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Jewelry + Watches: Holiday Outlook

Jewelry + Watches: Holiday Outlook
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Few things say holiday gifting more than a little blue or red box, yet the jewelry and watch categories have faced sustained challenges over the past few years, as global markets, technology, and consumer consumption patterns have undergone drastic shifts. Today we're examining the market outlook and e-commerce performance of both industries.

The Big Picture
A recent Business of Fashion and McKinsey report estimated that the jewelry and watch industry will see growth rates between 1.5-2% for 2017, largely driven by the mid-mass end of the market. Indeed, the market conditions for luxury watches and jewelry are looking tough these days.
There are several forces in play, the first of which is that wearing a watch is in decline. A YouGov survey showed that nearly 60% of those between the ages of 16-34 use their phone as their primary timepiece. Moreover, smart watches have not yet imbedded themselves in consumer's lifestyles in a way that manufacturers had hoped; analysts in October cited YOY declines in smart watch shipments which will ultimately be reflected in retail sales this holiday season.

When you couple shifts in consumer attitudes towards wearing luxe timepieces and jewelry with a slew of interesting and accessible offerings from newer industry entrants, you can begin to see where the industry erosion is occurring. Watch brands including Daniel Wellington, Greyhours, The Horse, and Brathwait, as well as Jewelry retailers Iconery and Catbird are filling a niche in the market for accessible, on-trend, and high-quality products.

Other challenges specific to the luxury watch and jewelry industry are that the industry has been slow to move online; additionally, resale and vintage marketplaces, both on-and off-line, are becoming more popular. Market data suggests that currently, fine jewelry accounts for only 4-5% of online jewelry sales.

What E-Commerce Data Tells Us
Below we highlight the shifts we are seeing in the jewelry and watch categories.
![graph](https://gallery.mailchimp.com/106f1e2d650b8a12647c61682/images/cb233ae9-5204-4362-aaa4-b679bbe9761b.png) We've seen the number of SKUs in luxury watches drop steeply from 2015, with a slight decline in average price as well. Retailers have also pulled back on the fine jewelry offerings, but have increased the average price 11%. In their entirety, these data points signal that retailers are narrowing and focusing their efforts in the watch and jewelry category. In the mid and mass markets, jewelry and watch assortments have both increased slightly by 3.9% and 3.5% respectively, and the average price point has increased by 14% for jewelry and 0.4% for watches. Regardless of which sector you examine, the watch category isn't showing strong forward movement. ![graph](https://gallery.mailchimp.com/106f1e2d650b8a12647c61682/images/0cb49c3c-06ac-4bc4-9a75-988eb7b3e81d.png) One of the most interesting trends we have been seeing over the past few weeks of holiday is that the watch category is being discounted at a significantly lower rate and dollar amount than other accessory and non-accessory categories. Based on what we've seen in many discount code terms and conditions, major watch brands are excluded from sale offers, an attempt by manufacturers and retailers to protect their margins and brand value.

Mid-mass retailers marked down roughly 50% of their jewelry assortments at an average discount of 40%. And while fine jewelry was discounted less frequently, the average mark-down was over 30%, as retailers and brands seek to incentivize holiday gifting at a higher price point.

Current and Future Opportunities
This doesn't mean there aren't opportunities that exist within luxury jewelry and watches. With fewer products in the assortment, particularly in watches, there is an opportunity for clear point of differentiation and education at the point of sale.

As mentioned previously, there is still major opportunity for fine jewelry and luxury watch brands to embrace e-commerce, and leveraging this channel connects them with the digital, younger consumer.

Time's up for us! Check back here later this week for more data on what's happening in e-commerce during these critical weeks leading up to the holidays.

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