Costume Jewelery and Fashion Accessories: Industry Report 2011

The Jewelery and Fashion industry has remained reasonably buoyant through the last two years since the global downturn. I'm going to detail the reasons for this and discuss the prospects for 2011 and beyond.

Costume jewelery (or fashion jewelry, as it also known), can be defined as any jewelery made from non-precious metals such as gold. Usually it does not contain any precious or semi-precious stone or pearls either, although in some high end cases, it might, particularly the designer jewelery market. This is not to say that it is always inexpensive, Kenneth Jay Lane's (known as the god father of costume jewelery) vintage pieces, have been known to sell at Christie's and Sotheby's for thousands of pounds, although new pieces are much more affordable. Usually however, mass market items can sell for anything between $ 1 and $ 100. Types of Costume Jewelery include earrings, necklaces, bracelets, brooches, cuffs and rings.

'Fashion accessories' is a broader term that includes not only costume / fashion jewelery, but also includes bags, hair accessories such as fascinators, scarves and belts. Jewelery is said to account for over 30% of the overall fashion accessory market with handbags the other big contributor, at around (or just below), this level.

After years of steady growth within the industry, the global downturn contributed to a 3% fall in retail sales for 2009 to $ 30.7 billion. Projected figures for 2010 are more positive with sales rebounding to $ 32.2 billion [Source: Accessories Magazine]. Higher than expected snowfalls, and lower temperatures across Western Europe in the run up to Christmas, may lead to a slight downgrading of this estimate, as retailers lose critical selling days. The well documented problems with the postal service specifically in the UK, may have affected take up rates within the online jewelery industry, as consumers fretted over delivery dates. Neverheless, taking into account that growth in the key costume jewelery markets of North America and Western Europe has been sluggish in 2010, any sort of positive growth is an achievement.

Companies within this sector should be bullish about the prospects for 2011 onwards; positive indicators that the industry will grow are as follows:

• As previously mentioned despite sluggish growth in key US and European markets, the industry managed to not only recover retails sales from the 2009 fall, but returned to pre credit-crunch growth levels.

• Austeration measures across much of Europe are likely to keep consumer spending in check. However smart retailers can take advantage of this, marketing to consumers who are trading down. Value for money is likely to be the key driver in the age of austerity; in the UK, ALDI thrived from customers who traded down from Marks and Spencers. Whilst I'm not comparing the Costume Jewelery industry to ALDI, you can hopefully see my point.

• Following on from this, brands that can offer affordable luxury are likely to prosper. For many Fashion Jewelery brands, affordable luxury is one of the key selling points. An example from outside the industry of affordable luxury thriving during tough economic times, is Costa Coffee, who experienced strong results over the last few years as many consumers continue to buy as a 'treat'.

• Emerging markets such as China and India, offer vast potential from strong brands. Growth in these economies remained strong in 2010 and is likely to continue, albeit at a slightly depreciated rate. As much of the world's mass produced costume jewelery and fashion accessories are manufactured in these new economies, companies need to examine their supply chain and marketing, to best capitalize on this opportunity. Cutting out the freight costs and selling directly at the point of origin is certainly a goal worth chasing for.

• The price of gold and other precious metals is still very high, Gold has been increasing through the last decade from $ 255 per ounce in 2001 to a high of $ 1422.60 this year. Silver is a similar, if not as dramatic story. This means that costume jewelery is better value against the traditional jewelery metals.

Those positives and opportunities besides, there are certain challenges the industry face in the quest for growth:

• The key challenge faced by the industry and indeed by many parts of the retail sector. is the rising world wide material costs. From copper to wheat, prices are rocketing as the emerging economies, particularly China and India, enable their populations to move out of poverty.

• Wages in China are also on the rise, putting additional presses on manufactures which will eventually filter down to retailers and customers.

• International pressure about their trade surpluses and the looming threat of inflation, could see China ever increase the price of the Yuan leading again to increased purchase costs.

• Fashion Accessories, particular mid-market spends, are boosted by a high percentage of impulse buys. Replicating this spend in the online jewelery space is a challenge that retailers need to face up to. There is no simple answer, the likes of Amazon and ASOS spend hundreds of thousands a year on web development, to enable linking of products, and suggestions to their customer. Smaller retailers need to also consider how they can innovate to maximize their sales.

Overall This is a challenging but exciting time for the Costume Jewelery and Fashion Accessories industry, I expect worldwide consumer spending in this sector to grow by between 4% and 5%, several new entrants to join the industry and the continued growth of online jewelery and accessories' sales. I will be revisiting this blog later in the year to see if I am correct in my analysis.

Source by Jonathan Paul White