A Kohl's executive recently said fine jewelry 'just seems to be something that continues to trend incredibly well with our customers'
One jewelry expert noted that current hot styles include "big gold pieces, chunky chains, big colored gemstone pieces and cocktail rings."
Jewelry sales have offered a glimmer of hope for retailers this year, as wealthier shoppers spend like inflation doesn't exist.
On recent earnings calls, executives at department-store chains like Macy's and Kohl's have cited jewelry as a strength. Management at mall operator Simon Property Group said that jewelry was among the categories it was most excited about. Some analysts say so-called "quiet luxury" - the understated but expensive styles found on TV shows like "Succession" - is on its way out, as shoppers turn to more ostentatious pieces.
Macy's (M) on Thursday cited "outperformance" in fine jewelry - or pieces made from precious metals and gemstones - during its second quarter. Jewelry retailer Signet Jewelers (SIG), a day earlier, highlighted quarterly same-store sales gains in "all fine-jewelry brands."
Elsewhere, Costco Wholesale (COST), which sells gold and diamond pieces, has said jewelry was among its better-performing departments during July and August. Pandora $(PNDZF)$ and LVMH (FR:MC) put up sales gains in jewelry in their second quarters.
Kohl's $(KSS)$ - which was once trying to trim its fine-jewelry selection - said last month that jewelry sales rose by a mid-single-digit rate in the second quarter, helped by giftable and personalized items. To build on those gains, the chain said it was rolling out an extra 350 fine-jewelry case lines to stores later this year, and bringing "elevated fashion-jewelry fixtures" to 320 stores in November.
"Jewelry just seems to be something that continues to trend incredibly well with our customers," Jill Timm, Kohl's chief financial officer, said on the company's earnings call.
Simon Property $(SPG)$, meanwhile, was bullish on jewelry as a retail category overall. CEO Eli Simon, during the company's earnings call last month, said the company was trying to add jewelry stores to its mall properties, as "uber-luxury" customers keep buying higher-priced fare. But he also said more lower-priced retailers were joining the fray.
"There's a lot of new entrants in this space that we're doing business with that have great-looking stores, [that] attract maybe that younger consumer," he said. "And so, it's a category that's important for us."
Wealthier consumers continue to partake in what some Fed officials this year have called "unapologetic luxury," driving up prices for jewelry, watches and other items in the process. That trend has widened the gap of the so-called "K-shaped" economy, the term economists have used to describe the gulf between the rising fortunes of higher-income shoppers and the sagging fortunes of middle- and lower-income shoppers, who have felt the pain of rising gas prices and other costs more directly.
That K-shaped trend has played out in its own way across a U.S. jewelry market that is expected to increase around 6% to $93 billion in sales this year, according to the research firm Tenoris, which follows trends at premium specialty jewelers.
However, at those specialty jewelers specifically, unit sales - a gauge of the actual number of items sold - are down 8.5% overall so far this year, according to data from the firm. But for items priced above $2,500, unit sales are up more than 18% so far this year.
"If you are a consumer for a $100 to a $500 jewelry item, and you used to go to a specialty jeweler, you don't anymore," said Edahn Golan, a partner at Tenoris. "As a result, specialty jewelers are pushing up their offerings to cater to their [higher-spending] consumer base."
Meanwhile, he said, shoppers who are more budget-conscious today are likelier to opt for, say, cheaper jewelry that might be sold in malls or supermarket chains.
Still, recent data showed some strength in jewelry spending among younger shoppers who were less established in their careers. BofA analysts, in an August note, found that jewelry spending among Gen Z households was up nearly 11% year over year in June. That trend, they said, "suggests younger consumers are prioritizing purchases and experiences that deliver immediate gratification - consistent with the 'little treat economy.'"
The sales trends have arrived after the luxury industry hiked prices over the 2020s, following the pandemic and overlapping supply disruptions, leading to distrust among some consumers.
Meanwhile, the price of lab-grown diamonds - or diamonds made by emulating the earth's natural heat and pressure conditions - has fallen, as technological advances and production expansion lead to oversupply. Values of colored gemstones have risen since the pandemic, following constraints in mining. The price of gold (GC00), which has risen through this decade, has had its ups and downs this year, trends Goldman Sachs analyst Tony Kim this month attributed to concerns about the Iran war and ambiguity over interest rates. But Kim said he expected strong central-bank demand to drive prices to record levels.
The "unapologetic luxury" trend also appears to be reflected in shifting consumer tastes. Brecken Branstrator, the editor-in-chief of GemGuide, a gem-price data platform, said the "quiet luxury" trend may be giving way to showier offerings.
"U.S. shoppers are seemingly turning back to bold - big gold pieces, chunky chains, big colored gemstone pieces and cocktail rings, that kind of thing," she said over email.
"Vintage and estate jewelry is also doing really well right now," she added. "Consumers appreciate the story behind a lot of these pieces."
She also noted that as the diamond sector softens, shoppers have become more interested in colored gems. Some diamond suppliers are adding those gems to their inventories to boost sales, she said.
Gen Z is seeking out personalized pieces, she added. And following the rise of gold prices, some designers incorporated wood, ceramic and titanium into their designs.
As prices for metals and stones fluctuate, and as lab-honed techniques make it easier to make larger diamonds, some experts think that materials and carats will eventually become less of a factor in the perceived value of jewelry.
Daniel Langer, a professor of luxury strategy at Pepperdine University, said that in the years ahead, the uniqueness of the stories luxury houses tell around their offerings, and the point of view they take on design, will play a bigger role in the value of any single piece.
"The material will stop being the signal," he said. "The size will stop being the signal. What now becomes the signal is the brand, is the story, is the exceptional craftsmanship."
-Bill Peters
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