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Risk Factors Involved in Jewelry Market

Jewelry business is a tough and competitive one. There are many risk factors jewelers might be experiencing. Few of them are:

  • Weak Economic Conditions: There is a relationship between economic regularity and jewelry demand. When the economic growth slows, jewelry demand declines. Extensive economic factors are declining in the U.S. market. Moreover, American shoppers are compelled by housing and mortgage troubles, less credit scope, high-energy costs, less wage gains, and increasing unemployment.
  • Sharply Rising Costs: Inflation has hit the jewelry industry. Precious metals like gold, platinum, silver costs have increased dramatically. Jewelers have not engaged those cost increases through higher retail prices. So, their profits are reduced. The challenge for jewelers is to re-price their goods to match with current costs without losing loyal customers.
  • Online Competition: Many online jewelers sell merchandise for less and sometimes extremely less than store-based merchants. The online financial operating version is far better than the financial model used by most of the store-based jewelers. But the online merchants are not expected to substitute jewelry stores, they will change the method store-based merchants do business.
  • Restricted Credit Availability: The sub-price mortgage turmoil has caused banks to fix their credit standards. So, jewelers are experiencing a higher rate of rejected credit operations.
  • Financial Deterioration: Less merchandise in their stores, the chance of making sales decreases. This sometimes produces a downward spiral, which can lead a merchant in the financial void of bankruptcy.
  • Dull In-store Experience: Jewelry merchants have not updated the method they perform business since generations. Some retailer offers a rich in-store experience which makes customers come to shop.
  • Questionable Retailer Integrity: Most of the jewelers promote price as cheap, cheaper and cheapest in order to attract customers. Retailers cannot get success on price alone, because a competitor can always price goods for less cost. Retailers who price the goods exactly are rewarded with increasing gross margin dollars, rised inventory turns, an increasing customer base and growing integrity levels.
  • Commodization of Diamond: Today, shoppers can easily compare prices of diamonds and buy from the cheapest merchant. Jewelers should develop value-added services and products to beat the consequence from the commodization of diamonds.

Updated: December 18, 2013 — 3:56 am
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