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great year for U.S. jewelers.
Not only were sales strong, but the industry's customer base expanded significantly beyond those consumers who have historically bought jewelry. Based on newly released U.S. Bureau of Labor Statistics (BLS) data, a broader consumer segment than ever purchased jewelry in 2006.
Besides reaching existing customers who have shopped for jewelry, jewelers reached new customers, including many who had not bought jewelry for perhaps several years.
The data shows that some multiyear consumer jewelry expenditure trends were shattered, while others apparently stood the test of time. The detailed research about consumer spending patterns for 2006 confirms that spending by consumers on jewelry continues to evolve.
Below are highlights from the government's latest Consumer Expenditure Survey for 2006, the latest data available.
* Total jewelry sales strong: U.S. jewelry sales rose 6.5 percent in 2006 to a total of $62.2 billion, one of the strongest gains this decade.
* Household expenditures on jewelry reached record levels: The average U.S. household spent $523 on jewelry in 2006, up from the prior year's $502. That's a 4.2 percent increase in per-household spending, up notably from the prior year and the highest per-household expenditure on record.
* Household formations expand the market: The total number of households grew 1.3 percent to 118.8 million; that gain is in line with the past 10-year average increase.
* Jewelry took market share from other retail categories: Total U.S. retail sales increased by 5.5 percent in 2006. Jewelry sales grew at a greater rate (6.5 percent), meaning it took a small amount of market share from other retail categories.
* Consumers of all ages buy jewelry: People of all ages bought jewelry in 2006. In the past, jewelry purchases were heavily biased toward young "millennials," ages 25 to 34 years old, and baby boomers over age 55. In 2006, the highest jewelry expenditures per household were among shoppers ages 35 to 44, a consumer group that has historically been below average for jewelry expenditures.
* Middle-income consumers have increasingly become significant jewelry buyers: While jewelry purchases are still heavily biased toward households with annual incomes of $70,000 and above, consumers in the $30,000-$50,000 and $50,000$70,000 income range spent proportionally more than ever before on jewelry in 2006.
* New jewelry shoppers are coming into the market: Most other demographic factors reflected the same trendsjewelry spending increased proportionally more among consumers who had historically under-spent on this category.
* Jewelry's share of wallet held about steady: Jewelry's share of wallet was about 0.86 percent of total consumer expenditures, up a minuscule amount from the prior year.
* Gift purchases of jewelry were up significantly: U.S. consumers spent much more on jewelry gifts than in the prior year. The 2006 data suggests that spending for jewelry gifts reverted to the long-term mean-about 15 percent of all jewelry expenditures are gifts.
* The number of shopping trips for jewelry held about constant: Consumers shopped for jewelry at about the same frequency in 2006 as in the past. About one in five U.S. households shop for jewelry, and they make two to four trips per year to buy jewelry. However, among the highest income consumers, about two in five of those households shop for jewelry each yeardouble the national averageand they make four to six trips annually to guild jewelry stores to buy gemstones and precious metal jewelry.
* Energy costs took a big bite out of consumers' discretionary spending: There were some notable swings in consumers' spending in some other categories. While the price of gasoline in 2006 was only a fraction of today's price, it was climbing. As a result, the typical U.S. consumer spent 3.7 percent of his or her income on gasoline for automobiles in 2006, up from 3.4 percent in the prior year. Housing was also booming in 2006, and consumers wanted to get in on the action. As a result, they took on larger mortgages and purchased more vacation homes; this increased their spending on housing to 27 percent share of wallet from 25.8 percent in 2005. Where did consumers cut corners? They spent notably less on self-education, insurance and entertainment.
* Gains in 2006 likely to be given up in 2007 and 2008: While forecasts are not normally a part of this series, it would appear that 2006 was a banner year for the U.S. jewelry industry. We do not expect to see the same results for 2007-indeed, jewelry sales were up a more moderate 4.1 percent, about in line with the total retail sales gain-nor do we expect to see consumer expenditures on jewelry particularly strong in 2008 due to economic weakness, a credit crunch, a housing crisis and soaring energy costs.
* Consumer Expenditure Survey Background: Each year, the BLS conducts a highly detailed Consumer Expenditure Survey for which consumers are given diaries and asked to account for every penny of their spending each day for two consecutive oneweek periods. In addition, five interviews with consumers are conducted at three-month intervals. The BLS survey overlooks virtually nothing.
In addition to the usual annual demographic profiles of the American jewelry shopper, new data is available on how many U.S. households actually purchase jewelry (about one in four), how much the typical jewelry shopper spends in a year (just above $2,000), and an estimate of the number of shopping trips in a year during which a jewelry purchase is made (it depends on who the consumer is).
There is a major caveat to all of this consumer demographic and spending data: it represents a mathematical average. Averages can be deceiving. For example, the average age of the typical American consumer in 2005 was 48.6 years, an average that was calculated by averaging the ages of all 300 million U.S. consumers. It really is meaningless. But after researchers drill down into detailed statistics, the "averages" are much more meaningful, because they look at a small segment of consumers.
* Best Jewelry Shopper: Based on the latest data from the Consumer Expenditure Survey, a picture of the "best" American jewelry shopper emerges. For example, consumer households with an annual income of $70,000 or higher spend $1,003 annually on jewelry; that's double the amount spent-$523-by the average household.
The bottom Une analysis of these demographics is that our long-term jewelry forecast for above-average sales remains intact. We continue to believe that jewelry sales will grow by at least 5 percent annually between now and 2025, somewhat above the 4.5 percent average growth forecast for all retail categories.
Not only were sales strong, but the industry's customer base expanded significantly beyond those consumers who have historically bought jewelry. Based on newly released U.S. Bureau of Labor Statistics (BLS) data, a broader consumer segment than ever purchased jewelry in 2006.
Besides reaching existing customers who have shopped for jewelry, jewelers reached new customers, including many who had not bought jewelry for perhaps several years.
The data shows that some multiyear consumer jewelry expenditure trends were shattered, while others apparently stood the test of time. The detailed research about consumer spending patterns for 2006 confirms that spending by consumers on jewelry continues to evolve.
Below are highlights from the government's latest Consumer Expenditure Survey for 2006, the latest data available.
* Total jewelry sales strong: U.S. jewelry sales rose 6.5 percent in 2006 to a total of $62.2 billion, one of the strongest gains this decade.
* Household expenditures on jewelry reached record levels: The average U.S. household spent $523 on jewelry in 2006, up from the prior year's $502. That's a 4.2 percent increase in per-household spending, up notably from the prior year and the highest per-household expenditure on record.
* Household formations expand the market: The total number of households grew 1.3 percent to 118.8 million; that gain is in line with the past 10-year average increase.
* Jewelry took market share from other retail categories: Total U.S. retail sales increased by 5.5 percent in 2006. Jewelry sales grew at a greater rate (6.5 percent), meaning it took a small amount of market share from other retail categories.
* Consumers of all ages buy jewelry: People of all ages bought jewelry in 2006. In the past, jewelry purchases were heavily biased toward young "millennials," ages 25 to 34 years old, and baby boomers over age 55. In 2006, the highest jewelry expenditures per household were among shoppers ages 35 to 44, a consumer group that has historically been below average for jewelry expenditures.
* Middle-income consumers have increasingly become significant jewelry buyers: While jewelry purchases are still heavily biased toward households with annual incomes of $70,000 and above, consumers in the $30,000-$50,000 and $50,000$70,000 income range spent proportionally more than ever before on jewelry in 2006.
* New jewelry shoppers are coming into the market: Most other demographic factors reflected the same trendsjewelry spending increased proportionally more among consumers who had historically under-spent on this category.
* Jewelry's share of wallet held about steady: Jewelry's share of wallet was about 0.86 percent of total consumer expenditures, up a minuscule amount from the prior year.
* Gift purchases of jewelry were up significantly: U.S. consumers spent much more on jewelry gifts than in the prior year. The 2006 data suggests that spending for jewelry gifts reverted to the long-term mean-about 15 percent of all jewelry expenditures are gifts.
* The number of shopping trips for jewelry held about constant: Consumers shopped for jewelry at about the same frequency in 2006 as in the past. About one in five U.S. households shop for jewelry, and they make two to four trips per year to buy jewelry. However, among the highest income consumers, about two in five of those households shop for jewelry each yeardouble the national averageand they make four to six trips annually to guild jewelry stores to buy gemstones and precious metal jewelry.
* Energy costs took a big bite out of consumers' discretionary spending: There were some notable swings in consumers' spending in some other categories. While the price of gasoline in 2006 was only a fraction of today's price, it was climbing. As a result, the typical U.S. consumer spent 3.7 percent of his or her income on gasoline for automobiles in 2006, up from 3.4 percent in the prior year. Housing was also booming in 2006, and consumers wanted to get in on the action. As a result, they took on larger mortgages and purchased more vacation homes; this increased their spending on housing to 27 percent share of wallet from 25.8 percent in 2005. Where did consumers cut corners? They spent notably less on self-education, insurance and entertainment.
* Gains in 2006 likely to be given up in 2007 and 2008: While forecasts are not normally a part of this series, it would appear that 2006 was a banner year for the U.S. jewelry industry. We do not expect to see the same results for 2007-indeed, jewelry sales were up a more moderate 4.1 percent, about in line with the total retail sales gain-nor do we expect to see consumer expenditures on jewelry particularly strong in 2008 due to economic weakness, a credit crunch, a housing crisis and soaring energy costs.
* Consumer Expenditure Survey Background: Each year, the BLS conducts a highly detailed Consumer Expenditure Survey for which consumers are given diaries and asked to account for every penny of their spending each day for two consecutive oneweek periods. In addition, five interviews with consumers are conducted at three-month intervals. The BLS survey overlooks virtually nothing.
In addition to the usual annual demographic profiles of the American jewelry shopper, new data is available on how many U.S. households actually purchase jewelry (about one in four), how much the typical jewelry shopper spends in a year (just above $2,000), and an estimate of the number of shopping trips in a year during which a jewelry purchase is made (it depends on who the consumer is).
There is a major caveat to all of this consumer demographic and spending data: it represents a mathematical average. Averages can be deceiving. For example, the average age of the typical American consumer in 2005 was 48.6 years, an average that was calculated by averaging the ages of all 300 million U.S. consumers. It really is meaningless. But after researchers drill down into detailed statistics, the "averages" are much more meaningful, because they look at a small segment of consumers.
* Best Jewelry Shopper: Based on the latest data from the Consumer Expenditure Survey, a picture of the "best" American jewelry shopper emerges. For example, consumer households with an annual income of $70,000 or higher spend $1,003 annually on jewelry; that's double the amount spent-$523-by the average household.
The bottom Une analysis of these demographics is that our long-term jewelry forecast for above-average sales remains intact. We continue to believe that jewelry sales will grow by at least 5 percent annually between now and 2025, somewhat above the 4.5 percent average growth forecast for all retail categories.
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