“Jewelry sales are sparkling after years of darkness”

Jewelry sales are sparkling after years of darkness

Posted: 11 Feb 2011 09:11 PM PST

ZBIGNIEW BZDAK - MCT

Scott Baron looks for a Valentine's Day gift for his wife at Leber Jeweler in Chicago on Thursday. Consumers are buying more jewelry overall lately, with an emphasis on deals and value.

BY SANDRA M. JONES - Chicago Tribune

Not to get anyone's hopes up this Valentine's Day, or get anyone else in trouble, but giving jewelry is back in style.

Jewelry sales made a big comeback this past holiday season after plummeting during the recession and continue to gain steam headed into Monday's big day, a sign that consumers are feeling better about the economy.

But don't expect any Elizabeth Taylor-size rocks. Even as consumers return to the jewelry stores, they're looking for a good deal, whether they're shopping at JCPenney or Harry Winston.

"There is a mentality of value, even in the luxury jewelry market," said Andrea Morante, CEO of Pomellato, an Italian luxury jewelry firm that counts Oprah Winfrey as a customer. "If a client is looking at a $70,000 ring, they want to know how many hours it took to produce. It's a healthy trend for consumers to ask aboutvalue."

U.S. jewelry sales rose 7.7 percent to a record $63.4 billion in 2010, according to a new report from the Jewelers Board of Trade, based on Commerce Department data. The uptick follows two consecutive years of declines, dropping 2.7 percent in 2009 and 2.4 percent in 2008, as Americans cut back on discretionary spending.

With the price of gold up 30 percent last year and trading at more than $1,300 an ounce, jewelers have taken pains to come up with creative designs aimed at keeping price tags down, as husbands and boyfriends find their way back to the jewelry counters.

One overarching strategy that is working so far: Designers are fashioning smaller, lighter-weight pieces that require less solid gold, relying on twists, lace designs and cutouts.

Jewelry merchants, among them Gurhan and Tiffany & Co., are combining sterling silver and gold into a necklace or bracelet. And customers are snapping up stacking rings and necklace charms that can be purchased one at a time over several months or years.

Even the traditional single-diamond engagement ring is giving way to more affordable designs. A halo setting, typically a small center diamond surrounded by smaller diamonds or colored stones, is becoming more popular with brides-to-be as the setting gives the illusion of a big ring without the price, said Amanda Gizzi, spokeswoman for the Jewelers of America.

"People are being smarter with their investments and are looking for items with lasting value," Gizzi said.

Like many consumers, Scott Baron, 33, avoided fine-jewelry purchases during the recession.

With a baby on the way and the stock market on the rise, Baron decided this Valentine's Day was a good time to "do something extra" for his wife. He spent Thursday afternoon at Leber Jeweler Inc. in Chicago selecting a stone that is both meaningful to his wife and a good investment.

"It's not something I do every year," Baron said. "Typically, we go out to dinner."

He isn't alone. Shoppers are expected to spend $3.5 billion on jewelry for Valentine's Day. That's up 17 percent from $3 billion last year, according to the National Retail Federation, a Washington, D.C.-based retail trade group.

Sales have skyrocketed at luxury retailers in particular as wealthy people began to shop again. Jewelry firms Bulgari of Italy, Parisian luxury conglomerate LVMH and Switzerland's Richemont, owner of Cartier, all reported sales gains topping 25 percent in the most recent quarter. And New York-based Tiffany, known for its little blue gift boxes, raised its profit forecast for the year, adding last month that it will accelerate store openings in 2011.

Business is looking up at the midtier jewelry chains as well. Zale Corp. said sales at stores open at least a year rose 8.5 percent for the combined months of November and December compared with the same period in 2009, when same-store sales dropped 12 percent. Costco Wholesale said its jewelry sales rose by a percentage "in the teens" in the last few months of 2010.

Meanwhile, JCPenney and Sears Holdings debuted new bridal jewelry collections at their department stores this month in hopes of capturing sales leading up to Valentine's Day, the second-biggest day in the jewelry trade.

The expansion comes after a rash of jewelers went out of business during the economic downturn. Signet Jewelers, the British company that owns the Kay Jewelers and Jared chains in the U.S., said in a presentation to investors last year that the total number of jewelry specialty stores shrunk by an estimated 12 percent in the U.S. since the start of 2008.

JPMorgan analyst Brian Tunick estimated in a Feb. 1 report that more than 2,750 jewelry stores have shuttered since the recession and predicts that closings will continue this year as jewelers balance rising commodity costs with consumers' desire forvalue.

"People are much more careful and study more before they go and buy," said Hana Ben-Shabat, partner at the London office of consulting firm A.T. Kearney.

This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured article: Collateral Damage - WikiLeaks In The Crosshairs.