KN52004

KEY NOTE Report : JEWELLERY AND WATCHES : September 2004

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This report covers: jewellery, real jewellery, fashion, costume, jewellery,watches, mechanical watches, quartz analogue, watches, quartz digital, gold, silver, platinum, diamonds, wholesalers, retailers,

Companies covered include: Britsih Jewellers' Association, Jewellery DIstributors' Association, The National Association of Goldsmiths, Abbeycrest, Accurist Watches, Cartier,Casio, Electronics Company, Jewellery Dstributors' Association, The National Association of GOldsmiths, Abbeycrest, Accurist Watches, Cartier,Casio, Fossil Inc., Rolex Watch Company, Rotary Group Holdings, Seiko UK, The Swatch Group, UK, Time Products, Zeon, Asprey, Holdings, Beaverbrooks the Jewellers, Claire's Accessories,The MW Group,Signet, Hot Diamonds, Omega, Rado, Seiko, Sekonda, Swatch, Tissot, Geraldonline, Chopard, Red, Mikey, House of Fraser, Louis Vuitton, De Beers, Company of Master Jewellers, Hamilton & Inches Georg Jenson, LVMH, Tiffany, TAG Heuer, Diesel,

EXECUTIVE SUMMARY

The UK jewellery and watches market was valued at £4.08bn at retail selling prices (rsp) in 2003, expenditure having increased by 37.1% since 1999. The jewellery sector includes both real and fashion pieces and the watches sector covers both quartz and mechanical timepieces. Rising levels of consumer disposable income, more accessible borrowing and increasing economic activity have all encouraged spending in discretionary markets, of which the jewellery and watches market is an example.

Expenditure on jewellery rose for a number of reasons. Consumer spending on luxuries has increased across a number of product sectors as rising levels of disposable income have given rise to more indulgent attitudes. Diamond pieces have been performing well, but platinum has seen the sharpest increase in sales, reflecting the rising popularity of white metals.

Branding has become a major feature of the jewellery sector, with manufacturer and designer names being more evident. The retail chains have also been developing their own exclusive collections based around design themes and exclusive diamond cuts, for example. This type of activity provides a focus in-store and a unique customer offer to attract trade.

Watch sales have also been on an upward trend. Multiple ownership is now an established feature of the sector and watch replacement cycles have accelerated, particularly among younger consumers. The success of cross-branding and seasonal collections from the major suppliers has also encouraged further spending. Branding from fashion sportswear and other markets is also being successfully exploited.

The market for jewellery and watches is highly fragmented, supporting a large number of suppliers and retailers. However, there are also global brands with matching promotional budgets, as well as strong international trade bodies supporting the trade and its products. The success of the Internet has provided further opportunities to promote brands and ranges, although the approach taken by suppliers is variable.

Consumer spending on jewellery and watches tends to be concentrated across the lower price points, with few consumers paying more than £100 for a watch or more than £350 a year on jewellery. Women are the major buyers in the market, whether buying for themselves or for gift purposes. They are now as likely to buy their own engagement ring as to have one bought for them. Men have always been the higher-profile buyers in the watch sector, but they are now more likely to wear jewellery as well. This trend has been encouraged by the increasing number of celebrities and sportsmen seen wearing items of jewellery, from chains to earrings.

As consumer spending continues to thrive, jewellery and watch sales are forecast to show continued growth. The proactive role being taken by suppliers to maintain and boost market shares will retain interest in the market and encourage higher-value transactions.

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Text © 2004 Key Note

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Last updated by Amanda Porteous November 2004