Rapaport Magazine
Markets & Pricing

Consumers don’t love Valentine’s

Store owners are divided over whether the holiday brings better sales. Meanwhile, some are seeing growth in synthetics.

By Lara Ewen
In theory, Valentine’s Day should be perfectly timed to boost jewelry sales between the end of the Christmas period and the start of wedding season. In practice, however, most retailers said Valentine’s sales had been lagging for years due to increased consumer spending on experiential gifts and a trend toward more budget-friendly online purchases. Still, retailers who promoted the holiday said they did well.

In addition, there’s a slow but growing move toward lab-grown diamonds, even at stores that previously shied away from the product. As the world moves into the third year of pandemic retailing, it seems the most important product to stock is whatever will bring in customers.

The heart of the matter

For some stores, Valentine’s Day continued to draw customers, despite industry rumors that suggested otherwise.

“Valentine’s Day gets people out,” said Michael Han, president of The Wedding Ring Shop in Honolulu, Hawaii. “It’s a marker in the seasons. We go through January, and everyone is recovering from the holidays, and then by the middle of February, you see the light at the end of the tunnel.”

Han makes sure his customers remember Valentine’s Day, too. “I have to make it a special holiday,” he explained, adding that traffic for the two weeks surrounding the date had been strong. “We have to talk about it and get excited about it. We don’t do enough of that in the industry.”

Average Valentine’s Day prices are usually more budget friendly, Han continued. “People look for more price-pointed items. We sell gold-dipped roses for $400, and jewelry between $75 and $350.” Still, it’s an important transition season for his store, as “Valentine’s Day kick-starts the bridal season.”

Elsewhere, sales were less robust. “For us, Valentine’s Day never was a big deal,” said Eve Alfillé, owner of Eve J. Alfillé Gallery & Studio in the Chicago, Illinois, suburb of Evanston. “Our customers are in their 50s or 60s and observe anniversaries, mostly.”

However, her custom redesign business has kept her busy, even during January, which is normally slow, she reported. “Lots of pandemic free time [let] everyone contemplate what to do with the heirlooms they’d accumulated,” she said, adding that many of her redesign customers also ended up buying something new, either for themselves or as a gift.

Yet some jewelers didn’t see much business at all. “I’m lucky if one person buys a Valentine’s present,” said Ken Stein, owner of Bensons Jewelers in Washington, DC. “In fact, I’m going away for Valentine’s Day weekend. I did make one ruby bracelet, but otherwise Valentine’s Day hasn’t done much for many, many years.”

Stein’s location also sees very little foot traffic nowadays, he commented. “There are some days when I go into work and there are only four cars in the whole parking garage. There’s no business.”

Lab-grown interest on the rise?

Lab-grown diamonds are doing well in Han’s store, but they aren’t his main focus, he said.

“We’re part of the Natural Diamond Council (NDC) and are looking to differentiate ourselves with that initiative while keeping lab-grown as an option for the customer. Customers are asking for [lab-grown], and some people are curious, so our team has to be well-educated. What matters is what the customer wants.”

For Alfillé, there’s not much demand for lab-created stones. In fact, she only recently had her first inquiry for the category. In mined stones, however, she was seeing requests for diamond studs.

“They fit the zeitgeist, because they’re mask-compatible and not ostentatious,” she said. “We also consistently sell out of anything featuring black diamonds — again, because of the zeitgeist.”

The ones who are left

Han said diamonds were selling well, even as prices increased.

“Barring any financial crisis, this will be an excellent year,” he predicted. “But we have to be financially responsible with our company. The reason some jewelers are doing well is that there are fewer jewelers, and the ones who are left are more responsible with their finances.”

Yet for Stein, the pandemic continued to pose challenges. “No one ever came back from the first variant,” he said. “Every time we were supposed to come back, we got hit again.”

He expressed hope that things would improve, but he wasn’t optimistic. “My friend said he thinks DC is going to come back by March 1. Maybe masks will come off. But the most frustrating thing for me is that diamond dealers say suburban stores are having the best seasons ever. I don’t want to hear that when I’m dying. It’s depressing. After this five-year lease, I think I might be done.”

By the numbers
  • Revenue from jewelry rose 20% year on year during January and 31% compared to January 2019, as shoppers bought gifts ahead of Valentine’s Day and refreshed their wardrobes for 2022.

  • Swiss watch exports to the US jumped 38% year on year in January to CHF 252.3 million ($274 million).

  • US retailers expect to handle more than $761 billion in returns of items they sold during 2021, accounting for just under 17% of their $4.58 trillion total sales. For every $100 of returns they accept, companies lose $10.30 to return fraud.

  • Last year, 536 US jewelry businesses closed — a drop of 11% from the 605 that shut down in 2020. Meanwhile, 385 new ones opened in 2021, 153% more than the previous year.

  • The average price of fancy-color diamonds was 1.7% higher at the end of 2021 than it was 12 months earlier. By category, blues jumped 2.2%, pinks grew 2%, and yellows rose 0.9%.

Sources: Mastercard SpendingPulse, Federation of the Swiss Watch Industry, National Retail Federation (NRF), Jewelers Board of Trade (JBT), Fancy Color Research Foundation (FCRF)

Article from the Rapaport Magazine - March 2022. To subscribe click here.

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Tags: Lara Ewen