Editor’s Note
This article examines how soaring gold prices are affecting the jewelry industry during the crucial holiday shopping season, forcing retailers to adjust pricing strategies amid shifting consumer expectations.
The holiday season remains a key period for the jewelry industry, with gift items accounting for a significant share of yearly revenues. But jewellers have had to raise prices as the cost of gold sharply increased — soaring roughly 55 per cent year-to-date to top the US$4,000 per ounce mark.
Based on what his business has seen, consumers are still spending so far this year, but by lesser amounts in the face of rising prices — not just for gold, but for the cost of living overall.
Nash said he thinks some price-sensitive consumers may avoid higher-end gold products altogether in favour of less expensive sterling silver items.
James Poag, co-owner of James O. Poag Jewellers, said he is also seeing consumers keeping a tighter grip on their wallets.
He’s also seen an increase in repairs, with people choosing to restore older pieces instead of replacing them, while other customers are trading in older pieces of jewelry and repurposing them into a new design.
Larger jewelry brands are also making adjustments.
Mejuri CEO and co-founder Noura Sakkijha said in a statement that the company introduced 10-karat solid gold products to provide more accessible price points. She added that offering a wide range of materials, including 10- and 14-karat gold as well as vermeil and sterling silver, gives consumers more choice.
But not all price adjustments come from decisions made at the store level.
Nash said that since his company works with higher-end brands like Rolex, Tudor and Roberto Coin, those brands dictate price increases and set their own manufacturer’s suggested retail price. He said once a brand decides that a price increase is needed, it notifies any stores carrying their product to follow suit.
Poag added that sharp rises in gold prices have made repricing difficult.
Poag said since the run-up in the commodity price, an average consumer might be paying about 25 to 40 per cent more, depending on the gold content and the item they are purchasing.
There’s no doubt the holiday season is a key time for jewellers.
Poag said it’s typical in the industry for December sales to account for about 20 to 25 per cent of annual revenues.
As sales start to ramp up, Nash said it’s difficult to predict where the price of gold will go as it continues to trade above the US$4,000 mark. Prices hit US$4,300 in October.
Given the current price dynamics, Poag said he doesn’t think gold prices will come down significantly and it’s not worth it for consumers to delay purchasing in hopes of lower prices.
Daniel Johnson, The Canadian Press
