Jewelry sales is slightly based on consumer income. Small jewelers can efficiently compete with large chains, because the important factor for deciding sales is not price. Profitability mainly depends on merchandising and effective marketing.
Jewelry selling is handled not only by specialized jewelry retailers, but also by department stores and mass merchants. As regular gross margins are very high, usually 50 percent, mass merchants have been able to level the prices and account more market share. Wal-Mart is considered as the largest jewelry retailer in the US.
Jewelry is generally categorized as bridal merchandise (for the purpose of engagement, bridal and anniversary rings, it has 35 percent of the market share), fashion jewelry (like rings, bracelets, earrings, pins, gold chains) and watches, silver flatware, and other gift items. Diamond jewelry and detached diamonds contribute the largest share of total jewelry store sales (46 percent), gold jewelry accounts for 11 percent; colored gemstone jewelry (like rubies, sapphires, emeralds, etc. accounts for 9 percent) and watches account for 4 percent.
Source: Hoovers 2009