[eltdf_dropcaps type=”normal” color=”#C0C0C0″ background_color=””]T[/eltdf_dropcaps]he jewelry business is set for a period of impressive growth. McKinsey projects the industry’s total global sales to nearly double between 2015 and 2020, as millions of consumers in the developing world find themselves able to afford indulgences for the first time.
Prosperity won’t be shared across the board though. Even as the jewelry industry as a whole expands, the trends and assumptions that have informed business decisions for decades are sure to look shakier from here on out. The sector’s winners will be those who correctly anticipate the key drivers of consumer tastes and buying habits in the near-to-medium term.
Who will those winners be? Only time will tell. Identifying the forces they’ll need to ride to get to the winner’s circle—that’s an easier task. Here’s a look at 10 key trends that will shape the jewelry industry in the next five years.
1. Continued Growth in the Peer-to-Peer Market
Middle- and down-market jewelry consumers are wising up—and asking whether they still need to pad a middleman’s pocket.
“It’s easier than ever for regular consumers to buy and sell pre-owned jewelry online,” says Josh Opperman, founder of I Do Now I Don’t, a leading peer-to-peer website for jewelry and watch sales. “By going directly to end users, sellers harness more of their underutilized jewelry’s value. On the other side of the transaction, buyers get fairer prices and better selection.”
Peer-to-peer won’t completely overtake traditional retail models, but it’s likely to account for a growing slice of the jewelry market. McKinsey predicts that up to 15 percent of jewelry sales will happen online, including on peer-to-peer platforms, by 2020.
2. Handmade and Bespoke Go Mainstream
The future is handmade.
Younger consumers are embracing handmade crafts, including jewelry, like no time since the advent of mass production. As jewelry is fundamentally a form of self-expression, the segment is ripe for bespoke disruption. And, per Uncommon Goods, handmade jewelry has plenty of laudable benefits—though it also tends to be pricier.
3. Mega-Brands and Cross-Border Fashion
According to McKinsey, the international jewelry industry has maintained a surprisingly parochial structure. Compared with the global apparel business, with which it shares obvious similarities, the jewelry industry largely remains within national rails.
That’s likely to change in the coming years as international mega-brands emerge and global patterns of behavior converge.
“Some industry observers project that the ten largest jewelry houses will double their market share by 2020, primarily by acquiring local players,” says the McKinsey report, written by Linda Dauriz, Nathalie Remy and Thomas Tochtermann.
They continue, somewhat ominously: “And if the apparel industry does indeed hold any lessons for the jewelry industry, incumbent jewelry houses will soon be fighting bidding wars against private-equity players with deep pockets.”
4. Social Consciousness and Responsible Sourcing
Social consciousness is the new price sensitivity. Jewelry consumers have never been more likely to ask about the provenance of new and used jewelry—nor merchants more likely to oblige. Jewelers who can get out ahead of this cresting wave and offer responsibly (and verifiably) sourced products are likely to come out ahead in the new normal.
5. Ongoing Consolidation in the Middle Market
As younger consumers seek out bespoke and responsibly sourced products and the upper end of the market reaches new heights, the middle market may experience some growing pains. McKinsey notes falling prices for mass-market jewelry, resulting in intense price competition among formerly comfortable producers and retailers.
This is likely to spur consolidation. But there’s a silver lining. According to Dauriz et al., consolidation could be a good thing for hitherto unknown local and regional brands. “International retail groups will acquire small, local jewelers,” they say, with the result that “some local brands will almost certainly become known globally as a result of industry consolidation.”
6. Accelerating Decline in the Unbranded Segment
At first blush, this trend would seem to conflict with the handmade and bespoke movements. After all, purchasing a one-of-a-kind bracelet from a master craftsman is very different than shelling out beaucoup bucks for a Swarovski trinket.
But the decline in unbranded jewelry and the rise of handmade and bespoke products are actually complementary. The common denominator: Consumers are less inclined to purchase anonymous, cookie-cutter jewelry that lacks pedigree, provenance or cachet. Even as newly wealthy consumers in Asia and other parts of the developing world plow their resources into status symbols, affluent young Americans and Europeans seek out unique pieces that reinforce their value systems and provide outlets for self-expression.
7. Online Jewelry Sales (New and Used) Increase
As noted, online jewelry sales currently make up a pretty small segment of the overall jewelry market. That won’t change dramatically, but the share of online sales as a percentage of total sales is nevertheless likely to increase by 2020. Exactly how the online mix will look by then is harder to call—some hybridization, whereby consumers buy online and then confirm their choice at an in-store pickup location, is likely.
8. Used Jewelry Remains Ascendant
It has never been easier for price-sensitive consumers to find pre-owned jewelry, whether on reputable auction sites like eBay or major brands’ own web portals. As online retailers and auctioneers find new ways to reduce friction for buyers and sellers, look for this trend to accelerate.
9. Single-Brand Boutiques Hold Their Own
In an ever more fragmented retail market, single-brand boutiques look poised—somehow—to grow. As long as they invest in loyalty-building and remember to take care of old-school basics like great customer service and quality products, trusted brands can leverage branded brick-and-mortar outlets to serve their best customers.
10. The 1 Percent Get Their Way
Good times are ahead for the upper end of the jewelry market. According to McKinsey, wealthy consumers are treating themselves like never before. “Splurge” continues to be redefined upward, and pricey baubles are increasingly seen as essential status symbols rather than once-a-year gifts for significant others. This trend is particularly pronounced in rapidly developing international markets. Players positioned to exploit that segment are primed for a lucrative run to 2020.
Which are jewelry industry trends you most bullish on?