Although the prospect of a mild recession in 2023 has weighed on many retailers and industries, jewelry is a more resilient category than others, Signet Jewelers (SIG) CEO Gina Drosos said.
“You know, jewelry is not immune to macroeconomic pressure, but I would say it’s very different from most of the rest of retail,” Drosos told Yahoo Finance Live (video above). “Jewelry inherently holds its value, and customers know that. So they know that if they buy a nice piece of jewelry, it will be worth at least the same, if not have appreciated, a year later. So we see in tough times, even including recession, jewelry actually does much better than the rest of retail.”
Drosos might be right in her assumption.
During its fiscal third quarter, Signet, the world’s largest retailer of diamond jewelry, delivered topline growth reaching $1.6 billion, with revenues up 2.9% year over year. The company struck an upbeat tone for the holidays on its earnings call, citing strength in website visits.
“One of our strategies has been to lead digital commerce in the jewelry category,” Drosos said. “It’s a category that traditionally was very brick-and-mortar based. People only went into a store so they could be consulted or try on the product. Now we’re actually selling a lot of jewelry online, but [it’s] mostly browsing. 67% of our customers go online before they come into the store.”
In addition, Drosos explained that demand for lower-priced jewelry could possibly be waning as consumer trends change.
“Last year was a big year for lower-priced jewelry,” Drosos said. “Stimulus was in the market, people really spending on themselves, which was great to see. Self-purchase tends to be a lower-priced purchase than bridal or romantic gifting, so we saw a big increase last year. That’s been offset this year somewhat.”
Signet dominates in the low- to mid-price jewelry business. The company owns brands including Jared, Kay, and Zales. It also acquired Blue Nile in October.
“We’re still up on a stack basis,” Drosos noted. “But we’ve seen lower-income customers be more challenged. You know, discretionary price increases are impacting their discretionary spend more so than higher-income customers.”
Despite this, Drosos mentioned transaction value was up 8% in the quarter and up 27% versus three years ago. She said a major part of that was recognizing that lower-income customers would be more challenged and adjusting accordingly.
“For that [lower-income] customer, we’ve added value-engineered product really to give them a great value, financing alternatives,” Drosos said. “But we’ve also pivoted our marketing and our assortment to attract a higher-end customer.”
Sandra Salathe is an editor at Yahoo Finance. Follow her on Twitter at @srsalathe
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