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14 july 2010

Logic would suggest that jewelers should target the market with the highest per-household spending on jewelry, www.idexonline.com says. If they followed that rule, they would miss out of some huge markets.

For example, while Asian households in America spend $623 per household on jewelry, the highest amount of any ethnic group, this segment of consumers represents only 4 percent of all U.S. households. Even with their high per-household expenditures for jewelry, their total spending on this category is just 5 percent of total jewelry industry sales. In contrast, White households represent 73 percent of all U.S. households and their spending on jewelry comprises 83 percent of total industry sales. Clearly, if jewelers are trying to reach the largest market with a high propensity for jewelry spending, they should focus on White shoppers.

Focusing On the Largest Markets

The following is a summary of total jewelry expenditures – spending per household times the total number of households – for each of the major demographic factors that tracks with jewelry expenditures.

Income

Consumers with incomes of $150,000 and above have by far the highest per-household expenditures on jewelry. They represent about 7 percent of the market. While this may seem to be a small group, they purchase a whopping 30 percent of all jewelry bought by American consumers, or about $18 billion. Jewelers who can reach this group should consider themselves to be very skilled . . . and perhaps lucky, too.

For most jewelers, the target market consists of consumers in the $50,000-100,000 income range whose aggregate expenditures represent about 30 percent of the total jewelry.

The graph below summarizes the aggregate size of the total spending by all households segmented by income levels.

Age

By age, the market for jewelry exists among younger consumers. Nearly a quarter of the jewelry market consists of consumers under age 35. Two-thirds of all jewelry expenditures in America are made by consumers under the age of 55. Unfortunately, far too many jewelry stores continue to cater to older consumers; their store and their merchandise holds no appeal for younger shoppers. The “look and feel” of most jewelry stores hasn’t changed in decades, but consumers are ever-changing.

Interestingly, households aged 25-to-34 do not have the highest income levels; their income is moderately below the national average. However, this age group buys more bridal jewelry – particularly big-ticket diamond engagement rings – than any other age group of American consumers. Further, their aggregate jewelry expenditures make them the second most-important age group among jewelry shoppers. Shoppers in the age group 45-to-54 have the highest income levels, and they represent the most important age group for jewelers, though not by a wide margin.

The graph below summarizes the aggregate size of the total spending by all households segmented by age.

Household Size

About one-third of all households consist of only two people, and their jewelry expenditures represent nearly 40 percent of the industry total, as the graph below illustrates. In two-person households, there is a high likelihood that both spouses work outside the home, and they have no child-related expenses. While two-person households do not have the highest per-household income levels (four-person households have the highest incomes), the average income level for a two-person household is above the national average.

Homeowners Vs Renters

Roughly two-thirds of all American households own the home they live in. The aggregate jewelry expenditures by American homeowners represent 80 percent of total industry sales, as the graph below illustrates. American homeowners have higher income levels than renters.  

Urban vs Suburban vs Rural

About 62 percent of all Americans live in a suburban location; their spending on jewelry represents two-thirds of the industry total revenues. Interestingly, center city consumers represent the next largest market. Suburban consumers have by far the highest per-household income levels, followed relatively closely by city center consumers. Rural consumers have relatively low per-household income levels.

The graph below summarizes the aggregate size of the total spending by all households segmented by location of residence.

Region of the Country

Southerners are the stingiest consumers: their jewelry expenditures per household are significantly lower than the national average. However, they represent the largest market of any geographic region in the U.S., as the graph below illustrates.

Consumers in the South have the lowest per-household income levels of any region of the U.S.; that correlates perfectly with the lowest per-household jewelry expenditures by region. Conversely, consumers in the Northeast have the highest per-household spending on jewelry and also have the highest income levels. Despite some jewelry expenditure anomalies by region, the highest correlation jewelry spending to any demographic factor to continues to be explained by income levels.

Ethnicity

White consumers absolutely dominate the jewelry market, as the graph below illustrates. While Asian consumers may have higher jewelry expenditures per household, there just aren’t enough Asian households to support the jewelry market.

Education

While less than 30 percent of all Americans have graduated from college, their spending represents about half of all jewelry market sales. This means that the jewelry market is split roughly evenly between college graduates and non-college graduates. College graduates earn about double the income of non-college graduates. While the market is split about 50/50, jewelers should concentrate on college graduates since they have the income levels to support increased jewelry spending.

Occupation

Jewelry spending by occupation correlates very closely to income levels for each occupation. Professionals typically make more money than laborers, and their jewelry expenditures reflect this disparity. Professional workers, who represent about one-quarter of the labor force, account for nearly half of all jewelry expenditures in the U.S. market, as the graph below illustrates.