Retail Gets off to Strong Start in 2015 – and Valentine’s Day Jewelry Sales Seen as Solid
This year has started well for American retailers as the economy continues to steam ahead. Christmas holiday sales were reasonable – helped by gas prices which fell in the last months of 2014, and have remained low in the first months of 2015. That has put extra money into shoppers’ pockets – and given retailers a boost.
The Christmas season was stable, with U.S. diamond jewelry and other jewelry watch sales in December at $15.25 billion. For all of 2014, jewelry and watch sales were $69.2 billion, the U.S. Commerce Dept reported.
A solid Valentine’s Day
The diamond jewelry trade reported a solid Valentine’s Day as shoppers felt more relaxed about opening their wallets. Although diamond rings were reportedly selling well ahead of Valentine’s Day, other items such as pendants, bracelets, necklaces and earrings were also doing well.
Although there were few specific sources of information regarding color diamonds, some high-end jewelers, such as Tiffany & CO, reported rising sales. Retail research firms predicted that Valentine’s Day spending would increase by 3.8% from 2014 figures.
Spend on Valentine’s Day rose
Falling unemployment over the past year has enabled American consumers to have more spending money for discretionary purchases like jewelry, gifts and dinner dates on special occasions. The average amount consumers spent on Valentine’s Day rose from last year’s $134.56 to $139.70.
The latest data from the CDC’s National Center for Health Statistics showed that the number of annual marriages has increased in recent years. Although Americans are waiting longer to get married, this does not translate to less spending on Valentine’s Day. Unmarried couples were a significant part of holiday revenue and jewelry purchases.
While Valentine’s Day is celebrated by single folks and couples alike, consumers reportedly spend the most amount of money on their significant others and spouses. IBISWorld estimates that revenue for jewelry retailers rose by 5.6% from last year, as consumers have more money to spend.
In 2014, data from U.S. specialty jewelry stores in February reflected a sales increase of 3.7% year on year to $2.91 billion, while sales of watches and jewelry across all retail channels improved 6% to $5.842 billion.
An increase in demand
Diamantaires also appear to be in a better frame of mind. One American diamond company executive with strong connections to the New York diamond jewelry business, said he had seen an increase in orders at the start of 2015.
“You can definitely see an improvement in retail sales. It is very gradual, but there is a shift in the way retailers are ordering. They are also saying that there is a rise in demand, especially for rings. It is partly a seasonal thing. As the Spring approaches, this is usually what happens but I believe there is an increase in demand.”
Marketing analysts have identified several trends in shopping patterns that apply just as much to diamond jewelry retailers as to the rest of the retail sector. Among these are ongoing growth in omnichannel shopping. This means that shoppers are buying via all channels – whether online or in bricks-and-mortar stores. Shopping and buying is taking place through multiple channels, with online research followed by in-store purchases.
The challenge for retailers
Another trend relates to sales via mobiles and tablet devices during the holiday season which were impressive, both in terms of the online and in-store traffic driven off of mobile devices. Actual purchasing from a mobile device is an increasingly popular and important sales channel. Clearly, consumers like the flexibility afforded through different channels.
The challenge for retailers is now to work out how to shift and adapt their operations to keep pace with widespread changes in shopping behavior in order to be able to deliver what shoppers are coming to expect. Shopping and researching in one channel, buying in another, and returning in a third are quickly becoming the new normal.
A further strengthening trend is the ongoing development of various payment options. The newest such payment channel is Apple Pay, a mobile payment solution that was launched in late 2014 and is seen developing and expanding further this year. Consumers want to be able to pay quickly, efficient and securely. Just as checkbooks have almost become a feature of a bygone era, so, too, will credit cards eventually as digital payment becomes the norm.
The rapid rise in the number of retailers accepting mobile payment options means further growth of mobile pay adoption is inevitable. Consumers are poised to want to experiment more with this form of payment this year, and credit card companies can be expected to fight back with various discount schemes in a bid to retain market share.
Another increasingly important feature of modern-day shopping is same-day delivery. The desire of consumers to be able to look, reserve and buy something from phone or laptop and have it delivered that same day is becoming a standard feture of purchasing goods. However, it is a hugely complex logistical operation.
It involves building additional distribution centers, learning how to manage pulling from store stock, partnering with third-party delivery firms and even launching a drone force, as Amazon said it planned to do for the delivery smaller items. It seems clear that this will a focus for companies in 2015.
If there is one trend that is becoming clearer ever year, it is that sales seasons are increasingly difficult to hold. Customers want to shop when they see a great deal and not just when a retailer or the retail industry says it is a great deal. In 2014, retailers increasingly experimented with start dates and sales periods and launched many flash sales as well as daily deals and shifting promotional calendar events in a bid to bring in business.
Head in the direction of consolidation
Is the American retail environment becoming over-populated? There is little doubt that there is saturation where store numbers are concerned. Consequently, retailers who overbuilt in recent years and over-opened regarding stores will have little choice but to close underperforming stores and head in the direction of consolidation.
American retail operations have a deep affinity to data and statistics, but is that information being wisely and effectively used? Retailers continuously collect, analyze and attempt to optimize data. Their specific challenge will be to act on that data to improve their business operations and to gain meaningful and actionable customer insight.