Competition and harsh credit conditions have cause some players to exit the industry.
New York, NY (PRWEB) December 22, 2013
Luxury spending took a substantial plunge when the economy began to falter in early 2008. A quickly climbing unemployment rate caused consumer confidence to crash and purchasing power to decline. Consequently, consumers tightened their purse strings, decreasing demand for nonessential luxury items such as jewelry. This factor pushed the Jewelry Stores industry into decline, with revenue plummeting in 2009. Moreover, over the five years to 2013, revenue is estimated to continue falling. Fortunately, consumers earning more than $100,000 per year (the industry's largest market) have returned to spending, helping jewelry stores return to growth since 2010. Consequently, IBISWorld expects revenue to increase slightly during 2013 alone.
According to IBISWorld Industry Analyst Vanessa Giraldo, “In addition to weak spending, operators have felt the pressure from the rising price of gold.” Profit margins, measured as earnings before interest and tax, plummeted in 2008 and 2009, due to recession-driven declines in revenue. However, rising revenue and cost-cutting measures, such as reduced salaries, have propelled profit margins in 2013. Meanwhile, aggregate wages have fallen in 2008 to 2013. Some companies also encountered competition from nonjewelry retailers like supercenters and internet stores. “Competition and harsh conditions in the credit market have caused notable companies, such as Friedman's, to file for bankruptcy,” says Giraldo.
The Jewelry Stores industry's four largest players (Signet Jewelers Ltd., Tiffany & Co., Zale Corporation and Helzberg Diamonds) accounted for more than 20.0% of the total market in 2013 (see IBISWorld report 44831 for major player market shares). The domestic jewelry landscape is highly fragmented. Over the past five years, industry concentration has increased slightly as the major players used their brands to sustain and expand their respective market shares. Most notably, major player Signet Jewelers has expanded its market share through acquisitions. Furthermore, concentration is expected to continue rising steadily throughout the five years to 2018. The industry's low barriers to entry create a highly competitive environment, in which a large number of small companies compete for a small share of the domestic industry.
Nevertheless, the future looks bright for the Jewelry Stores industry. IBISWorld forecasts a solid recovery, with revenue growing over the five years to 2018. With the consumer confidence index projected to increase in the next five years, profit is anticipated to grow in the same period. This is because it is doubtful that consumers will turn to nonjewelry retailers such as Walmart to purchase high-value pieces like engagement rings. Thus, this factor will limit competition from alternative retailers in the next five years. Moreover, the high level of customer service offered at many traditional jewelry stores will remain a trademark of the industry, and employment will grow over the five years to 2018. Wages will also grow over the same period, indicating the value of in-store staff.
For more information, visit IBISWorld’s Jewelry Stores Industry in the US industry report page.
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IBISWorld industry Report Key Topics
Jewelry stores in this industry sell new jewelry, timepieces and sterling and plated silverware. Companies that vend these products in combination with engraving or repair services are also included in the industry. Operators do not cut and set gemstones or sell costume jewelry or antiques. They also do not sell used goods or provide repair services without also selling new jewelry products. Moreover, this industry does not include internet, mail order or direct sales retailers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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