As economic pressures compel consumers to reevaluate their spending habits, jewelry retailers like Signet Jewelers are witnessing a surge in demand for guidance and consultation.
During a conference call with analysts on Wednesday (March 20), Signet, the parent company of Kay Jewelers, Zales, and Jared, revealed insights into this trend amid discussions on its fourth-quarter and fiscal 2024 earnings results. CEO Virginia Drosos highlighted the increasing number of consumers seeking advice on purchasing jewelry that aligns with their budgets.
Drosos noted, “We have a significant portion of customers seeking the expertise of our jewelry consultants to assist them in making informed choices.” She emphasized that while some shoppers are focused on value-driven purchases, particularly in fashion, others are constrained by fixed budgets, especially when considering natural versus lab-grown diamonds.
The company reported a 6.3% decline in total sales year over year, with same-store sales experiencing a 9.6% decrease, indicative of the broader belt-tightening among consumers. According to the PYMNTS Intelligence study “New Reality Check: The Paycheck-to-Paycheck Report,” based on a survey of over 4,200 U.S. consumers, 60% of respondents are cutting back on nonessential expenditures.
Despite the overall downturn, Signet observed a preference for lower-priced items during the holiday season and Valentine’s Day, reflecting a continued focus on value among consumers. Drosos remarked, “We anticipate consumers will prioritize value as they navigate their budgets this year.”
Nevertheless, affluent consumers continue to indulge in discretionary spending, even at the expense of financial security, as highlighted in “The Nonessential Spend Deep Dive Edition” of the New Reality Check series. The study, which surveyed over 2,200 U.S. consumers, revealed that 1 in 3 individuals living paycheck to paycheck cite nonessential spending as a contributing factor to financial strain, a figure that rises to 38% among those earning over $100,000 annually.
For many, purchasing jewelry, particularly diamonds, represents a significant investment. Drosos explained, “Engagement customers view this purchase as a long-term investment, often the most substantial expenditure they make together as a couple.”
Even amid financial constraints, consumers are exploring flexible payment options to acquire desired items. According to the PYMNTS Intelligence study “Tracking the Digital Payments Takeover: What BNPL Needs to Win Wider Adoption,” based on a survey of over 3,100 consumers, 41% of buy now, pay later (BNPL) users utilize the method for clothing and accessories purchases, surpassing other retail categories.
Daniel’s Jewelers CEO David Sherwood noted, “Many customers with less-than-ideal credit histories have remained loyal to us for extended periods, leveraging payment plans to access our products.”
In navigating the evolving landscape of consumer preferences and financial constraints, jewelry retailers are increasingly focusing on providing tailored guidance and flexible payment solutions to meet diverse customer needs.