Editor’s Note
This article examines how jewelers are navigating a “K-shaped economy,” where affluent customers continue to spend while lower- and middle-income households pull back.
Higher material costs have pressured jewelers’ margins and driven up retail prices, as store owners navigate a divergence of demand: Stock market and home equity gains have buoyed affluent consumers’ confidence, while persistent inflation and a worsening job market have eroded spending power and confidence of lower- and middle-income households. In what’s dubbed a “K-shaped economy,” the income and spending of affluent customers trend upward, while the fortunes of the less affluent drop down—resembling the letter “K.”
At the lower end, marketing and merchandising strategies need to be laser-focused on price. While affluent consumers are still spending, executives say the bar to convert browsers to buyers is higher, requiring more personalized sales and marketing channels. During Signet Jewelers’ quarterly earnings conference call in September, CEO J.K. Symancyk said that to connect with consumers today, more than one-quarter of the company’s marketing spend goes to social media.
Among independent retailers, clients are still buying fine jewelry—but prudence is the name of the game.
The ongoing upheaval of tariffs has had a broad impact on jewelers’ own supply chains as well as consumer enthusiasm, particularly in combination with the spot price of gold, which has increased around 60% over the past year, peaking at nearly $4,400 in late October.
With fewer choices for the most price-sensitive customers, the industry is redefining “entry-level” pricing.
Collins predicts that the new floor for entry-level purchases will increase to between $200 and $500, and that sales volume will contract as shoppers consolidate their spending.
While jewelers say they’re absorbing some of the increase at the expense of profits, they also are finding ways to use less gold in order to hold the line on prices.
Padis is another jeweler who says she is leaning into “smarter” design.
Some industry pros say they’re offering more pieces in 14k gold and even 10k in response to consumer demand, while others are incorporating non-gold metals to blunt the price impact.
