Here is an insider view on the state of the European jewelry landscape. Even though European craftsmanship and branding may have raised the profile of their products during the course, they are faced with new realities. India and China may be the real threats in the long run. The numbers are on their side, but still European products have a perceived value in the emerging markets due to branding and that special look and feel. It's all in the state of mind of most consumers. The only way to stay on top will be to innovate and find your own niche in the already crowded jewelry market (s) of the world.
Leopoldo Poli (Co-owner, La Nouvelle Bague, Florence, Italy) writes:
Given the social, political, and cultural events of the last decade, the question before us is whether there will be genuine opportunities for growth and development for the Italian and European goldsmith industries. Recent events have generated crises and related difficulties, but in markets the word crisis is always synonymous with opportunity, and opportunities are truly what make the difference in the success of a company. The challenge for the next decade or two will be to transform some players in the goldsmith world from passive into active participants who turn change into opportunities.
Crisis
The economic crisis throughout Europe has put a growing number of jewelry companies at risk. Problems related to unemployment and the erosion of salaries has made the purchasing power of the middle class precarious. Only companies that know how to invest in the emotions of their clientele—persuading them to spend less in other luxury areas—have maintained a solid market share. Italy, in particular, has been at a disadvantage due to the introduction of the euro.
The second crisis is foreign competition. China, India, and Turkey, all new players on international markets, have started exporting products of increasingly high quality, benefiting from lower costs due to their highly competitive local wages.
Third, there is a crisis in the motivation to acquire gold jewelry. Other consumer market segments have taken over the role of jewelry, which has witnessed a decline in the myth of ostentation together with the emergence of functionality—new electronic gadgets, exotic travel and health spas.
Today’s European players
Today, there are four main players in Europe’s gem and jewelry industry, which have mixed prospects for the future:
1. Historic jewelry brands
They have their own history, combined with a strong tradition in both production and marketing. These firms can be expected to maintain a sizable market share, though it has been diminished by producers from lower-wage nations. The ones who will remain strong are those who organize themselves in a market-oriented way, seizing new opportunities, anticipating trends, and communicating the product emotionally via brand identity.
2. Emerging steel and silver brands
These young companies entered the market in response to the need for a new type of jewel, precious in design if not necessarily in the materials used. They have built on emotion and symbolism of their product, aiming it at the youth market. The winners will be those who know best how to interpret the trend for the hot metals, by discovering materials and designs that fit in with current styles.
3. Fashion companies
These are fashion brands that have entered the jewelry market in order to deliver a total look. They put forward industrial products that make an effort to present a distinctive design and are sophisticated technologically, flaunting their Italian workmanship.
4. Small artisanal companies
These are small, traditional manufacturing companies that develop their brands and are characterized by high quality craftsmanship. Some are disappearing because others have eroded their market share, and some are winners thanks to the intrinsic strength of the artisanal product. Those companies that put forward innovative designs, distinct from mass-produced items, will succeed. Opportunities for these companies are both in the specialist sector serving the big brands, and in the promotion of their own brands with high quality product.
Trends and the Trendsetter
The strength of a brand is measured in emotional terms; the key is to conduct a dialogue in a differentiated way with one’s clientele. Choosing the right communication means significantly enhancing the value of a product so that a larger slice of the population will want to trade up.
In every area of business, the most enthusiastic client is the trendsetter. Successful producers cater to tastemakers who influence and infect other groups of consumers. By knowing the trendsetters and working with them, we can achieve success without excessive investments in advertisement, because the product is truly exceptional.
Industrial production that lacks added value will be penalized. Therefore, we should continue to develop products with strong artisanal characteristics that value their origins and traditions. Italy has an enviable tradition of fashion and design. In this respect, our competitors are at a disadvantage because they are not creators of trends.
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