The jewelry industry faces many challenges that threaten market growth and resilience. By understanding challenges and risks, jewelry brands and retailers can anticipate obstacles and innovate their business practices to withstand volatility and uncertainty.
This article from UCFS explores challenges in the jewelry industry in 2023 and how you can overcome these challenges to see measurable growth and success.
Rising Labor Costs
Labor costs affect nearly every industry, including the jewelry market. Rising labor costs are stagnating the global gems and jewelry industries, and those price increases trickle down to affect the cost of the final product, creating significant challenges to business growth.
Producing fine jewelry requires skilled craftsmanship. The technical capability of jewelry artisans directly affects the quality and value of the final product. An increasing scarcity of qualified artisans drives labor costs, increasing prices for retailers and consumers.
In the competitive landscape of the jewelry industry, excellence in stone quality and jewelry design is essential. And that means jewelry brands and stores must employ artisans who can meet consumer expectations. Skilled labor comes with a high price tag, and jewelry producers and retailers must find ways to maintain talent without losing customers to cheaper imitations.
Demand for Sustainability and Traceability
Sustainability has long been a buzzword in the jewelry industry. In 2023, consumers don’t merely prefer sustainable practices; they demand them. Disclosing responsible sourcing of materials, ethical labor practices, and sustainable production methods is no longer optional.
Jewelry shoppers want to know where their purchases come from and who played a role in creating the product. Heightened mindfulness of safe, ethical labor conditions guides purchase decisions in nearly every industry, especially in the fine jewelry market.
As sustainability and labor issues first arose, certifications and commitments to sustainable practices satisfied jewelry consumers. Today, shoppers demand more. Artificial Intelligence technology allows for fully traceable diamonds, from initial procurement to the final polished jewel.
AI applications in sustainability and tracking provide indisputable data that identifies all stages of a diamond’s journey. Consumers have greater access to complete jewel and stone data than ever. And that data drives their purchase decisions. Recent research shows that 71 percent of consumers prefer jewelers committed to sustainability and are willing to pay more to support sustainable jewelry practices.
High-level, AI-powered, data-driven transparency allows consumers to trace their jewelry, specifically diamond jewelry, through all production phases, providing the peace of mind shoppers want when purchasing fine jewelry.
The Threat of Cheap Competition
The jewelry industry is competitive, with new players entering the market daily. An expanding digital shelf increases access to clientele, but it has also increased the competition for jewelry brands and retailers. Cheaply produced imitation pieces flood the market, attracting shoppers unwilling to invest in artisan pieces.
Instead of investing in luxury jewelry, more consumers opt for imitation pieces. And while a cheap alternative can save shoppers money, nothing can replace a quality crafted piece.
Jewelers must overcome the threat of cheap competition by highlighting fine jewelry’s quality, lasting nature, and the significance of investing in such a piece.
Disruption from Digital Technologies
The retail landscape of the jewelry industry is rapidly evolving. A traditional in-store experience has shifted to omnichannel retail, reflecting changing consumer shopping behaviors and preferences.
2023 research finds that while 62 percent of consumers have bought jewelry online in the last year, the brick-and-mortar store is still the preferred place to purchase jewelry. Shoppers want to make essential purchases in person, but the shopping experience begins long before the consumers cross the storefront’s threshold.
The same research found that roughly 70 percent of shoppers researched their jewelry purchases online before heading in-store. Stores and retailers with a competitive advantage facilitate digital touchpoints with consumers, especially younger demographics. Making connections early in the buyer’s journey increases the likelihood that shoppers will come in-store for more significant purchases.
Your online presence will dictate brand affinity and consumer perception. A single-page site isn’t enough. Consumers want in-depth, relatable content that both informs and endears. Jewelry purchases are driven by emotion. Shoppers want to see themselves within your brand’s story. As you create an omnichannel experience, consider how your content can address the emotional aspect of the buyer’s journey and how you can help shoppers visualize themselves –– or someone they love –– wearing your pieces.
Inflation and Economic Uncertainty
Inflation has affected U.S. markets for years now. What began as supply chain issues have grown into long-term inflation issues felt in every consumer’s wallet. The burden of inflation coupled with looming economic uncertainty can result in hesitancy among shoppers considering fine jewelry purchases.
Historically, economic uncertainty and inflation have not affected luxury spending from high-income earners. However, the tide of customer sentiment is turning. As inflation continues to cause price increases in the jewelry market, even high-income spenders rethink jewelry purchases.
Jewelry retailers can offer low monthly payments to lessen the burden of consumers needing a large up-front dollar amount to make their purchase. Through consumer financing from United Consumer Financial Services, a wider breadth of shoppers can bring home the pieces they want today while paying for the item over time through affordable, fixed payments.
Increased and immediate purchasing power is crucial for jewelry retailers. Most jewelry purchases are tied to a significant event or emotional connection, and the delivery is time sensitive, such as with an engagement ring or anniversary necklace.
Shoppers want quality pieces to convey their love and care but need affordable payment options to bring home the piece the same day. UCFS’s dedicated consumer financing allows shoppers to choose the pieces they want –– when they want them –– without disrupting their monthly budgets or savings accounts.
In the present time of economic uncertainty and inflation affecting consumers at every turn, jewelry financing options provide accessibility and increase purchase power, empowering shoppers to buy the pieces that speak to them.
Conclusion
The jewelry industry faces many challenges. And over the next few years, those challenges will evolve, presenting new obstacles for brands and retailers. But with the right tools and resources, you can approach these challenges as opportunities for growth.
Connect with the team at UCFS today to learn how our financing options help you position your business for success.