Can a cautious consumer can be a jeweler's best friend?
The luxury jewelry business in the U.S. has undergone a dramatic change due to a significant shift in the way consumers view diamonds and other precious stones.
In the wake of financial meltdown, U.S. consumers are now looking at high-end jewelry purchases as an investment, Henri Barguirdijan, president and CEO of Graff Holdings, told CNBC.
According to Barguirdijan, this is a tremendous shift in the mindset of the company's customers and it is having a significant impact on how Graff does business.
"That consumer realized that really fine-quality diamonds—or precious stones for that matter—do keep their value—actually, even increase in value—in times like this, and this is something that is new to the American consumer because they always saw jewelry as almost a necessary evil to please the wife or the fiancée ... and now they realize that it is not such a stupid idea to have a small percentage of their wealth in precious stones," Barguirdijan said.
Although Graff's business is back to 2007 levels, the retailer is reaching that bar with fewer transactions as customers buy pricier products than they once did.
Graff is not the only jeweler seeing this trend. Rival Tiffany said last week that its U.S. business continued to see modest growthin purchases of so-called statement jewelry, which includes pieces priced above $50,000, but that "aspirational" shoppers—typically middle-class consumers with luxury tastes—remain concerned and are buying less. That translated into fewer sales of products priced under $500, Tiffany said.
Barguirdijan said he sees U.S. consumers as "very cautious."
"They do more comparison-shopping than they ever have," he said.
The research consumers are conducting before making a purchase also means that Graff has to clearly communicate the value of the product they are offering to their customers, Barguirdijan said.
That's something all retailers need to remember in this environment.
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