The French Jewelry & Watches market in 2020: resilient and digital?

Last February, the Comité Francéclat presented the evolution of the Jewelry & Watches market (HBJO) in France between 2019 and 2020. Unsurprisingly, domestic sales have dropped by 14% – an unprecedented result explained by the absence of foreign tourists and the closure of stores. Despite a record growth of 27%, online sales were unable to offset this loss. As for production, the jewelry industry seems less affected than the watch industry as it was spurred by strong demand from the Place Vendôme for its export markets.

The French industry shows resilience despite a decline in production

After four years of growth, French production of HBJO fell by 5% in 2020. This decline “certainly marks a milestone but also illustrates the resilience of manufacturers” according to the Comité Francéclat.

However, these results vary among sectors and companies. Production decreased by 22% in the watch industry but by only 2% in the jewelry industry, with stable levels in fine jewelry and a more pronounced decline in fashion jewelry.

While many businesses have suffered from the crisis, others have managed to increase their production by 50% to over 100% in response to demand from the Place Vendôme firms.

The 2020 shock: the French HBJO market faces an unprecedented drop in sales

The Comité Francéclat estimates HBJO sales in France at 4.8 billion euros (including tax) for the year 2020, down 14% compared to 2019, thus marking the strongest decline in the panel’s history. The Comité notes an 11% drop in gold jewelry sales and a 9% drop in watch sales.

Sales targeted at foreign clienteles were obviously affected, with a 47% decrease in turnover, while businesses selling to more local clienteles got by with a decrease of only 7%.

The market picks up at the end of each lockdown

The French market remained relatively strong and benefited from a sales boost in December (+12%) despite the three-month store closure and the absence of international customers.

The Comité refers to this strong end-of-year increase in sales as “the 2020 paradox effect”. If the government had not decided to reopen stores in December, the loss of turnover would have reached 900 million to 950 million euros in a month.

Trends in the watch industry: smart watches on the rise

Despite the closure of stores, sales of watches over €1,000 in France reached break-even at the end of 2020. As for watches under €1,000, the market has suffered from the competition with online selling, which has taken the lead, and the rise of smart watches.

Online selling: the future of the HBJO market?

The drop in turnover has affected all distribution channels (city, supermarkets, shopping centers) except for distance selling, which has increased by 27%, thus gaining three years of growth at once. The panel estimates its value market share at 8.7% for fine jewelry and 17.3% for watches in 2020.

Despite this sharp increase, online sales only offset 3% of the loss caused by the closure of retail stores. While they are far from compensating for the drop in HBJO sales, the evolution of this distribution channel should be carefully monitored in 2021 as it marks a turning point in consumer habits.

Lab-grown diamonds vs Natural diamonds

According to the Comité Francéclat, lab-grown diamonds only represent 3.5% of “diamond + lab-grown diamond” sales. Their competition with natural diamonds is still weak, as major sellers remain faithful to the latter.

While the share of lab-grown diamonds has made little progress, its distribution has however widened in the diamond minority target, driven by a significant price differential. Some experts emphasize the importance of traceability, regulation and consumer information – those are key elements for the market.

What prospects for 2021?

Overall, the results for 2020 are grim, but “not entirely hopeless”, according to General Delegate Hervé Buffet. Customer demand for HBJO in France has remained strong despite the economic recession.

Unfortunately, the crisis persists this year, starting with the closure of department stores and shopping centers in January 2021, with brands representing 50% of employees and sales of the HBJO market at a standstill, followed by the general closure of all nonessential stores announced on March 31.

While the future is full of uncertainty, the crisis acts as a trend accelerator. This is especially the case for distance selling, which is expected to keep rising in 2021.

In this context, it is vital to support innovation and creation but also to train our artisans/small business owners for this new era of communication and digital technology.

Let us not forget that jewelry is one of France’s jewels (literally) and sources of pride. It represents a unique savoir-faire. Unlike our European neighbors, it seems that the government and the State do not sufficiently support this uniqueness. There is an urgent need to establish a real proactive policy to foster our heritage and support creativity and innovation in this area, Mr. President.