July 5, 2021 – The diamond, gem, and jewelry industry and trade are an integral part of the luxury consumer product industry and market. But when asked if our industry is part of the global fashion industry, many industry members won’t know how to reply.
Last week The Business of Fashion (BoF) platform provided a clear answer.
It published “The State of Fashion – Watches & Jewellery.” It is the first in a series of special edition reports that The Business of Fashion and McKinsey & Company will release, complementing its annual State of Fashion reports. This first edition analyses the fine jewelry and watch industries over a future time horizon of 2021 to 2025.
BoF is not very well known yet in our industry. It is recognized worldwide for its authoritative, analytical perspective on the $2.5 trillion global fashion industry. It is subscription-based, and admittedly, subscriptions do not come cheap. However, since its establishment by Imran Amed in 2007, BoF has become the authoritative voice of the fashion industry. “Serving members in more than 125 countries, BoF combines independent, agenda-setting journalism with practical business advice, online learning, career-building tools and immersive events and experiences, powering positive change in fashion and the wider world.”
The State of Fashion – Watches & Jewellery is a refreshing alternative to the reports our industry has come to rely on and outclasses them.
Here are some of the excerpts of the report:
After suffering double-digit revenue declines due to the pandemic, both the fine jewellery and premium to ultra-luxury watch industries are poised for steady growth through 2025, though watches will be significantly slower than jewellery.
The rebound from the global pandemic will happen faster in some regions and consumer segments than others; the pace of growth for both sectors in Asia will remain above the global average each year through 2025.
With international travel between the main shopping regions only expected to fully recover after 2024, brands will focus more on domestic sales, particularly in China.
Already the biggest regional market, accounting for approximately 45 percent of branded global fine jewellery sales and approximately 50 percent for watches, Asia is set to expand its share even further, with China leading the way.
In the fine jewellery market, a brighter future lies ahead for branded jewellery, which according to McKinsey estimates will see compound annual growth rates (CAGR) of 8 to 12 percent from 2019 to 2025. As price points in branded jewellery can be around six times higher than of unbranded products, competition between established luxury jewellery brands, fashion brands and new direct-to-consumer (DTC) companies will heat up as players compete to win customers who are turning towards brands that reflect their distinct point of view.
Meanwhile, sustainability will play an increasingly important role in buying decisions. Purchases of fine jewellery that are influenced by sustainability will more than triple in the years ahead, presenting an opportunity for the industry to learn from its history and make positive change. To show consumers that they are sincere about driving environmental and social progress, companies will need to establish more transparency and traceability in their supply chains and move beyond the performative marketing that has plagued the industry in the past.
Finally, no business leader can ignore the game-changing impact of digital transformation in the years ahead. While the jewellery industry had been slow to make the leap to online sales, the pandemic has fundamentally reset expectations for both consumers and companies. The onus will be on business leaders to create compelling online solutions that serve a clear customer need and measure up to trusted face-to-face interactions which form part of the magic of the in-person buying experience.
Download the report here.