Jewelry Industry Analysis
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Lifecycle
In the Broad Industry of Jewelry, It is hard to pinpoint what stage of the lifecycle the industry is currently in. The Jewelry Industry is very old and started about 40,000 years ago with the Cro-Magnons, ancestors of Homo sapiens. It is important to note that till this day, this industry continues to grow. In Canada, jewelry sales rose by 4% in 2003. In 2006, Canadians consumers spent over 2 billion dollars on jewelry . The United States similarly experienced a rise in jewelry sales by 9% in 2005. Overall sales in the jewelry industry are expected to grow with the economy and sustain growth rates of 3-5% annually .
Due to the Industrys adaptability to fashion there is no actual maturity or decline phase. Jewelry and Fashion go hand-in-hand; a change in one usually causes a change in the other. Jewelry has existed for 40,000 years and has lived through many ancient cultures and societies such as ancient Egypt, Mesopotamia, Greece, Rome, ect. Jewelry has been a part of the evolution of humanity and is now considered a necessity.
Industry Characteristics
Fig.1
Today, the jewelry industry can be subdivided into two major subcategories: Classic (high-end) jewelry and Costume (low end, Fad) jewelry (see Fig.1). Classic or fine jewelry is defined as high-end jewelry built of pricy precious metals or gemstones usually including gold, white gold, platinum, palladium, and gemstones such as diamond, ruby, emerald, ect . Costume jewelry is usually inexpensive because it is made of less valuable materials such as base metals, plastic, glass or synthetic stones instead of more valuable materials used for fine jewelry . Our entrepreneur has created a new subdivision ÐFashion Jewelry which fills the gap between the two previously mentioned subdivisions.
Canadian jewelers import their jewelry from the United States, China, India, Israel and Italy. However, the import market for jewelry in Canada is dominated by the United States and China, importing $287.2 million and $115 million respectively in 2004. However, China exceeds the United States in costume jewelry imports. In 2004, Canada imported $64.5 million worth of costume jewelry from China, $16.1 from the United States and a total of $116.7 million an increase of 10.9% over the previous year.
Key Success Factors
In an industry where consumers are investing large amounts of money, quality, durability and price are important aspects. Consumers tend to be less sensitive to price when they are assured they are acquiring a product of high quality.
Competitive Forces
The jewelry industry in Canada is made up of a few large retail chains, major department stores, and thousands of independent jewelers. Larger companies with stronger buying power increasingly dominate the jewelry business. As mass retailers and superstores sell large quantities of products with very little markup and become increasing popular, they are also gaining market share in the jewelry and costume jewelry industries.
Costume jewelry is increasingly being sold through mail-order catalogues, home-shopping networks, and internet purchases rather than just traditional retail outlets.
Market
In 2006, over $2 billion dollars was spent by Canadian consumers on jewelry . PMB, the print measurement bureau reported that 6% of Montrealers aged twelve and over spend between $100 and $499 on jewelry for gift giving and another 6% of Montrealers aged twelve and over spend $100 to $499 on jewelry for themselves. This means that about $165 million dollars are spend on jewelry worth between $100 and $499 dollars (see appendix A-1).