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March 2008 - Vol. I, Issue 7

Polygon MonitorThe Gems and Jewelry Indicator

A DMCC initiative

Infocus

Online Jewelry Sales in USA

Holiday Season Sales up, despite concern over economy

Recessionary Fears in America

With a marginal growth of 0.6 percent in the last quarter of 2007, the US economy registered its worst year since 2002. The economy has been reeling under the housing market slump, credit squeeze, subprime crisis and stock price declines on Wall Street.

Despite successive interest rate slashes, consumer spending in the fourth quarter declined to 2 percent, down from 2.8 percent recorded in the previous quarter. The Holiday season was unable to bolster consumption, sales dropped by 0.4% at U.S. retailers in the month of December.

A consumption-driven US economy thrives on credit. Americans often spend more money than their expected income. The subprime losses have led to a credit squeeze and triggered a slump in the housing market.

US retailer’s JC penny witnessed a sales decline of 4.1% to $6.4 billion in the fourth quarter of 2007. Poor sales of fine jewelry were partly responsible for the decline. Zale, a jewelry retailer reported a 31% decline in profits for their second quarter ended Jan 31, 2008, following a significant fall in jewelry sales during the 2007 holiday season.

Growth in Online Shopping

However, a closer look at retail performance reveals a rather startling dichotomy. While retail stores have faced the brunt of an imminent recession, online retailing fared pretty well. In fact, certain online players have enjoyed record profits in the fourth quarter of 2007.

Diamond and Jewelry online retailer Blue Nile Inc experienced a 23.3% growth in sales to $111.9 million, compared to $90.7 million in the fourth quarter of 2006. For the full year (ended Dec 30, 2007), Blue Nile reported net sales of $319.3 million, an increase of 26.9 percent from fiscal year 2006.

However, Blue Nile does expect 2008 to be a

difficult year for the luxury retail sector and has lowered its profit expectations for current year.

Diamond sales on its jewelry and watches store at Amazon.com witnessed a 100 percent growth in the fourth quarter 2007, compared with the same quarter of 2006. The Seattle-based internet retailer said that everything

from pendants to stud earrings to create-your-own engagement rings were extremely popular amongst customers.

In addition to diamond jewelry, gemstones too did extremely well. 14k white gold coated Swiss blue topaz teardrop earrings, 14k white gold round blue topaz and 14k yellow gold channel set round coated blue topaz hoop earrings were top sellers in the gemstone category.

Strong Online Holiday Shopping Season

Online retailers enjoyed a wonderful holiday season with more than $28 billion spent online during the first 57 days (Nov 1 to Dec 27) of the holiday season, a 19 percent gain versus the corresponding days last year.

However, the 19 percent growth in the holiday season was lower than the 25 percent growth a year ago. A couple of factors can explain the relatively smaller increase. Firstly, the growth in the previous season was off a smaller base as compared to this year. Secondly, general recessionary fears that affected retail consumer spending affected online spending too.

“Green Monday” (Monday, December 10) was the heaviest individual spending day of the season with $881 million in sales. “Cyber M o n d ay ” ( M o n d ay, N o v e m b e r 2 6 ) , represented the first major spike in online spending activity during the season with sales

of $733 million.

Surprisingly, sales even after Christmas were strong. For instance, the day after Christmas saw online sales touch $545million, more than double the sales on the same date last year. This indicates that consumers were taking advantage of the attractive late-season

promotions and discounts offered by retailers to lure consumers at the end of the holiday season.

Outlook on 2008

Given the current economic outlook in US, 2008 will prove to be a challenging year for most business retailers. There exists tremendous uncertainty in the luxury retail sector. Jewelry purchases are often a causality of discretionary spending.

Jewelry and Watches sales in US are expected to touch US$ 65.9 in 2008, according to JIRI (Jewelry Industry Research Institute) a marginal growth of 2.9% from 2007.

Online Jewelry Websites have been cutting into the market share of store-based retailers. Discount promotions, low value segment jewelry and diversity in styles drove online jewelry sales in the fourth quarter of 2007. Despite concerns of recession, Online Jewelers are confident that they will enjoy a sizeable share of the expected watch and jewelry pie of US$ 65.9 this year.

Please call us for an appointment on 022 - 66291000

Polygon.net Pvt. Ltd. • 4th floor, Daulatram Mansion, St. Kittridge Road, Colaba, Mumbai - 400005. • www.polygon.net

• Extremely Satisfied

Neither Satisfied nor Dissatisfied

Extremely Dissatisfied

•

•

• Somewhat Satisfied

Somewhat Disstisfied•

65%26%

4%4%

1%

Source JCOC December, 2007

How Satisfied were you with your Purchase?

2% 2%

20%

7%

15%

5%

13%

6%

29%

Ashford BlueNile eBay Amazon Bidz Ice Overstock JewelryTelevision

Other

Source JCOC December, 2007

Which website did you purchase Jewelry from?

33280

40052

108174

22

Polygon IDCarat

2.01

0.71

0.83

0.507

Polygon Diamond Offers

To Buy

Call us at

(022) 66291000

US

US

IN

US

Price (USD)

332

203

890

1,880

Stock #

D-3

Ro3384

24340190

P12079

H

F

WH

G

ColourShap/Cut

Round

Round

Round

Round

13

SI1

12+

VS1

Clarity

Clarity

VVS

NA

VVS1 or IF

Si2

Polygon Diamond Demands

IN

US

US

IN

Carat Weight

0.50-2 cts & Above 2 cts

1.60 cts

Shap/Cut

Round

Heart

Rounds

To Sell

Call us at

(022) 66291000

20 cts

PAIR 2.5 cts

Round

H - I

H - I

D - G

Colour

Intense Yellow

Polygon ID

137275

3473

4798

137629

Remarks

NA

NA

NA

Eye Clean

THE SECOND POLYGON BUSINESS CONFIDENCE SURVEY (JAN-MAR’08)

Polygon India has recently concluded its Second Business Confidence. The survey revealed that the Indian Gems and Jewellery Industry had a disappointing Oct-Dec ‘07 quarter. Record level gold prices deterred Indian consumers from purchasing gold jewellery during the festive season, the sliding dollar adversely affected diamond companies. The Current Business Index (CBI) for the Oct-Dec quarter stood at 63.3 as

opposed to a CBI of 82.1 in the preceding quarter.

The Polygon Current Business Index assesses the Industry’s views on performance in the last quarter, Oct-Dec’07 with respect to their performance in the same quarter of the previous year Only 51% of the respondents performed better in the Oct-Dec’ 07 quarter as compared to the same quarter in the previous year.

The Industry is optimistic about business prospects in the next quarter and it reflected in a healthier Business Confidence Index. The Business Confidence Index (BCI) for Jan-Mar’08 stands at 75.5. However, it was substantially lower than the BCI of the preceding quarter. The Business Confidence Index for Oct-Dec ’07 stood at 94.64 as the industry was excited about business prospects in the festive season.

The Polygon Business Confidence Index is a barometer that senses the pulse of the Industry’s Business Prospects in the current Jan-Mar’08 quarter. About 65.3% of the respondents indicated that they expect to perform better in Jan-Mar’08 than the same quarter in the previous year.

Gross operating margins for Jewellers and Diamond Companies will be under pressure in the Jan-Mar’08 quarter. Gold prices are expected to remain strong through 2008. Uncertainty over supply of diamond rough

will expose Indian companies to price volatility of the open market.

Uncertainty over the US economy will alter the export landscape of Gems and Jewellery. Companies will look at emerging markets for export growth. About 29% of the Jewellers will export their jewellery to the Middle East. Asia, led by China has emerged as the most popular export destination for Diamond Companies.

Online jewellery shopping is gaining popularity amongst Indian consumers and sellers. Increasing number of companies are looking at selling online to reach a wider target audience. However, Jewellers are still concerned over malpractices prevalent in online jewellery shopping, like copying of designs.

Call us at (022) 6629 1110 to get a free copy of Polygon Business Confidence Report (Jan-Mar’08).

Industry Focus


About Polygon.net

Jewellers BCIBCI Oct - Dec’07

97.7

BCI Jewellers and Diamond Co’s

75.6

9080.5

BCI Jan - Mar’07BCI Oct - Dec’07 BCI Jan - Mar’07

CSI BCI BMEI

63.3

75.5

46.9

Business Indices Overall

We are pleased to introduce you to www.Polygon.net.

Polygon is the Jewelry Industry’s largest marketplace on the Internet, facilitating trade amongst wholesalers and direct to retailers. With over Rs.10,000 crore fresh inventories online, we are a subscription based e-marketplace and do not charge any transaction fee.

Founded in the United States 23 years ago, we have over 3,000 paid retailers onboard in the USA. Our Indian operation allows us to cater to the demand of all Indian retailers and help suppliers sell more efficiently. The tables below are current, live demands and offers from www.Polygon.net.


Polygon Online Price List - Price List as on 15th February 2008 [Prices in US$ per carat] US$1 = INR 39.66

Third Carat (0.30 - 0.49)

IF VVS1 VVS2 VS1 VS2 SI1 I1SI2



D

E

F

G

H

I

J

K

D

E

F

G

H

I

J

K


D

E

F

G

H

I

J

K

One Carat (1.00 - 1.49)

Two Carat (2.00 - 2.99)

D

E

F

G

H

I

J

K

Three-fourths Carat (0.70 - 0.89)

IF

IF

Third Carat (0.50 - 0.69)




D

E

F

G

H

I

J

K

D

E

F

G

H

I

J

K


One and One-half Carat (1.50 - 1.99)

D

E

F

G

H

I

J

K

D

E

F

G

H

I

J

K

Three Carat (3.00 - 3.99)

Nine-tenths Carat (0.90 - 0.99)

Polygon Price List Methodology***

*

The report is based on offer prices quoted on Polygon.net A detailed analysis is done every two weeks on Polygon.net to derive the Price List Each cell is the average price off all diamonds for a combination of the 3 following criteria’s:

• Color : D through K • Clarity : IF through I1 • Carat size spread : 0.30-0.49 | 0.50 -0 .69 | 0.70 -0.89 | 0.90 - 0.99 | 1.00 – 1.49 | 1.5 – 1.99 | 2.00 – 2.99 | 3.00 – 3.99

Lower quality color & clarity are not included because of non-significant quantities in database.

3610

2890

2719

2496

2265

1862

1733

1547

2866

2579

2535

2252

1989

1660

1594

1399

2476

2269

2141

1966

1759

1554

1410

1314

2164

2038

1880

1746

1560

1398

1279

1144

1965

1812

1688

1533

1415

1313

1209

1063

1550

1480

1458

1371

1304

1220

1093

918

1387

1336

1318

1251

1190

1134

976

854

1074

993

951

911

885

820

781

674

7694

5643

5189

4468

4134

3297

2671

2172

5694

5295

4848

4152

3637

3118

2552

2161

4946

4577

4328

3791

3311

2997

2444

1967

4349

4034

3846

3461

3130

2843

2317

1925

3928

3702

3490

3216

2981

2692

2264

1820

3347

3199

2997

2830

2641

2411

2134

1708

2950

2797

2624

2514

2416

2180

1991

1461

1882

1871

1775

1724

1656

1525

1424

1183

17417

12219

10492

8299

6684

5577

4859

4240

13349

11272

9935

7799

6415

5313

4511

3803

10829

9369

8778

7358

6057

4938

4201

3731

8185

7524

7187

6412

5253

4466

3994

3517

6647

6255

6175

5680

4878

4216

3641

3146

5169

4912

4747

4491

4349

3831

3375

2893

4296

4043

3967

3840

3731

3386

3153

2569

2979

2776

2614

2559

2445

2236

1985

1833

31430

22954

21188

15778

13366

10309

8098

6893

25221

22093

19878

15293

11833

9424

7900

6564

21034

18048

16949

13527

11222

9305

7419

5948

16911

15359

13920

12608

10152

8394

6766

5420

13314

12617

12583

11423

9457

7591

6256

5026

10035

9747

9559

9008

8156

7042

5820

4708

8213

7874

7750

7449

6944

6281

5461

4243

4286

3854

3713

3449

3317

3150

2956

2688

6159

4476

4126

3666

3191

2879

2376

1931

4752

4214

3951

3368

2996

2620

2080

1761

4000

3775

3560

3147

2709

2404

2002

1639

3270

3078

2945

2790

2477

2089

1768

1476

2977

2747

2623

2388

2182

1870

1682

1336

2496

2283

2109

1984

1898

1694

1513

1242

1972

1880

1744

1666

1581

1555

1367

1166

1522

1414

1337

1265

1204

1124

1057

899

10393

9528

8006

6361

5494

4592

3649

2960

8266

8177

7898

6005

4919

3935

3450

2937

7060

6212

5899

5031

4707

3872

3418

2656

5612

5284

5151

4463

4209

3564

3067

2432

4823

4782

4659

4278

4020

3361

2906

2317

4336

4143

3998

3761

3515

3092

2706

2180

3753

3610

3471

3269

3129

2758

2459

1971

2460

2401

2293

2263

2035

1990

1792

1269

23514

17310

14957

12040

8810

6946

6111

5061

17906

16287

14333

10763

8528

6605

5664

4645

15453

14019

12541

9892

7746

6536

5619

4444

11894

10865

10451

8929

7131

6257

5096

4256

9717

9201

9009

8157

6753

5793

4643

3815

7636

7340

7129

6446

6095

5326

4434

3589

6100

5850

5637

5283

5078

4581

3946

3334

3637

3373

3208

3159

2957

2808

2561

2210

60096

45733

40232

25927

22275

16264

12870

9476

47587

38140

37683

25133

19350

14505

10791

7077

38758

34615

28743

23746

17900

13119

10015

6911

32610

25420

24026

20202

15856

12186

9260

6539

24491

20884

20360

17013

13744

10575

9116

6167

15953

14688

14325

12654

10822

9301

8048

5878

11451

10588

10468

9933

9341

8097

7130

5755

5574

5275

4924

4701

4466

4354

4343

423

Polygon Members Speak

AD

VT.


Q1 -How were your Online Jewelry Sales/enquiries in International Markets in the last three months?Manisha: Demand for Jewelry from Europe, US and Australia is typically strong during November-December-January. We

received many queries, but sales were lower than the previous years.Vibrant: Our online portal was launched before a couple of months. We have received enquiries from Australia, Singapore,

China, US & Spain.

Q2 - What is the scope of Jewelry E-Retailing in India?Manisha: E Retailing will take its time to cast its spell in India; we still need to develop the trust and mindset to bring buyers to

the Internet to buy jewelry online. However, E-Retailing will makes its presence felt, with a lot of brands and sellers opting in to

go online with international and local portals.Vibrant: Our E-retailing website, vibrantfashion.com was launched just 4 months back, it is a B2C portal and is a fun site where

along with E-Retailing you can register and become a member of the group. E Retailing in India has tremendous scope.

Q3 - In your opinion, what are the benefits and challenges of selling Jewelry online?Manisha: You need to understand the online model, build trust and reach out to more potential customers. The benefits range

from the ease of sowing your inventory without having to carry it around to reaching customers across the globe.Vibrant: You reach a wider target audience. The consumer gets to view jewelry from the comfort of his house. However, the

disadvantages are that consumers like to feel the jewelry before they purchase it and they are not aware of ring sizes making it

difficult to shop online.

Sanjay Gulecha

Hemant Bhai Shah

a dmcc initiative - polygon jewelry€¦ · own engagement rings were extremely popular amongst...

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