The next five years will offer significant opportunities for fine jewellery players to rewrite the rule book across products, distribution models, and engagement strategies, according to the latest State of Fashion report published by Business of Fashion and McKinsey. The report is based on extensive executive interviews, analysis of public and private companies, and proprietary insights.

McKinsey research expects the global fine jewellery market to rebound from the Covid-19 pandemic and grow at 3-4% per year between 2019 and 2025, expanding from $280 billion in sales to between $340 and $360 billion. It also notes that branded jewellery, which currently comprises less than 20% of the market, will grow to represent around 25-30% of the market by 2025.

“We expect demand to increase from younger consumers as well as in domestic markets amid continuing restrictions on international travel and the rise of domestic duty-free zones in China. Already the biggest regional market, accounting for 45% of global fine jewellery sales..., sales in Asia are set to expand even further, with China leading the way,” it added. Looking forward to the next five years, McKinsey expects branded fine jewellery sales in Asia to grow 10-14% annually.

The report identified three seismic shifts that will shape value pools in the fine jewellery industry:

• Branded fine jewellery is expected to grow at 8-12% CAGR from 2019 to 2025, outpacing the overall fine jewellery market.
• Online fine jewellery sales are expected to grow to 18-21% of total sales by 2025, up from 13% in 2019.
• 20-30% of fine jewellery purchases in 2025 will be influenced by sustainability considerations.

Branded fine jewellery will grow approximately three times faster than the total market. The report added that competition between established luxury jewellery brands, fashion brands, and new direct-to-consumer (DTC) companies will heat up as players compete to win customers who are turning toward brands that reflect their distinct points of view.

“Many branded players will also find themselves well positioned for the expected growth of online sales; however, emerging DTC players will apply pressure and give established players a sense of urgency to move quickly.

“The move toward online, however, must be carefully considered by jewellers to not discount the importance of humanising digital experiences. Consumers will expect the same level of customer service and attention to detail online as they do in stores, and with about 80% of fine jewellery purchases still made in stores in 2025, seamless connectivity between channels will be paramount.

“Purchases influenced by sustainability practices will triple in the years ahead, presenting an opportunity for the industry to make real, tangible strides toward important environment and social imperatives,” it noted.

Boucheron ring set with tourmalines, tsavorites and diamonds. Photo: © Boucheron