Reporting from Chicago — Not to get anyone's hopes up this Valentine's Day, or get anyone else in trouble, but giving jewelry is back in style.
Jewelry sales made a big comeback this past holiday season after plummeting during the Great Recession. They continue to gain steam headed into Monday's holiday, a sign that consumers are feeling better about the economy.
But don't expect any Elizabeth Taylor-size rocks. Even as consumers return to the jewelry stores, they're looking for a good deal, whether they're shopping at JCPenney or Harry Winston.
"There is a mentality of value, even in the luxury jewelry market," said Andrea Morante, chief executive of Pomellato, an Italian luxury jewelry firm that counts Oprah Winfrey as a customer. "If a client is looking at a $70,000 ring, they want to know how many hours it took to produce. It's a healthy trend for consumers to ask about value."
U.S. jewelry sales rose 7.7% to a record $63.4 billion in 2010, according to a new report from the Jewelers Board of Trade, based on Commerce Department data. The uptick follows two consecutive years of declines. Sales dropped 2.7% in 2009 and 2.4% in 2008 as Americans cut back on discretionary spending.
With the price of gold up 30% last year and trading at more than $1,300 an ounce, jewelers have taken pains to come up with creative designs aimed at keeping price tags down, as husbands and boyfriends are finding their way back to the jewelry counters.
One overarching strategy that is working so far: Designers are fashioning smaller, lighter-weight pieces that require less solid gold, relying on twists, lace designs and cutouts.
Jewelry merchants, among them Gurhan and Tiffany & Co., are combining sterling silver and gold into a necklace or bracelet. And customers are snapping up stacking rings and necklace charms that can be purchased one at a time over several months or years.
Even the traditional single-diamond engagement ring is giving way to more affordable designs. A halo setting, typically a small center diamond surrounded by smaller diamonds or colored stones, is becoming more popular with brides-to-be as the setting gives the illusion of a big ring without the price, said Amanda Gizzi, spokeswoman for the Jewelers of America.
"People are being smarter with their investments and are looking for items with lasting value," Gizzi said.
Like many consumers, Scott Baron, 33, avoided fine-jewelry purchases during the recession.
With a baby on the way and the stock market on the rise, Baron decided this Valentine's Day was a good time to "do something extra" for his wife. He spent Thursday afternoon at Leber Jeweler Inc. in River North, Ill., selecting a stone that is both meaningful to his wife and a good investment.
"It's not something I do every year," Baron said. "Typically, we go out to dinner."
He isn't alone. Shoppers are expected to spend $3.5 billion on jewelry for Valentine's Day, up 17% from $3 billion last year, according to the National Retail Federation, a trade group in Washington.
Sales have skyrocketed at luxury retailers in particular as the wealthy begin to shop again. Jewelry firms Bulgari of Italy, Parisian luxury conglomerate LVMH and Switzerland's Richemont, owner of Cartier, all reported sales gains topping 25% in the most recent quarter. And New York-based Tiffany, known for its little blue gift boxes, in January raised its profit forecast for the year and said it would accelerate store openings in 2011.
Business is looking up at the mid-tier jewelry chains as well. Zale Corp. said sales at stores open at least a year rose 8.5% for the combined months of November and December compared with the same period in 2009, when same-store sales dropped 12%. Costco Wholesale Corp. said its jewelry sales rose by a percentage "in the teens" in the last few months of 2010.
Meanwhile, both J.C. Penney Co. and Sears Holdings Corp. debuted new bridal jewelry collections at their department stores this month in hopes of capturing sales leading up to Valentine's Day, the second-biggest holiday in the jewelry trade.
The expansion comes after a rash of jewelers went out of business during the economic downturn. Signet Jewelers, the British company that owns the Kay Jewelers and Jared chains in the U.S., said last year that the number of jewelry specialty stores shrank an estimated 12% in the U.S. since the start of 2008.
Brian Tunick, a retail analyst at JPMorgan Chase & Co., estimated in a Feb. 1 report that more than 2,750 jewelry stores have been closed since the recession began. He predicts that closings will continue this year as jewelers balance rising commodity costs with consumers' desire for value.
"People are much more careful and study more before they go and buy," said Hana Ben-Shabat, a partner at the London office of consulting firm A.T. Kearney.