On Data: What We Know About Jewelry Sales So Far This Year

In a recent note cited in this Bloomberg article, economists Yelena Shulyatyeva and Andrew Husby wrote: “The June retail sales data implies there’s still enough momentum for the U.S. economy to grow during the rest of the year as consumers find ways to cope with surging inflation, whether by dipping into savings or switching jobs.” 

So, what does our data show about sales momentum in jewelry? Let’s take a look at the numbers and see.  

Year-to-date numbers for January through July show independent jewelers up 5.8 percent in gross sales when compared with the same period in 2021. 

It is worth considering the extent to which increasing prices accounted for that growth, especially in light of year-to-date unit performance. 

Number of units sold is down 4.5 percent, while the average retail sale has climbed 10.7 percent. 

Overall gross margin continues to increase year-over-year, driving a strong increase of 8.1 percent in gross profit dollars. The better margins retailers make on lab-grown diamonds might be a factor in that increase. 

Now, let’s break it down by category, starting with diamonds.

In July, gross sales of loose diamonds (natural and lab-grown) declined a whopping 22 percent while units sold dropped 20 percent. The average retail sale was down as well. 

It may be premature to signal a shift from natural to lab-grown, but the data comparisons bear watching. 

Diamond semi-mounts and diamond engagement rings also saw a decline in gross sales in July, 18 percent and 16 percent, respectively, likely reflecting a decrease in foot traffic into stores. 

With respect to lab-grown diamonds specifically, our year-to-date data (January through June; data on lab-grown for July was not yet available) shows lab-grown loose is now 7 percent of total retail loose sales, an increase from 5.3 percent over the same period in 2021.

Lab-grown loose increased 46 percent in gross sales when compared with the same year-to-date period in 2021 and units sold grew 42 percent despite the likelihood of more challenging foot traffic into stores. 

We’ve heard lots of questions about the average retail sale of lab-grown loose diamonds. Our year-to-date data (again, through June) of the independent channel shows the overall average retail sale grew by 6 percent.

When we delve into the data, it shows there were decreases in average retail sale in many sizes. However, larger lab-grown diamonds showed significant increases in most of the key performance indicators.

The 3.25- to 3.50-carat range showed a 194 percent increase in gross sales, a 114 percent increase in units sold, and a 25 percent increase in average retail sale, suggesting some customers might be trading up in size from smaller natural diamonds. 

The 4.5- to 5-carat range recorded a spike of 582 percent in gross sales, 414 percent in units sold, and 33 percent in average retail sale, and the 5.5- to 6-carat range showed a 78 percent increase in gross sales, a 67 percent increase in units sold, and a 7 percent increase in average retail sale. 

The data for lab-grown diamonds 6 carats and above show increase in gross sales and units sold as well as in the average retail sale.

I should also note that smaller lab-grown loose (under 0.60 carats) also grew in average retail sale.

It was the 0.60-carat to 3.25-carat range that showed decreases in the average retail sale, with declines ranging from 5 percent to 21 percent.

As sales for lab-grown loose continue to grow, so do inventory levels, which show a 109 percent increase in cost and a 79 percent increase in units in our year-to-date data.

Overall gross margin for lab-grown loose comes in at a very healthy 62 percent, up from 60 in the previous year-to-date data.

Now I’ll move on to color. 

Although colored stone and pearl jewelry only make up about 8 percent of annual jewelry sales, a few categories showed slight increases this July. 

Colored stone necklaces showed a 7 percent increase in gross sales and a 20 percent increase in average retail sale but an 11 percent decline in units sold, likely reflecting the aforementioned decrease in foot traffic into retail stores. 

Colored stone pendants showed a 4.1 percent increase in gross sales and a 24 percent increase in average retail sale but, again, a 16 percent decline in units sold. 

Pearl bracelets showed a 21 percent increase in gross sales, a 22 percent increase in average retail sale, and were flat in units sold.

Watches showed a 1.7 percent increase in gross sales and a 19 percent increase in average retail sale but a double-digit decline in units sold at 14 percent.

Precious metal jewelry without stones declined 7 percent in gross sales and 12 percent in units sold but increased 6 percent in average retail sale. 

Precious metal bracelets were the one standout, recording an 11 percent increase in gross sales, a 13 percent increase in average retail sale, and only a slight decline of 1.3 percent in units sold.

All told, growth in overall sales reflects a healthy sales environment for retailers, although a decline in unit sales might signal a marked decline in foot traffic. In addition, year-to-date growth might have some price increases built in, so that is worth watching as prices stabilize. 

Gross margin improvements might reflect retailers taking some extra profit on older owned inventory, as well as increased sales of lab-grown diamonds, as mentioned above. 

The performance of natural diamonds and semi-mounts may reflect the assumed declines in foot traffic and the continued momentum of lab-grown diamond sales, which showed strength in larger sizes and stones under 0.60 carats.