By many accounts, 2021 may be remembered as the year that Gen Z, the generation born between 1997 and 2012, came into its own. According to the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey, it was the age group that posted the largest increase in jewelry demand in the United States, purchasing almost four times more than it had in 2020.
In an examination of the CES data, diamond industry analyst Edahn Golan pointed out that demand by Gen Z skyrocketed 270 percent year over year. “The under 25-year-old age group burst out of [COVID] lockdowns with a voracious appetite for life,” he wrote. “Among spending on streaming services and accessories, they also revealed a growing interest in jewelry.”
Still, it’s fair to note that the Gen-Z spending last year was measured against a low base. In 2020, under 25-year-olds had the lowest spend on jewelry.
Indeed, in 2020 it was the 45-54 age group that spent the most on jewelry. That changed in 2021, with that top-rated category shifting upward to the 55-64 age group, which spent an average $1,343 per household on jewelry, representing an increase of 213 percent year over year.
The 55-64 age category, which Golan identifies as Generation X, although some may contend that it also includes the tail end of the Baby Boom, is clearly more able to spend money on fine jewelry, having achieved what is likely to be its peak in spending capacity.
But by 2025, according to a study by Boston Consulting Group, Millennials and Gen Z together will constitute more than more than 60 percent of the luxury market.
U.S JEWELRY MARKET GROWTH IN 2021 BY AGE
TAILORING MARKETING CAMPAIGNS FOR GEN Z
Despite its relative youth, Gen Z already accounts currently account for some $143 billion in annual “spending power,” and that amount will almost certain rise sharply. Recent research in the United States indicates that the oldest among this generation’s consumers already holds a 5 percent share of all diamond jewelry piece purchased in the United States.
It’s a reality that is not lost on some of the world’s leading jewelry brands. Tiffany & Co is one of them. For its latest campaign, “Not Your Mother’s Tiffany,” it partnered with pop-culture icons Beyonce and Jay-Z, and also signed the teenager British tennis champion Emma Raducanu as its new brand ambassador. These are the type of role models that Tiffany’s hopes will speak to a younger target audience.
The fashion jewelry giant Pandora, which is selling at price points that are likely more suitable to the Gen Z audience, has created a number of pop-up stores specifically to promote its youth-focused Me range. Appearing both in Dublin and London, the stores featured interactive graffiti walls and gaming arcade.
The Danish jewelry company has even built a Pandora Island in Animal Crossing, a popular social simulation video game series developed and published by Nintendo. Some 87 percent of Gen Z consumers describe themselves as gamers.
SET TO TRANSFORM THE INDUSTRY
What is certain is that Gen Z is going to transform the jewelry shopping experience. According to a study release by mOOnshot digital, members of the generation prefer an interactive and personalized approach, focusing on authentic, original brand stories.
They expect a sense of purpose in the products they buy and also a personal connection. High-end retailers, therefore, are looking to transform showrooms into experiential spaces, where the emphasis is on their brand storytelling.
And the physical space needs to blend seamlessly with the digital environment, with augmented reality and virtual reality being an integral part of the experience. And this is not only a challenge that will be faced by retailers, but by all players along the distribution chain, who will be expected to tailor their marketing approach do that their products can be presented in both a physical and digital environment.
Member of the diamond industry’s midstream, and rough diamond producers as well, will all be expected to buy into the new marketing approach. If they choose op out, retailers are likely to move their business to those who have will and capacity to opt in.
Source: Bain & Co./Altagemma, 2022.