Demand for jewelry will grow as the economy continues to recover, boosting industry revenue
Los Angeles, CA (PRWEB) May 09, 2013
Unlike its brick-and-mortar counterpart, the Online Jewelry and Watch Sales industry performed well over the five years to 2013. Driven by the ongoing shift of the retail sector to the online sphere, the industry has grown at an average annual rate of 2.9% to $9.8 billion. From 2008 to 2013, the percentage of services conducted online has climbed from 6.4% to 9.8%, indicating Americans' mounting affinity for quick and easy online shopping. “Internet retailers allow customers to compare prices more easily across websites, which was particularly essential during the recession,” says IBISWorld industry analyst Nikoleta Panteva. Industry revenue declined only 0.2% in 2009 due to falling per capita disposable income.
As disposable income has rebounded, industry revenue has grown more strongly. In 2013, IBISWorld expects revenue to increase 3.8%. Profit has followed a similar, albeit more volatile, trajectory. In 2008, when shoppers tightened their purse strings, industry profit (i.e. earnings before interest and tax) plummeted from 9.4% to 3.1% of revenue. It remained low through 2009, but has recovered slowly through each of the four years since then. However, profit margins for the Online Jewelry and Watch Sales industry are lower than those of physical retailers. “In general, consumers shy away from making high-end jewelry purchases via the internet,” adds Panteva. “While online retailers typically provide certificates of authenticity for their diamonds, they do not provide the same level of comfort to consumers as shopping in person does.” As such, online jewelers' revenue heavily relies on sales of costume jewelry, which carries a lower price tag and profit margin than diamonds.
Over the past five years, IBISWorld expects that the industry's concentration increased marginally as major players increased marketing expenditure and solidified their positions as the top players in the online market. However, a considerable rise in smaller industry players over the period mitigated exceptional concentration growth. Industry player Signet Jewelers Ltd displayed the most phenomenal growth over the period; however, this growth came off a low base, coupled with the acquisition of Ultra in 2012. IBISWorld expects that market share concentration will increase over the next five years as industry players ramp up marketing expenditure and trend towards merger and consolidation begins to emerge.
As the economy continues along its upward trajectory, consumer demand for discretionary items like jewelry will grow steadily. Coupled with Americans' dwindling free time as they return to work, the Online Jewelry and Watch Sales industry is anticipated to grow over the five years to 2018. In addition to strong external competition, the industry's players will feel intensifying internal competition as the number of online jewelers rises. This increase will restrain profit growth and limit opportunities for individual players. For more information, visit IBISWorld’s Online Jewelry and Watch Sales in the US industry report page.
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IBISWorld industry Report Key Topics
This industry sells jewelry, watches and costume jewelry via the internet. Operators include online-only retailers as well as brick-and-mortar stores that have an online presence.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.