Gold down, steel up in watch sales
By Beth Braverman
Randolph, N.J.—All that glitters is steel for luxury watch retailers.
Despite yellow gold’s turn in the fashion spotlight, consumers still want white metal when it comes to mid-range luxury wristwatches, retailers tell
National Jeweler
.
Sales of stainless steel watches within the $1,500-$9,999 price point jumped 22 percent from August 2005 to August 2006, creating a $1.2 billion market, according to information from the Luxury Goods Index (LGI), which tracks sales data from 6,800 retailers across the country.
“Steel has really picked up, and at this point, it is, by far, the biggest category in size and volume,” LGI Chief Operating Officer Andrew Talbert says.
By contrast, gold watch sales in the same price category lagged behind, with 14-karat-gold watch sales decreasing 30 percent to $21.6 million, and 18-karat-gold watch sales dropping 7 percent to $70.4 million.
Talbert says that 14-karat-gold watches have declined for years, prompting several watch manufacturers to get out of the market altogether. Rising gold prices may have even pushed some 18-karat-gold watches beyond the study’s $10,000-price-point threshold, he adds.
Retailers echo these findings.
| Vacheron Constantin watch in 18-karat gold. |
“The solid gold watches have really dipped out,” says Beth Garbo, owner of Tick Tock Jewelers in Burlington, Vt. “I don’t think it has to do with the gold prices. They are still expensive watches [in steel], but I think it is about the fashion and the look.”
Other watch trends Garbo has seen include an augmented demand for mechanical and automatic watches, and classic styles that emphasize design rather than function.
LGI data finds that sales of steel and 18-karat-gold watches remained relatively flat for the year, increasing 1 percent to nearly $652 million. Sales of watches with other case materials showed a dramatic 24 percent increase to $85.3 million.
The report does not break out sales of various types of gold, but retailers say consumers who want a white-metal watch would rather buy one in steel than in white gold.
“The solid gold watches for us have declined,” says Brian Toone, co-owner of the Jewelry Design Center in Spokane, Wash. “We have noticed a bigger influx in larger steel watches and watches with diamonds.”
Toone attributes the demand for steel, in part, to platinum’s hold on the bridal market.
As young people get engaged with platinum rings, they want the rest of their jewelry wardrobe to match. So a few years into marriage when they start to have disposable income, their first luxury-watch purchases tend to be white metals, Toone says.
| Armand Nicolet S05 watch with stainless steel case and rubber strap. |
Tony Boccardo, co-owner of Boccardo Jewelers, in Scranton, Pa., reports a similar trend.
“Steel watches have been popular since about 1990,” he says. “Anything in white metals has sold well for us, in watches and in jewelry.”
Not all retailers have seen a drop in gold demand. At Lux Bond and Green, a nine-store chain, sales for all watches grew throughout 2006, says owner Marc Green.
Green says luxury buyers want traditional styles, such as Chopard’s Happy Diamonds, or anything from Rolex.
“Classic, classic, classic,” Green says. “If people spend that much money on a watch, they want an enduring look.”
Watch sales have also endured at Tourneau, though 18-karat-gold sales have surpassed 14-karat-gold sales, says Andrew Block, the company’s executive vice president.
And white metals have done even better.
“We have seen more attention paid from a media and design perspective to a younger customer,” Block says. “These customers are buying primarily white metals such as stainless steel, platinum and white gold.”
Gold sales parachute*
* 14-karat gold: down 30 percent to $21.6 million
* 18-karat gold: down 7 percent to $70.4 million
* Stainless steel: up 22 percent to $1.2 billion
* Other: up 24 percent to $85.3 million
* Sales change in watch-case materials from August 2005-August 2006
Source: LGI Network
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