When the recession first hit, one of the earliest markets to get slammed was the luxury goods market. Jewelry sales at retailers plummeted, while diamonds online sold better. However, 2010 appears to be the year that the retail trend reverses significantly with retailers like Tiffany’s showing increased sales worldwide. It could be a strong signal that consumers are tired of being frugal and now have more confidence to splurge on themselves. If this Christmas shows upbeat sales, as expected, it could be the luxury goods market is now back on its feet after a long recessionary struggle.
Tiffany & Co.
In the third quarter of 2010, Tiffany & Co. has revealed that sales increased 14 percent world wide. Those additional sales have resulted in a 27 percent increase in net earnings. While sales only increased 9 percent for the same period in the Americas, they went up 12 percent in Japan. The Asia-Pacific region showed strong sales growth with a 24 percent increase for the third quarter. Some experts believe that overall all jewelry sales will have increased by 12 percent around the world.
This is encouraging for all luxury retailers, signaling an increase in consumer confidence and a willingness to use some discretionary income again for luxury goods. In many ways, it stands to reason after a couple of years with pent-up demand and consumers forced to adopt more frugal ways that the trend would reverse as soon as the economy began to heat up.
Price of Gold
Another possibility that could explain the interest in fine jewelry is the rising price of gold, silver, and diamonds on the commodities market. With few places to put wealth that are secure, consumers may be deciding that it’s not such a bad idea to hold something precious in their hands both as a way to feel beautiful and a way to invest their money in physical commodities increasing in value.