Is gem demand on the decline?

Isaac Mostovicz writes...

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Interesting news out of Dubai this week. At the 5th City of Gold Jewelry Conference, business leaders suggested that a unified marketing strategy for the global gems and jewelry industry is necessary in order to prevent gems and jewelry from losing ground in the worldwide luxury market.

KPMG recently undertook a study for the Gem and Jewellery Export Promotion Council of India in which they predict that the global gems and jewelry industry (currently worth $146 billion USD) will see its compound annual growth rate (CAGR) drop from 5.2 percent to 4.6 percent over the next ten years. Other luxury goods, such as luxury apparel (estimated to grow 10–15% over the next seven years) are expected to compete with jewelry for the wealthy consumer’s dollar.

The chairman of the Indian Gem and Jewelry Export Promotion Council, Sanjay Kothari, said that the global industry needs to rethink the retail experience in order to create emotional connections that will inspire consumer confidence. (Emotion in luxury is a topic we’ve discussed before on Janus Thinking).

Says Kothari:

It is time for retailers to take the initiative to grow the market. We need to look into new markets, identify new segments and new value propositions. Most of all, we need to contribute to creating a single unified global marketing masterplan that we can then tailor to the regions of the world.

One new market he identifies is luxury electronics and the potential for integrating precious metals and gems into them. He also suggests a more coordinated effort should be made to introduce jewelry to men, children and people over 65 (all non-traditional markets).

Kothari’s idea for global marketing coordination isn’t a bad one, but I can’t see anything practical coming out of it. There are too many players globally. But if the KPMG projections are true and demand for diamonds, other gems and precious metals does decline over the next decade, drastic times may call for drastic cooperative measures.

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