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Jewellery and Watches Retailing - UK - September 2016

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
Market to grow by 2.3% in 2016
Figure 1: Best- and worst-case forecast value sales of jewellery and watches, 2011-21
Brexit could result in slower growth
Gold hallmarking on the increase
Aurum Group among the strongest players
Figure 2: Leading jewellery specialists’ compound annual growth rate (CAGR) in net revenues, 2011-14/15*
Rolex stands out for trust
Figure 3: Brand personality – Micro image, June 2016
Gifting drives jewellery purchases
Figure 4: Purchasing of jewellery and watches, July 2016
Watches top consumers’ future purchasing intentions
Figure 5: Purchasing intentions for jewellery and watches, July 2016
Over four in ten have bought online
Figure 6: Where precious metal jewellery and watches were purchased in the last 5 years, in-store or online by retailer, July 2016
Older men shop around for the best priced jewellery
Figure 7: Attitudes towards precious metal jewellery and watches, July 2016
Monitoring health and fitness is biggest attraction of smartwatches
Figure 8: Reasons for considering a smartwatch purchase, July 2016
Majority (60%) of consumers not considering a smartwatch purchase
Figure 9: Reasons for not considering a smartwatch purchase, July 2016
Gold jewellery is viewed as timeless but lacks fashion appeal
Figure 10: Correspondence analysis, July 2016
What we think
ISSUES AND INSIGHTS
How has the jewellery and watches market fared?
The facts
The implications
How is the smartwatches market developing?
The facts
The implications
How might Brexit have an impact on the jewellery and watches market?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Market to grow by 2.3% in 2016
Brexit could result in slower growth
Consumer finances remain stable for now
Gold and silver prices begin to rise in 2016
Gold hallmarking on the increase
MARKET SIZE AND FORECAST
Market to grow by 2.3% in 2016
Figure 11: Value sales of watches and jewellery, at current and constant prices, 2011-21
Jewellery and watch sales to reach £6bn by 2021
Figure 12: Best- and worst-case forecast value sales of jewellery and watches, 2011-21
Forecast methodology
The impact of the EU referendum vote
Jewellery and watches market was flat following the recession
Figure 13: Alternative market scenarios for the post-Brexit jewellery and watches market, at current prices, 2016-21
Figure 14: Detailed post-Brexit scenarios for the jewellery and watches market, at current prices, 2016-21
Value growth in the market may slow
Weaker Pound could boost tourist spend in the UK
Pandora was a relatively small player during the post-recession years
MARKET SEGMENTATION
Precious metal jewellery retains demand
Figure 15: UK retail value sales of jewellery and watches, by sector, 2011-16
Watch sales grow 4.9%
MARKET DRIVERS
Gold and silver prices begin to rise in 2016
Figure 16: Average yearly prices of gold, platinum and palladium, in dollars, 2002-16
Figure 17: Average yearly prices of silver, in dollars 2002-16
Gold hallmarking on the increase
Figure 18: % change in number of items hallmarked, by precious metal type, 2014-15
Figure 19: Number of gold and silver items hallmarked, 2007-16
Swiss watch exports to the UK rise 13.4% in July
Figure 20: Share of all COSC certificates accounted for, by leading Swiss-watch brands, 2014-15
Figure 21: Number of Swiss watch certificates issued by the COSC, 2014-15
Figure 22: Number of Swiss watch certificates issued by the COSC, three leading brands, 2011-15
Consumer confidence dips post-Brexit
Population trends point to rise in male 25-44s
Surprise decline in marriages in 2013
Current smartwatch ownership levels remain low
Figure 23: Ownership of smartphones and smartwatches, September 2015 and April 2016
US tourists spend the most in the UK
Figure 24: % change of inbound tourism to the UK, by world region, for the rolling 12 months June 15-May 2016 compared with June 14-May 15
THE CONSUMER – WHAT YOU NEED TO KNOW
Silver jewellery retains its popularity among women
Consumers most likely to be considering a watch purchase
Over four in ten have bought online
Pandora attracts the most precious metal jewellery shoppers
Argos caters for less affluent buyers
Older men shop around for the best priced jewellery
Style of a watch prevails over function among under-45s
Four in ten would consider buying a smartwatch
Gold jewellery is viewed as timeless but lacks fashion appeal
PURCHASING OF JEWELLERY AND WATCHES
Self-purchasing prevails for watches
Figure 25: Purchasing of jewellery and watches, July 2016
Silver jewellery favoured by women
Figure 26: Purchasing of precious metal jewellery in the last five years – Women, July 2016
Men opt for gold as much as silver
Figure 27: Purchasing of precious metal jewellery in the last five years – Men, July 2016
Costume jewellery a popular self-purchase
Figure 28: Purchasing of costume jewellery in the last five years, by gender, July 2016
Watch self-purchasing peaks among young men
Figure 29: Purchasing of watches in the last five years – Men, July 2016
Fashionable smartwatches set to boost women’s buying levels
Figure 30: Purchasing of watches in the last five years – Women, July 2016
Repertoire of jewellery and watch purchases
Figure 31: Repertoire of jewellery and watch purchases, July 2016
FUTURE PURCHASING INTENTIONS
12% planning a watch purchase in the coming months
Figure 32: Purchasing intentions for jewellery and watches, July 2016
Almost a quarter of young women look to buy costume jewellery
Figure 33: Women that are considering purchasing jewellery or watches in the next 6 months, by age, July 2016
Platinum tops young men’s priority list for jewellery
Figure 34: Men that are considering purchasing jewellery or watches in the next 6 months, by age, July 2016
WHERE THEY SHOP
Over four in ten have bought online
Figure 35: Where precious metal jewellery and watches were purchased in the last 5 years, in-store or online, July 2016
High street jewellery chains favoured by men
Figure 36: Where precious metal jewellery and watches were purchased in the last 5 years, in-store or online by retailer, July 2016
Argos caters for the less affluent jewellery and watch buyers
Figure 37: Where precious metal jewellery was purchased in the last 5 years, in-store or online, by socio-economic group, July 2016
Pandora attracts the most precious metal jewellery shoppers
Figure 38: Where precious metal jewellery was purchased in the last 5 years, in-store or online, by age, July 2016
Young, affluent watch buyers opt for high street chains
Figure 39: Where watches were purchased in the last 5 years, in-store or online, by demographics, July 2016
Increased activity from online-only watch retailers
Majority of consumers just use one retailer
Figure 40: Repertoire of retailers used for buying precious metal jewellery and watches, July 2016
ATTITUDES TOWARDS PRECIOUS METAL JEWELLERY
Older men shop around for the best priced jewellery
Figure 41: Attitudes towards precious metal jewellery, July 2016
Layering jewellery trend encourages self-purchases
Figure 42: Attitudes towards precious metal jewellery, by age, July 2016
Opportunity for ethical ranges targeted towards young men
Figure 43: Those who would prefer to buy precious metal jewellery that they know has been ethically sourced, by socio-economic group, July 2016
ATTITUDES TOWARDS WATCHES
Style prevails over function among under-45s
Figure 44: Attitudes towards watches, July 2016
Figure 45: Preference towards style/appearance or function of a watch, by gender and age, July 2016
Older consumers not as concerned with specialist watch brands
Second hand watches attractive to young buyers
Demand for personalised watches
INTEREST IN SMARTWATCHES
Figure 46: Future purchasing intentions for smartwatches, among those that have bought a watch in the last five years, July 2016
Why are consumers interested in smartwatches?
Figure 47: Reasons for considering a smartwatch purchase, July 2016
Barriers to smartwatch sales
Figure 48: Reasons for not considering a smartwatch purchase, July 2016
ASSOCIATIONS WITH GOLD, SILVER AND COSTUME JEWELLERY
Gold jewellery is viewed as timeless but lacks fashion appeal
Silver jewellery offers everyday wearability
Figure 49: Correspondence Analysis, July 2016
Costume jewellery is the most fashionable option
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Pandora is the fastest growing retailer over five years
Online watch retailers tap into pre-owned watch demand
Michael Kors enters the smartwatch market
Advertising spend boosted by Apple
New campaign strategy for Tiffany
RETAIL COMPETITOR ANALYSIS 
Leading specialists: Compound annual growth rates
Figure 50: Leading jewellery specialists’ compound annual growth rate (CAGR) in net revenues, 2011-14/15*
Leading specialists: Revenues
Figure 51: Leading specialists’ revenues, 2011-15
Leading specialists: Outlet numbers
Figure 52: Leading specialists’ outlet numbers, 2011/12-15/16
Leading specialists: Sales per outlet
Figure 53: Leading specialists’ sales per outlet, 2013/14*
LAUNCH ACTIVITY AND INNOVATION
Jewellery
Harrods’ caters for bespoke jewellery demand
John Lewis teams up with local jewellers
Online service improved by video chat function…
…while other jewellers opt for WhatsApp communication
Liz Earle enters Fairtrade jewellery market
‘Singles Bar’ lets shoppers mix and match earrings
Wearable jewellery
Watches
Online watch retailers tap into pre-owned watch demand
Harrods hosts six-week Fine Watch takeover
Olivia Burton launches vegan-friendly watches
Michael Kors enters the smartwatch market
ADVERTISING AND MARKETING ACTIVITY
Advertising spend boosted by Apple
Figure 54: Total above-the line, online display and direct mail advertising expenditure on jewellery and watches, 2012-15
Pandora ramps up advertising spend
Figure 55: Total above-the line, online display and direct mail advertising expenditure on jewellery and watches, by advertiser, 2012-2015
New campaign strategy for Tiffany
Growth in television advertisements
Figure 56: Total above-the line, online display and direct mail advertising expenditure on jewellery and watches, by media type, 2015
Figure 57: Total above-the line, online display and direct mail advertising expenditure on jewellery and watches, by media type, 2012-15
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 58: Attitudes towards and usage of selected brands, June 2016
Key brand metrics
Figure 59: Key metrics for selected brands, June 2016
Brand attitudes: Pandora expresses the wearer’s personality
Figure 60: Attitudes, by brand, June 2016
Brand personality: Rolex stands out for exclusivity
Figure 61: Brand personality – Macro image, June 2016
Swatch is a practical choice, offering durability and comfort
Figure 62: Brand personality – Micro image, June 2016
Brand analysis
Pandora is a trend-setter
Figure 63: User profile of Pandora, June 2016
Rolex garners the highest levels of trust
Figure 64: User profile of Rolex, June 2016
Swarovski enjoys vibrant and engaging associations
Figure 65: User profile of Swarovski, June 2016
Michael Kors increases awareness
Figure 66: User profile of Michael Kors, June 2016
Tiffany & Co works on its ‘cool’ factor
Figure 67: User profile of Tiffany & Co, June 2016
Swatch is a cool and urban brand
Figure 68: User profile of Swatch, June 2016
Thomas Sabo needs to increase exposure
Figure 69: User profile of Thomas Sabo, June 2016
COMPANY PROFILES
 AURUM GROUP LTD
What we think
Background
Company performance
Figure 70: Aurum*: Group financial performance, 2010/11-2014/15
Figure 71: Aurum: Outlet data, 2010/11-2014/15
Retail offering
 CASIO ELECTRONICS CO. LTD
What we think
Background
Company performance
Retail offering
 SIGNET GROUP (UK)
What we think
Background
Company performance
Figure 72: Signet Group (UK): Group financial performance, 2011/12-2015/16
Figure 73: Signet Group (UK): Outlet data, 2011/12-2015/16
Retail offering
 SWAROVSKI UK LTD
What we think
Background
Company performance
Retail offering
 THE SWATCH GROUP (UK) LTD
What we think
Background
Company performance
Retail offering
 TIFFANY & CO LTD
What we think
Background
Company performance
Figure 74: Tiffany & Co Ltd: Group financial performance, 2010/11-2014/15
Figure 75: Tiffany & Co Ltd: Outlet data, 2010/11-2014/15
Retail offering
 LINKS OF LONDON LTD
What we think
Reinforcing its British brand positioning
Boutique.Goldsmith deal offers more options for customers to shop Links of London
Expanding the breadth of category offering
Building its presence in Asia through travel retail outlets
Company background
Company performance
Figure 76: Links (London) Ltd: Group financial performance, 2010/11-2014/15
Figure 77: Links (London) Ltd: Outlet data, 2010/11-2014/15
Retail offering
 PANDORA JEWELLERY UK LTD
What we think
Slowly moving away from just charm bracelets
Capitalising on the gift market
Concept stores
Maximising online presence
Building close relationships with its customers
Customised jewellery
Company background
Company performance
Figure 78: Pandora Group: Group financial performance, 2011-2015
Figure 79: Pandora Jewellery UK Ltd: Outlet data, 2011-2015
Retail offering
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology
APPENDIX - CORRESPONDENCE ANALYSIS 
Methodology
Figure 80: Correspondence analysis, July 2016
Figure 81: Jewellery & watches, July 2016

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