gold reigns in bridal.
• Yellow continues to be popular in other jewelry.
• Color sells, mainly champagne, and black and yellow do well.

Article from the Rapaport Magazine - September 2007. To subscribe click here.

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