Branded jewelry squeezes Tiffany
In Christmases past, gentlemen headed to their trusty local jewelry shop to buy generic gems for their significant others.
This year, more are visiting luxury department stores and boutiques and dropping premiums on branded fine jewelry from fashion houses including Ralph Lauren Corp., Gianni Versace SpA and Salvatore Ferragamo Italia SpA.
Celebrity jewellers such as glam-rock-inspired Stephen Webster are feeling the love, too.
Well-heeled consumers are developing a taste for precious adornment that broadcasts its brand provenance either by incorporating such well-known logos as Versace’s Medusa head or using distinctive designs like David Yurman’s chunky carved cable silverwork.
Branded jewelry sales will double to 30 per cent of the $59.2 billion U.S. fine jewelry market in the next decade, said Ken Gassman, president of the Jewelry Industry Research Institute. The new entrants are competing with Tiffany & Co. — which last month cut its annual profit forecast for the third time this year — and may further decimate the thinning ranks of specialty jewellers. The U.S. had 22,330 specialty jewellers in 2011, down 28 per cent from their 1987 peak, Gassman said.
“The fact that many top-tier luxury brands are targeting jewelry creates intense competition, and squeezes Tiffany,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based luxury consulting firm.
The race is on this month because the holiday period generates 30 per cent of jewellers’ annual sales, making them more dependent on November and December than any other retail segment, according to the National Retail Federation, a Washington, D.C.based trade group. Most of the sales occur in December and a quarter of them in the week before Christmas, said Michael McNamara, a vicepresident for Purchase, New York-based MasterCard Advisors SpendingPulse.
Jewellers are fighting for market share while facing weak consumer demand for lower-priced baubles as well as higher raw-product costs. Purchases of jewelry sold at the top 10 per cent of prices fell 3.2 per cent in the retail fiscal year through November, compared with a 13 per cent jump a year earlier, according to SpendingPulse figures for transactions in all payment forms.
New York-based Tiffany said Nov. 29 that sales growth at stores open at least a year in the Americas shrank to one per cent in the third quarter from 15 per cent in the same period a year earlier.
Neiman Marcus Group Inc., which sells brands like Yurman and Webster, saw “very strong” precious jewelry sales at the Dallas-based luxury retailer in its last quarter, chief executive Karen Katz said on a Nov. 28 conference call.
Branding is good for the industry because converting jewelry from an evergreen investment that you hand on to your heirs into a fashion accessory that goes out of style drives sales by spurring replacement purchases, Gassman said.