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Watches and Jewellery Retailing - UK - September 2011

INTRODUCTION
Definitions
Abbreviations
EXECUTIVE SUMMARY
The market
Figure 1: Best- and worst-case forecast value sales of watches and jewellery, 2006-16
Green shoots of recovery
Market Factors
Booming mobile phone ownership poses a threat
Figure 2: Ownership of watches and mobile phones, 2005-10
Gold price hits all-time high
Figure 3: Average price of gold and total weight of gold hallmarked in all UK assay offices, 2001-10
Waning demand for wedding and engagement rings
Ageing population presents a challenge
ABs to boost market
The Consumer
Rising popularity of inexpensive watches
Figure 4: Amount of money prepared to spend on a watch for self, by gender, July 2011
Average price prepared to spend on a watch
Figure 5: Average price prepared to spend on a watch for oneself, 2010 and 2011
Middle-aged AB males aim high
The majority wear a watch most of the time
Figure 6: Attitudes towards watches, by gender, July 2011
Gifting is a lucrative driver of watch sales
Replacement is a key motivator for watch sales
Consumers with several watches benefit market
Specialist brands vs. designer brands
High street chains are the top destination for jewellery
Figure 7: Preferred outlets for buying jewellery, July 2011
ABs favour independent jewellers
Argos is top of the non-specialists
Other outlets
Jewellery is a precious gift
Figure 8: Attitudes towards buying or receiving precious metal jewellery, by gender, July 2011
Scope for retailers to capitalise on unworn jewellery
Under-25 women are the biggest self-purchasers
Consumers are not willing to pay more for ethical jewellery
What we think
ISSUES IN THE MARKET
What effect has the rising competition from alternative timepieces had on the watch market?
What impact is the rising price of gold having on the jewellery market?
How are advances in multichannel shopping affecting the jewellery market?
Has the amount consumers are prepared to spend on themselves changed?
How has fashion jewellery impacted upon the precious metal market?
How important is gifting to the watches and jewellery market?
FUTURE OPPORTUNITIES
Trend: Experience is All
Trend: Many Mes
INTERNAL MARKET ENVIRONMENT
Key points
Vast majority wear a watch
Figure 9: Trends in ownership of watches, 2006-10
Figure 10: Ownership of watches and mobile phones, by age and socio-economic group, 2010
Surge in mobile ownership
Figure 11: Trends in ownership of watches compared to mobile phones, 2005-10
Price of gold rockets
Figure 12: Average price of gold and platinum, 2001-10
2011 sees record highs in the price of gold
Weight of hallmarked gold falls
Figure 13: Weight of gold hallmarked by all UK assay offices, 2001-10
Switch to silver
Figure 14: Ownership of gold or platinum jewellery* and silver jewellery, 2006-10
Figure 15: Trends in ownership of gold or platinum jewellery and silver jewellery, 2006-10
Increased spend in luxury gold market
Figure 16: Trends in amount spent on gold or platinum jewellery, not diamond set, in the last 12 months, 2006-10
Growing market for under £100 silver
Figure 17: Trends in amount spent on silver jewellery in the last 12 months, 2006-10
BROADER MARKET ENVIRONMENT
Key points
Figure 18: Trends in the age structure of the UK population, 2006-16
Declining numbers of under-25s to hinder market
Ageing population presents a challenge
Figure 19: Forecast growth of the UK adult population, by age group, 2006-11 and 2011-16
25-34s to boost market
Growth in ABs to prosper market
Figure 20: Forecast growth of the UK population, by socio-economic group, 2006-11 and 2011-16
Fall in big-spending 35-44s to hamper market
Marriages are at the lowest ever rate
Figure 21: Rate of marriages in England and Wales, by gender, 1960-2009
Tough trading conditions but light at the end of the tunnel
Figure 22: GDP, PDI, consumer expenditure and savings, at constant 2011 prices, 2006-16
Eurozone economic recovery grinds to a halt
Figure 23: Trends in GDP quarterly change, Q1 2004-Q2 2011
Consumer confidence continues on its downward spiral
Figure 24: Trends in consumer confidence, January 2008-August 2011
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
Additional functionality
Innovations in watch technology
Ethical practices
New retail innovations
Customisations spur individuality
Mobile and online innovations
New marketing campaigns
Collaborations
COMPETITIVE CONTEXT
Key points
Jewellery and watches compared to clothing and footwear
Figure 25: UK retail value sales of clothing and adornment products, at current prices, 2006-11
Jewellery and watches make up 9% of the clothing and adornment sector
Figure 26: UK retail value share of clothing and adornment products, at current prices, 2011
MARKET SIZE AND FORECAST
Key points
Slow recovery in the midst of consumer caution
Figure 27: Value sales of watches and jewellery, at current and constant prices, 2006-16
The future
Watches and jewellery to grow by 8%
Figure 28: Best- and worst-case forecast value sales of watches and jewellery, 2006-16
Factors used in the forecast
SEGMENT PERFORMANCE
Key points
Figure 29: UK retail value sales of jewellery and watches, by sector, 2007-11
Precious metal jewellery
Watches
RETAIL COMPETITOR ANALYSIS
Key points
Store closures for Signet and AURUM
Figure 30: Jewellery retailers, by number of outlets, 2005-11
RETAILER PROFILES
Signet Group
Figure 31: Key financials for Signet Group UK, 2010 and 2011
AURUM Holdings
Figure 32: Product offering – AURUM, July 2011
Links of London
Figure 33: Key financials – Links (London) Limited (Global), 2008 and 2009
Tiffany
Figure 34: Key financials for Tiffany & Co Ltd, 2009 and 2010
Warren James
Figure 35: Key financials for Warren James (Jewellers) Ltd, 2009 and 2010
BRAND PROMOTION AND COMMUNICATION
Key points
Resurgence in adspend in 2010
Figure 36: Expenditure on advertising by top 20 jewellery and watch brands and retailers, 2008-10
Press advertising holds supremacy
Figure 37: Expenditure on advertising by jewellery and watch brands and retailers, by media type, 2008-10
THE CONSUMER – AMOUNT PREPARED TO SPEND ON A WATCH
Key points
Figure 38: Amount of money prepared to spend on a watch for self, July 2011
Value watches en vogue
Figure 39: Amount of money prepared to spend on a watch for self, by gender, July 2011
Mid spenders
Figure 40: Amount of money prepared to spend on a watch for oneself, by age, July 2011
Men willing to spend more
Figure 41: Amount of money prepared to spend on a watch for self, by socio-economic group, July 2011
Middle-aged men top in expenditure
Figure 42: Prepared to spend over £250 on a watch for self, by gender, age and socio-economic group, July 2011
Three in 20 would never buy
Figure 43: Agreement with the statement ‘I would never buy a watch for myself’, by age and socio-economic group, July 2011
Shift towards value watches
Figure 44: Amount of money prepared to spend on a watch for self, 2010 and 2011
Average price prepared to spend on a watch shows marked decline
Figure 45: Average price prepared to spend on a watch for oneself, 2010 and 2011
THE CONSUMER – ATTITUDES TOWARDS SHOPPING FOR WATCHES
Key points
Figure 46: Attitudes towards watches, by gender, July 2011
Majority wear a watch most of the time
Figure 47: Consumers wearing a watch most of the time, by gender, age and socio-economic group, July 2011
Time is a gift
Figure 48: Consumers who are happy to receive a watch as a gift, by gender, age and socio-economic group, July 2011
Figure 49: Consumers who would consider buying a watch for a gift for someone else, by gender, age and socio-economic group, July 2011
Three in ten only buy to replace
Mobiles reducing demand for watches
Figure 50: Use of mobile phone instead of watch to tell the time, by gender, age and socio-economic group, July 2011
Several watches for third age consumers
Watch brands
Aesthetics are important for one in seven
Main interest in designer watch brands comes from under-25s
THE CONSUMER – WHERE JEWELLERY IS BOUGHT
Key points
Figure 51: Preferred outlets for buying jewellery, July 2011
Popularity of high street chains prevails
Figure 52: High street jewellery chain and independent jeweller shoppers, by age, July 2011
ABs favour independent jewellers
Under-25s and D consumers shop at Argos
Figure 53: Argos jewellery shoppers, by gender, age and socio-economic group, July 2011
Department stores popular for parents
Fashion stores
A fifth do not buy jewellery
Figure 54: Consumers who do not buy jewellery, by gender, age and socio-economic group, July 2011
THE CONSUMER – ATTITUDES TOWARDS BUYING PRECIOUS METAL JEWELLERY
Key points
Figure 55: Attitudes towards buying or receiving precious metal jewellery, by gender, July 2011
A precious gift
Figure 56: Consumers who like receiving jewellery as a gift or have been given jewellery to mark a special occasion, by age and socio-economic group, July 2011
Unworn pieces
Popularity of gold is in decline
Figure 57: Consumers who wear more gold than silver, by age and socio-economic group, July 2011
One in ten check the hallmark
ABs are most experimental with jewellery
Under-25 women are the biggest self-purchasers
A worthy investment?
Competition from costume jewellery
Ethical jewellery
Cash for gold
Half of men are non-wearers
Figure 58: Consumers who do not wear jewellery, by gender, age and socio-economic group, July 2011
TARGET GROUPS
Key points
Figure 59: Marketing target groups for watches and jewellery, June 2010
Low Spenders
Unadorned
Big Spenders
Accessorise to Maximise
APPENDIX – INTERNAL MARKET ENVIRONMENT
Figure 61: Ownership of watches, by demographics, 2010
Figure 62: Ownership of mobile phones, by demographics, 2010
Figure 63: Ownership of gold or platinum jewellery, by demographics, 2010
Figure 64: Ownership of silver jewellery, by demographics, 2010
Figure 65: Amount spent on gold or platinum jewellery, not diamond set, in the last 12 months, by demographics, 2010
Figure 66: Amount spent on silver jewellery in the last 12 months, by demographics, 2010
APPENDIX – THE CONSUMER – AMOUNT SPENT ON WATCHES
Figure 67: Amount of money prepared to spend on a watch for self, by demographics, July 2011
APPENDIX – THE CONSUMER – ATTITUDES TOWARDS SHOPPING FOR WATCHES
Figure 68: Most popular attitudes towards watches, by demographics, July 2011
Figure 69: Next most popular attitudes towards watches, by demographics, July 2011
Figure 70: Amount of money prepared to spend on a watch for self, by most popular attitudes towards watches, July 2011
Figure 71: Amount of money prepared to spend on a watch for self, by next most popular attitudes towards watches, July 2011
APPENDIX – THE CONSUMER – WHERE JEWELLERY IS BOUGHT
Figure 72: Preferred outlets for buying jewellery, by demographics, July 2011
APPENDIX – THE CONSUMER – ATTITUDES TOWARDS BUYING PRECIOUS METAL JEWELLERY
Figure 73: Most popular attitudes towards buying or receiving precious metal jewellery, by demographics, July 2011
Figure 74: Next most popular attitudes towards buying or receiving precious metal jewellery, by demographics, July 2011
Figure 75: Other attitudes towards buying or receiving precious metal jewellery, by demographics, July 2011
Figure 76: Preferred outlets for buying jewellery, by next most popular attitudes towards buying or receiving precious metal jewellery, July 2011
Figure 77: Preferred outlets for buying jewellery, by other attitudes towards buying or receiving precious metal jewellery, July 2011
APPENDIX – TARGET GROUPS
Figure 78: Target groups, by demographics, July 2011
Figure 79: Preferred outlets for buying jewellery, by target groups, July 2011
Figure 80: Attitudes towards buying or receiving precious metal jewellery, by target groups, July 2011

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