Editor’s Note
This analysis highlights a pivotal shift in the US jewelry market, where online channels are gaining significant ground as traditional brick-and-mortar stores see a contraction in both footprint and market share. The data underscores how the pandemic accelerated existing trends, reshaping the retail landscape.
1) Major Channel Restructuring: Offline channel market share and store count have both declined, while the online share has rapidly increased. Before 2020, the US offline jewelry channel market maintained a steady growth trend, increasing from $41.6 billion in 2009 to $49.5 billion in 2023, with a CAGR of 1.3%. In 2020, affected by pandemic control measures, the offline channel market size dropped sharply by 29%, while the online jewelry market share surged to 35% (year-on-year +8.0 percentage points), becoming the largest sales channel. After the pandemic in 2021, the online channel’s jewelry market share slightly retreated but remained stable at around 33%, still significantly higher than pre-pandemic levels.
2) Driving Factors Analysis: Reduced jewelry consumption expenditure, severe industry aging, and the formation of online consumption habits. ① Jewelry consumption expenditure has decreased, leading to ongoing adjustments in per capita offline store availability. ② The industry is in an intergenerational transition phase, with retail store owners aging and low willingness among young people to enter the industry. ③ Post-pandemic offline retail foot traffic has not fully recovered, while online jewelry consumption habits have become established.
Product Changes: Online channel characteristics empower compatible categories, with a trend towards lower prices. ① The online trend drives the growth of lab-grown diamonds, with channel advantages continuously empowering the category. According to calculations based on Euromonitor and Tenoris data, the market share of lab-grown diamonds increased from 2% to 9% between 2018 and 2023. ② Online consumption features lower average order values, and emerging categories align with online consumer behavior. US jewelry consumers show lower willingness and price points for online purchases; according to Plumb Club, 65% of consumers are unwilling to buy precious metal jewelry online. Amazon’s online jewelry sales exhibit a significant low-price characteristic, with best-selling jewelry items mainly priced in the $10-$20 range. ③ Social media creates buzz, driving sales of personalized accessories. From May 2020 to November 2022, search interest for “Signet ring” on TikTok continued to rise, primarily because social media sparked discussions by portraying signet rings as symbols of power, status, and identity.
Brand Changes: Head effects intensify for precious metal jewelry, while accessory jewelry shows a significant trend towards fragmentation.
① The market share and store concentration of leading precious metal jewelry brands continue to increase, with CR5/CR10 rising from 7.1%/8.0% in 2020 to 11.4%/12.1% in 2023. The consolidation trend among leading precious metal jewelry brands is significant. Although the store count of the top 15 US precious metal jewelry brands has contracted, their share of the total store count increased from 22.37% in 2019 to 24.19% in 2023. ② The fragmentation trend in the accessory jewelry market continues. In 2023, leading brands’ store counts contracted, while super-leading brands regained market share. The barriers in the accessory jewelry category mainly lie in product innovation, design, and style iteration, making competition fiercer and market share more fragmented. From 2014 to 2020, the CR5 and CR10 of the US accessory jewelry market showed an overall declining trend, dropping from 13.9%/16.4% to 11.3%/13.8%.
① Acquiring Offline Channels: Signet’s acquisition of Zales. The scale effect from merging offline channels could not offset operational efficiency losses. Signet’s brand with the most stores, Kay Jewelers, and Zale’s main brand, Zales (also with the most stores), had highly overlapping product offerings, both covering similar diamond jewelry and targeting the mid-to-high-end bridal market. The acquisition did not bring long-term market share gains. Signet faced declining operational efficiency and ultimately resorted to store closures for self-rescue.
② Acquiring Online Platforms: Signet rapidly increased its online market share by acquiring online jewelry sales platforms. Signet successfully extended into online channels by acquiring jewelry e-commerce platforms, with significant results. Its online revenue share jumped from 5% in FY2014 to 23% in FY2024. From FY2018 to FY2024, James Allen and Blue Nile contributed to Signet’s online market share in a steadily growing trend, increasing from 0.5% to 2.7%.
③ Building In-House Online Platforms: Pandora’s forward-looking e-commerce channel layout completed channel extension. Pandora proactively laid out its e-commerce channel as early as 2011. From 2016 to 2023, its online revenue CAGR reached 28.86%, successfully weathering the worsened competitive landscape in the accessory market post-pandemic and achieving counter-trend market share growth.
China’s jewelry industry has already shown a clear online trend. Currently, there is approximately one store for every 17,000 people, which is already lower than the US market (approximately one store for every 19,000 people). The offline channel may similarly face contraction in the future. Drawing lessons from the US market, CITIC Securities believes Chinese jewelry companies can address potential risks through the following methods: ① Differentiated brand positioning can help gold and jewelry companies gain growth space. ② Strengthening online operational capabilities is crucial; jewelry brands that entered the online space earlier gained a developmental head start, highlighting the importance of online operations. ③ Developing products aligned with the online trend and lower-priced items, while enhancing diversified product design capabilities.
1) Risk of intensified market competition; 2) Risk of macroeconomic fluctuations and weak consumer spending power; 3) Risk related to funding and liquidity in mergers and acquisitions; 4) Risk of poor post-merger integration and management; 5) Risk that product strength and brand power enhancement fall short of expectations; 6) Risk of marketing channel transformation.
Post-pandemic, the US jewelry market has undergone a channel shift, with the online share surging and offline stores contracting at an accelerated pace. Under this channel shift, emerging categories like lab-grown diamonds have seen substantial growth, online products have become more affordable, and social media channels have driven the personalization of accessories. Precious metal brands are accelerating their consolidation at the top, while accessory brands face fiercer competition and regional fragmentation. Facing this major channel upheaval, jewelry retailers increasing their online presence can effectively cope with competition, while those persisting with offline expansion may face greater integration difficulties in a negative beta environment. Drawing on US development experience, CITIC Securities believes that companies with: ① differentiated brand positioning, ② a focus on building online operational capabilities, and ③ continuous enhancement of diversified product design capabilities are likely to withstand risks and achieve steady growth during the channel transformation.