Jewelry Industry Analysis

4547 words - 18 pages

OverviewWith the U.S. economy growing and unemployment rates declining, consumer confidence is expected to increase. As a result, there will be a higher demand for discretionary items. One industry that is expected to profit from this upward shift in our economy is the jewelry store industry. Some of the key economic drivers of this industry are households that earn more than $100,000 annually, the consumer confidence index, marriage rates, and the world price of gold [1]. This industry not only includes stores that sell new jewelry, watches, and sterling and plated silverware, but also stores that offer engraving and repairs [1]. However, operators in this industry do not cut and set gemstones or sell costume jewelry or antiques. Also, this industry does not include internet, mail order, or direct sales retailers [1]. The key players in this industry are Signet Jewelers Ltd., Tiffany & Co., and Zale Corporation [1]. Main activities include selling new jewelry, new sterling and plated silverware, and new watches and clocks [1]. Some of the major products include diamond, pearl, other gemstone, platinum, and gold jewelry, loose gemstones, and watches [1].With the growing jewelry industry, there are a few trends that are expected to surface. First is that retailers will be increasing the prices of their jewelry to receive an increase in revenue [1]. However, the increase in prices is not expected to discourage consumers [1]. Also, stores that offer jewelry at discounted prices are still being threatened by non-specialized retailers such as Target and Overstock.com who already carry jewelry in their inventory [1]. Another trend is that the number of jewelry stores operating in this industry in the U.S. will increase at an annual rate of 1.7% [1]. One last trend is that employment rates are expected to increase in this industry [1]. Customer service is and will always be a trademark in jewelry stores, so consumers are turning to traditional jewelry stores with help in making a sounds decision for their needs [1]. It is projected that employment rates will grow at an average annual rate of 1.3% over the next five years [1].Overall, there is a promising future for the jewelry store industry. Between 2008 and 2013, the annual growth rate for this industry was -0.3%, due to the recession and a decline in the consumer confidence index [1]. Currently, there are 67,622 jewelry stores in the U.S. [1]. Together, they account for $32.8 billion in revenue, earning a profit of $2.5 billion [1]. Over the next five years, revenue is expected to grow at an annual rate of 0.4%, with profits to grow in the same time frame to 8.7% of revenue [1]. Experts in this industry have confidence that consumers are going to be turning to more traditional jewelry stores as opposed to nonjewelry retailers such as Walmart to purchase high-value items, for example engagement rings [1]. This trend will decrease the amount of competition in the industry, driving out the weak,...

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