Jewelers should Targeting consumers by market segment
By Ken Gassman
Logic would suggest that jewelers should target the market with the highest per-household spending on jewelry. If they followed that rule, they would miss out on some huge markets.
This regional chart from IDEXOnline.com shows per-household income levels correlate closely with per-household spending on jewelry
For example, while Asian-Americans spend an average of $623 per household on jewelry annually, the highest amount of any ethnic group, the group represents only 4 percent of all U.S. households. Even with their high per-household jewelry expenditures, their total spending on this category is just 5 percent of total jewelry industry sales. In contrast, Caucasian households represent 73 percent of all U.S. households, and their spending on jewelry comprises 83 percent of total industry sales. Clearly, if jewelers are trying to reach the largest market with a high propensity for jewelry spending, they should focus on white shoppers.
Focusing on biggest markets
Below is a summary of total jewelry expenditures--spending per household times the total number of households--for each of the major demographic factors that tracks with jewelry expenditures.
• Income
Consumers with annual household incomes of $150,000 and above represent, by far, the highest per-household expenditures on jewelry. They represent about 7 percent of the market. While this group may seem small, they buy $18 billion worth of jewelry annually, a whopping 30 percent of the total amount of jewelry bought by U.S. consumers overall. Jewelers who can reach this group should consider themselves to be very skilled ... and perhaps lucky, too.
For most jewelers, the target market consists of consumers in the $50,000 to $100,000 annual income range whose aggregate expenditures total about 30 percent of the jewelry market.
Download a chart that breaks down total jewelry spending, segmented by annual income levels.
• Age
By age, a key market for jewelry exists among younger consumers. Nearly a quarter of the jewelry market consists of consumers under 35. Two-thirds of all U.S. jewelry expenditures are made by consumers under 55. Unfortunately, far too many jewelers have not changed the look and feel of their stores in decades and they continue to cater to older consumers. Their stores and their merchandise hold no appeal for younger shoppers.
Interestingly, households where 25-to-34-year-olds reside have income levels that are moderately below the national average. However, this U.S. consumer age group buys more bridal jewelry-particularly big-ticket diamond engagement rings-than any other. Further, their aggregate jewelry expenditures make them the second most-important age group among jewelry shoppers. Shoppers in the 45-to-54 age group have the highest income levels, and are the most important age demographic for jewelers, though not by a wide margin.
Download a chart that segments total jewelry spending by age.
• Household size
About one-third (33 percent) of all U.S. households consist of only two people, and their jewelry expenditures represent 39 percent of the industry total, more than that of any other household size. In two-person households, there is a high likelihood that both spouses work outside the home, and they have no child-related expenses. While two-person households do not have the highest per-household income levels (four-person households have the highest incomes), the average income level for a two-person household is above the national average.
The next highest jewelry spend per household occurs in one-person households, which represent 21 percent of jewelry spend, and 29 percent of all U.S. households. From there, the larger the household, the lower the amount of money spent on jewelry. Three-person households represent 16 percent of jewelry spend, while four-person households represent 15 percent and households of five people or more represent 9 percent of jewelry spend.
• Homeowners vs. renters
The roughly two-thirds of all American households occupied by home owners have higher income levels than those of renters. Their aggregate jewelry spend represents 80 percent of the industry's sales versus renters' 20 percent.
• Urban vs. suburban vs. rural
About 62 percent of Americans live in the suburbs, have by far the highest per-household income levels and represent 62 percent of the industry's total revenues. Interestingly, center city consumers closely follow in income levels and represent the next largest market, accounting for 28 percent of the spend. Rural consumers, with relatively low per-household income levels, make up 9 percent of jewelry expenditures.
• Region of the country
Southerners are the stingiest consumers: their jewelry expenditures per household are far lower than the national average. However, they represent the largest market of any U.S. geographic region (see chart at top of page).
Consumers in the South have the lowest per-household income levels of any U.S. region, which correlates perfectly with the lowest per-household jewelry expenditures by region. Conversely, consumers in the Northeast have the highest per-household spending on jewelry and also have the highest income levels. Despite some jewelry expenditure anomalies by region, the highest correlation between jewelry spending and any demographic factor continues to be explained by income levels.
• Ethnicity
White consumers absolutely dominate the jewelry market, representing 73 percent of total households as of 2008 and 83 percent of the jewelry spend. While Asian consumers spend more per-household on jewelry, they represent only 4 percent of all households-not enough to support the jewelry market. Blacks and Hispanics represent 7 percent and 6 percent of spend, respectively, and each accounts for 12 percent of all U.S. households.
• Education
While only 29 percent of all Americans have graduated from college, their spending represents 48 percent of all jewelry market sales. This means that the jewelry market is split about evenly between college graduates and non-college graduates. College graduates earn about double the income of non-college graduates. While the market is split about 50/50, jewelers should concentrate on college graduates since they have the income levels to support increased jewelry spending.
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