Mounting competition and reduced disposable income have hurt demand for industry services
Los Angeles, CA (PRWEB) April 08, 2013
Following a decade of decline, the Watch and Jewelry Repair industry continues to lose its shine. Mounting external competition from brick-and-mortar retailers and online repair service providers, as well as from substitute products, and surging input prices have all taken their toll on the craftsmen of horology (the art of manufacturing or repairing watches and clocks). “During the recession, weakened per capita disposable income made caused American consumers cut back on their purchases of luxury goods, including jewelry and watches,” IBISWorld industry analyst Agiimaa Kruchkin says. Consequently, demand for their affiliated repair services also declined. Over the five years to 2013, industry revenue has declined at an annualized rate of 4.9% to an estimated $504.2 million. Revenue is expected to drop another 2.1% in 2013 due to an ongoing intensification of external competition, as well as anticipated price hikes of key inputs.
The Watch and Jewelry Repair industry has traditionally operated at slim margins, and profit has been squeezed further over the past five years. The skyrocketing world prices of gold and silver have pressured industry profit (i.e. earnings before interest and tax) over the five years to 2013. “As investors sought out a safehold of value for their assets, they turned to these precious metals, pushing up their prices,” Kruchkin says. As the prices of these commodities skyrocketed, industry profit shrunk.
This industry is highly fragmented with a low level of concentration, defined as the top four industry firms accounting for less than 40.0% of industry revenue. Currently, Fast-Fix Jewelry and Watch Repairs has the highest industry market share with 1.1%. According to Census data and IBISWorld estimates, industry concentration has steadily declined during the past decade as operators have exited the industry due to receding demand. Throughout the past five years, the number of firms declined at an annualized rate of 2.0%, from about 14,705 in 2008 down to about 13,325 in 2013. About 95.0% of these firms employ fewer than 10 individuals. In the next five years, IBISWorld anticipates industry concentration to continue declining as firms exit the industry due to falling demand.
Constrained by expanding external competition, the watch and jewelry repair industry is forecast to remain irreparable in the five years to 2018. Although per capita disposable income is expected to recover significantly over the period, the growing attractiveness of free and discounted repair services offered by watch and jewelry retailers is expected to continue eating into profit and revenue. In addition, expected growth in the prices of major key inputs such as gold and silver will further squeeze profit margins, fueling the exodus of industry operators. Consequently, industry revenue is projected to decline. For more information, visit IBISWorld’s Watch and Jewelry Repair in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides watch and jewelry repair services, including sizing, polishing and battery replacement. Firms in the industry also offer other repair and rental services and resell refurbished merchandise and parts. However, industry participants are stand-alone shops that do not sell new watches or jewelry.
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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