Are diamonds the ultimate recession buy? Recent data seems to suggest that our current economic turbulence is sending some Americans to the jewelers.
Fine jewelry sales are expected to sparkle this holiday season, outshining much of the rest of the retail sector — which is projected to generate just so-so sales, said Dr. Michael Haydock, retailer analytics leader for IBM (IBM).
Jewelry could be getting a lift from strong luxury sales, as wealthier consumers continue to shop. But industry analysts at a recent conference expressed uncertainty as to why this high-ticket product is selling so briskly in a down economy.
According to IBM’s forecast, jewelry sales are poised to climb 7.7% to $2.66 billion this November from 2010. And in December, sales will rise to $5.4 billion, up 4% from 2010.
The rise is surprising considering the overall weakness in the economy and the recent stock market gyrations. However, these wild market swings are known to spark more prudent style of spending. Diamonds? Prudent? In this case, buying jewelry is seen as a way to extend one’s wardrobe by changing up one’s look without buying a whole new closet of clothes, Jill Puleri, vice president and global retail leader for IBM global business services, said during the press dinner.
The jewelry business has been strong all year, with unit sales through August up 11.4% compared to 2010, Ken Gassman, president and founder of the Jewelry Industry Research Institute, tells DailyFinance. However, a hefty 8.4 percentage points of that increase is the result of rising commodity prices, especially in the metals markets, which have jacked up the price of gold, silver and platinum, he said.
In the end, Gassman says, Americans just want to spend again: “People are tired of the recession. Remember, there are a couple of adages that define American shoppers: A, When the going gets tough, the tough go shopping; and B, Americans are born to spend.”