High-end jewelry sales lose luster

Demand for jewelry has slowed as the economy suffers.

NEW YORK (AP) — This holiday season, women may be more likely to wind up with a partridge in a pear tree than five gold rings.

As the luxury jewelry market loses its luster, jewelers are looking toward the crucial holiday season — a time for gifts as well as a popular time to get engaged — with trepidation.

Demand for jewelry has waned as consumers put their income toward the high cost of food and fuel. A wobbly labor market and tighter credit also have Americans wondering how they’re going to finance expensive purchases this holiday.

Analysts say everyone appears to be cutting back — not just the aspirational customers, who dabble here and there in high-end brands. Even the affluent, who used to drop hundreds or even thousands of dollars in a single shopping spree, are becoming more frugal.

Marie Driscoll, an equity analyst with Standard & Poor’s, says the luxury market is slowing because wealthy shoppers are feeling the pinch of a weak economy but don’t want to buy cheaper brands.

“People that shop luxury, who demand a certain brand, they just don’t trade down,” she says. “They simply do without until they feel comfortable to purchase again. Women who wear Prada and Chanel shoes — I don’t see them trading down to Cole Haan, even though it’s a great brand.”

Though Tiffany & Co.’s second-quarter profit doubled on sales in Asia and Europe, the high-end retailer warned of softness in the U.S. in sales of items priced above $50,000.

Even the smaller, independent jewelers are having a hard time ringing up pricey items, especially after the meltdown on Wall Street left thousands without jobs. Between March and August, 19,000 jobs were lost in New York’s securities and financial activities sectors, according to the New York Federal Reserve.

“That industry has been, for lack of a better word, decimated in terms of making large dollar transactions,” says Stifel Nicolaus analyst Scott Devitt. “This is going to be, most likely, the worst holiday season in two decades, given how broad the economic recession is.”

In Manhattan’s famed Diamond District, Wall Street bankers have been known to splurge their bonus money on flashy jewels at Ultimate Jewelry Designs. But Gem Sezgin, one of the store’s longtime employees, says big-ticket items have lost their allure among New York’s high rollers.

While analysts think people used to luxury shopping won’t give up their preferred brands, the more aspirational shopper might be willing to compromise by purchasing slightly less expensive jewelry.

“A banker who might have paid $40,000 for a ring is now only spending $10,000,” Sezgin says. “When the economy goes down, the first thing that gets hit is luxury. We’re not expecting a good Christmas.”

Sezgin won’t know for sure what the holiday holds until right after Thanksgiving, when sales typically ramp up.

“It’s a big question mark. We’re trying our best, but when it rains, it rains everywhere,” Sezgin says.

Last December, sales of jewelry softened from a year earlier. Jewelers recorded $6.5 million in sales, down from $6.7 million during the year-ago month, according to statistics from the Commerce Department.