As a safe bet for stumped husbands everywhere, fine jewelry sales typically shine over the holidays.
But as retailers grapple with deflation, sluggish tourism spending and shifting consumer preferences toward less expensive pieces, growth may be harder to come by this Christmas.
Major jewelers like Signet and Tiffany are already feeling the heat. Sales at each company's established stores declined 2 percent during the third quarter, contributing to what analysts predict will be a contraction in their full-year revenues.
Analysts expect Tiffany's topline to fare a bit better in the fourth quarter, though the company cautioned that its surprise third-quarter revenue improvement isn't enough to signal a turning point.
Both Signet and Tiffany generate roughly one-third of their annual sales during the holiday quarter.
"One of the things we have detected, in the U.S., is that while Signet and its brands are destinations for many looking for diamonds and other expensive items, they are far less on the radar for those looking for somewhat cheaper items," said Carter Harrison, an analyst at Conlumino research firm. "This is especially [an issue] over the holiday period when gifting becomes more important."
The price of a 1-carat polished diamond fell nearly 3 percent in the year ended October, according to industry expert Rapaport. That drop has contributed to a broader decline in fine jewelry prices, which are also under pressure from lower-cost online competition, and secondhand sellers.
Adding to the category's woes are a slump in sales from foreign tourists, which is largely the result of a strong U.S. dollar. And as shoppers seek out bargains, fine jewelry's dollar growth has failed to keep pace with lower-price costume jewelry.
Whereas Euromonitor predicts costume jewelry sales will grow 3.3 percent on a dollar basis this year, to $10.5 billion, fine jewelry is expected to rise 2.4 percent, to $51.4 billion. Volume growth for fine jewelry is expected to pick up this year, after posting a decline last year.