According to a new study by Polygon, the retail jewelry industry in the United States continued to adapt to falling diamond prices, high numbers of jewelry store closures, and an industry-wide liquidity crunch in 2016. That, combined with rock-bottom prices offered by online-only retailers and foreign suppliers, is putting downward pressure on gem and jewelry prices at every step of supply chain, says the report.
At the retail level, more jewelry businesses in the United States ceased their operations in 2015 than in 2014, while major retailers continued to shutter stores and shrink their distribution networks. While online retail sales across all other categories continued to grow at a healthy rate, sales of jewelry at retail stores in the U.S. grew at the slowest pace since 2011.
Several of the top U.S. retail jewelry brands reported increased sales and revenues in 2015, however most of these positive reports were calculated using a constant exchange rate; currency fluctuations actually resulted in net revenue losses for many jewelry brands.
According to the most recently available figures from the Census Bureau, growth of retail jewelry store sales in the United States from 2011 to 2016 has been sluggish, particularly in the last three years. Total sales at U.S. retail jewelry stores reached $30.53 billion in 2015, only a slight increase from 2014 ($30.51 billion).
At the top of the supply chain, the world’s largest producers of gems are also cutting costs through mine closures, asset sales and massive layoffs. In December, mining giant Anglo-American PLC announced that it would lay off 85,000 people and sell around 60% of the company’s assets in an effort to remain profitable.
Anglo-American’s sales fell by 17% in the first half of 2015, representing a loss of nearly $2 billion, while the company’s share price had dropped 72% from previous highs by December 2015, mainly due to low commodity prices.
ComScore analysis of online retail commerce in 2015 shows strong growth in purchases being made from both desktop and mobile platforms. In the first three quarters of 2015, retail sales made via desktop purchases grew 7% year-over-year to reach $179 billion. For the 3rd quarter alone, combined online ecommerce sales reached $69.7 billion, including $11.4 billion in retail purchases made exclusively from mobile devices.
Concluding, the report notes that the retail jewelry industry in the U.S. continues to adapt to the rise of online retailing, downward price pressure from economic trends, and unpredictable geopolitical events that impact the global supply chain of gems and precious metals. Retail and wholesale jewelers in the United States are struggling to compete with foreign suppliers, who are willing to accept razor- thin margins or even losses to convert stones and metals into cash.
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Source: Media Post Mobile