Korean jewelry brands struggle due to polarization in spending

[Courtesy of Stonehenge]

South Korean jewelry brands, which have long been a staple alongside cosmetics on the first floor of department stores, are facing a sharp decline in sales due to polarization in consumer spending.

According to sources on Sunday, most domestic jewelry brands in the three major department stores in Korea have experienced a decline in sales, with revenues dropping by more than 10 percent in the first half of this year.

“Sales of domestic jewelry brands have been declining since the second half of last year, and this trend continues this year,” said an official at a department store. “We don’t expect favorable results for the second half either.”

The main reason for the poor performance of domestic jewelry brands is the polarization of consumer spending caused by high inflation.

Mid-priced domestic brands are losing ground between consumers who prefer to buy expensive luxury items and those who opt for cheaper, high-value products.

Additionally, jewelry, being a luxury rather than a necessity, is more significantly affected by this polarization.

The rise in gold prices has also negatively impacted domestic jewelry brands.

According to the New York Mercantile Exchange, the price of international gold futures for August closed at a record high of $2,467.8 per ounce on July 16. The following day, it reached an intraday high of $2,483.73, setting a new record.

Due to these circumstances, domestic jewelry brands have had to increase the prices of their main products, 14K and 18K gold items, by an average of 20 percent compared to last year.

For example, Stonehenge raised the prices of its gold products by up to 30 percent in May. The price of its 14K One-Touch Earrings, which was previously 388,000 won ($280), has risen by 31 percent to 508,000 won.

A jewelry industry insider expressed the challenges faced by brands, saying that “many customers are deterred by higher-than-expected prices, but we have no choice but to reflect the increased cost of gold in our product prices.”

In response, brands that primarily offer 14K and 18K gold products are now significantly expanding their range of silver jewelry to increase customer accessibility.

They are also replacing their brand muses with young celebrities in their early 20s to attract the interest of Generation Z.

Stonehenge, for instance, has garnered significant attention by selecting the popular K-pop girl group NewJeans as its brand muse.