Jewelry Retail
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Industry Overview
The US jewelry retail industry generates annual revenues of about $25 billion from 30,000 specialty stores. Large companies include Zale, Tiffany, and Sterling Jewelers. The industry is fragmented: the top 50 jewelry chains hold less than half of the market.
Competitive Landscape
Jewelry sales depend partly on consumer income. Small jewelers can effectively compete with large chains because price isn't the main factor determining sales. Profitability depends on merchandising and effective marketing. Average industry revenue per worker is about $160,000.
Jewelry is also sold in department and discount stores, and by mass merchants. Because regular gross margins are very high, often 50 percent, mass merchants have been able to cut prices and take market share. Wal-Mart is the largest jewelry retailer in the US.
Products, Operations & Technology
Jewelry is often classified as bridal merchandise (engagement, bridal and anniversary rings - about 35 percent of the market); fashion jewelry (rings, bracelets, earrings, pins, gold chains); and watches, silver flatware, and other giftware. Diamond jewelry and loose diamonds account for the largest share of total jewelry store sales (46 percent); gold jewelry for 11 percent; colored gemstone jewelry (rubies, sapphires, emeralds, etc.) 9 percent; and watches 4 percent.
Jewelry is expensive, intimidating, difficult for consumers to evaluate, and usually not branded. Purchases therefore require a good deal of service and expertise. Consumers are most likely to buy jewelry from a merchant they feel is trustworthy: either a well-known local jeweler or a trusted retailer such as Tiffany.
Jewelers' operations consist of buying jewelry from manufacturers and wholesalers, training sales staff, and marketing products through various channels. Many jewelers also operate repair services, which can account for 10 percent of annual revenue. Company buyers must be both technically skilled and aware of fashion trends. Most retailers buy merchandise fully finished from many different manufacturers. Some retailers also create pieces themselves. Tiffany manufactures about 30 percent of its jewelry, and has licensing arrangements with several jewelry designers who sell their designs only through the company. Retailers also sell merchandise on consignment from manufacturers.