Contents:

Chapter 1: Introduction Research Objectives Methodology Focus Group Research Quantitative Jewelry Consumer Survey & Sample Demographics Gender Figure 1: Gender of Survey Samples Age of Respondents Figure 2: Age of Survey Respondents Household Income Figure 3: Household Income of Survey Samples Other Demographic Characteristics Luxury Jewelry & Watch Buyers Data Chapter 2: About Jewelry Market Sales & Growth Jewelry Market Grew 6.5 Percent in 2006 to Reach $62.2 Billion Figure 4: Jewelry and Watch Industry Sales, 1997-Proj. 2010 Fine Jewelry Sales Continued Strong in 2006, but the Big News In the Jewelry Market Was Jewelry and Watches for Men Figure 5: Jewelry and Watch Sales and Growth by Major Category, 2001-2006 Growth Categories in Fine Women's Jewelry Rings Were Earrings, Charms and Other Types of Jewelry, such as Pins/Brooches Figure 6: Women's Fine Jewelry Sales by Item, 2003-2006 Men's Fine Jewelry Boomed in 2006 Figure 7: Men's Fine Jewelry Sales by type of Item, 2003-2006 While Sales of Rings and Other (Pins, Charms) Declined, Necklaces Bracelets and Earrings Were Growth Categories in Women's Costume Jewelry Figure 8: Women's Costume Jewelry Sales by Item, 2003-2006 Fine/Formal Watches Captured Growing Share of Market in 2006 Figure 9: Fine and Costume Watch Sales, 2003-2006 Gold Jewelry Was Most Popular in Women’s Fine Jewelry Figure 10: Women's Fine Jewelry Sales by Metal, 2003-2006 Gold Was Tops in Men’s Fine Jewelry Too Diamonds Are a ‘Girl’s Best Friend’ Figure 11: Women's Fine Jewelry Sales by Gemstone, 2003-2006 Men Like Diamonds Too Figure 12: Fine Men's Jewelry Sales by Gemstone, 2003-2005 Jewelry Stores Regain Share of Market on Strong Growth Figure 13: Jewelry Sales by Channels of Distribution, 2003-2006 Projections of Jewelry Sales into the Future Chapter 3: About Jewelry Consumers and Their Purchases About Half of U.S. Consumers Purchased Jewelry Figure 14: Jewelry Purchase Incidence, 1999-2007 Type of Jewelry Bought Figure 15: Type of Jewelry Bought, 2007 & 2004 Jewelry & Watch Buyer Demographics — Key Target Market Is More Mature Women with Higher-Income Figure 16: Demographic Distribution of Jewelry Segment Buyers, 2007 Demographic Distinctives in Type of Jewelry Bought Women's Fine Jewelry Buyer Demographics Women's Costume Jewelry Buyer Demographics Men's Jewelry Buyer Demographics (both fine and costume) Women's Watch Buyer Demographics (both fine and costume) Men's Watch Buyer Demographics (both fine and costume) Summary of Jewelry and Watch Buyer Segment Demographics Men Mostly Buy Jewelry as a Gift; Women Mostly Buy Jewelry for Themselves Figure 17: Percentage of Jewelry Bought as Gift Figure 18: Percentage of Category Purchases as Gifts by Gender, 2007 Price must be right to buy jewelry as a gift Men tend to spend more on a gift than the female recipient thinks is appropriate Women need to accompany men to select gift Occasion of gift impacts selection Joy of gifting is seeing how much the item is appreciated Some stores are right for a gift, while others are not Selecting the right gift item can be a challenge Sizing is an issue in buying jewelry as a gift Thinking about the next gift Matching pieces appreciated About Total Jewelry and Watch Spending in Past Year Total Spending in 2007 by Demographic Segments Figure 19: Total Spending on Jewelry and Watches, 2007 Typical jewelry buyer spent 8.2 percent more in 2007 as compared with 2004 Details about Total Annual Jewelry and Watch Purchases by Gender Figure 20: Summary Jewelry and Watch Purchases Past Year by Gender, 2007 (Number of jewelry items bought; total amount spent and total purchase incidence by category) Comparative Total Jewelry Purchases by Gender in 2004 Figure 21: Summary Jewelry and Watch Purchases Past Year by Gender, 2004 Total Annual Jewelry and Watch Purchases by Age Figure 22: Summary Jewelry and Watch Purchases Past Year by Age, 2007 Total Annual Jewelry and Watch Purchases by Income Figure 23: Summary Total Jewelry Purchases by Income, 2007 Male Purchasers Have Slightly Greater Jewelry Market Potential Most Jewelry Shoppers Expect to Spend the Same Next Year Figure 24: Spending Trends on Jewelry in Next Year Chapter 4: About Most Recent Jewelry Purchase Comparing 2004 survey results with 2007 results Jewelry Purchases Linked to Gift-Giving Holidays Figure 25: Date of Most Recent Jewelry Item Purchased, 2007 What Motivated Most Recent Jewelry Shopping Trip Figure 26: What Motivated Most Recent Jewelry Shopping Trip, 2007 Most Shoppers Bought Two Items during Their Last Jewelry Shopping Trip Figure 27: Number of Items Bought During Last Jewelry Shopping Trip, 2007 & 2004 Total Spending on the Last Jewelry Purchase Figure 28: Spending on Last Jewelry Purchases, 2007 Multi-Item Buyers Spent More Figure 29: Jewelry Spending on Last Purchase and Total Annual Spending by Number of Pieces Bought in Last Purchase, 2007 Majority Bought Last Jewelry Item on Sale; Many Bought Last Item as Gift Figure 30: More About Last Jewelry Purchase Made: Bought on Sale and Bought as Gift by Gender, 2007 Women’s Jewelry Is Most Frequently Purchased Jewelry Category Demographic Distinctives in Recent Category Purchases Necklaces, followed by Earrings and Rings Top the List of Most Recent Women’s Fine Jewelry Item Purchased Type of Women’s Fine Jewelry Bought Figure 32: Women's Fine Jewelry Most Recently Bought by Type of Item, 2007 & 2004 Fine Gold Is the Metal of Choice In Fine Women’s Jewelry Figure 33: Women's Fine Jewelry Most Recently Bought by Type of Metal, 2007 & 2004 Diamonds Are a Girl’s Best Friend when It Comes to Fine Women’s Jewelry Women's Costume Jewelry Necklaces and Earrings Grew in Popularity Figure 35: Women’s Costume Jewelry Most Recently Bought by Type of Item, 2007 & 2004 Rings Top Men's List of Favorite Men's Fine Jewelry Items Bought Recently Type of Men’s Fine Jewelry Bought Figure 36: Men's Fine Jewelry Most Recently Bought by Type of Item, 2007 & 2004 80 Men Go for the Gold in Their Jewelry Most Men’s Fine Jewelry Is Metal-Only with No Gemstones Figure 38: Men's Fine Jewelry Most Recently Bought by Type of Gemstone, 2007 & 2004 About Men's Costume Jewelry Purchases About Most Recent Watch Purchases Figure 39: Watches Most Recently Bought by Type, 2007 Gold Watch Is Preferred Figure 40: Fine Watches Most Recently Bought by Type of Metal, 2007 Plain Metal Watches Are Most Purchased Figure 41: Fine Watches Most Recently Bought by Type of Gemstone, 2007 The Typical Jewelry Buyer Spent 18 Percent More on Average on the Last Item Purchased in 2007 as compared with 2004 Figure 42: Spending on Most Recent Jewelry Item Purchased, 2007 & 2004 Style and Design and Buying for a Special Occasion Motivates Most Recent Purchasers of Jewelry Figure 43: Reasons Why Made Most Recent Jewelry Purchase (Source: Jewelry Survey 2004) Gifters Buy For Special Occasions; Self-Purchasers for Style About What Shoppers Look for In Buying Jewelry Piece Clasp that will hold and is secure Gold content True color in gemstones No man-made stones Preferred metal Depends on the occasion Affordable price Place of origin and/or conflict diamonds of little importance About Conflict Diamonds Figure 44: Awareness of Conflict Diamond Issue, 2007 Branding and designer not particularly important Design, presentation and setting Distinctive and unusual design High quality Size of piece Inconsistency of mass-market jewelry Heritage value Personal taste is key About Top Brands in Jewelry Figure 45: Top Jewelry Brands, 2007 About Top Watch Brands Figure 46: Top Watch Brands, 2007 Jewelry Purchases More Likely to be Impulse Driven Figure 47: Percentage who Shopped Around to Compare Prices or Items before Making Last Purchase, 2007 & 2004 Buying Diamonds Takes More Care and Requires More Comparison Shopping Department Stores, Followed Closely by Independent Jewelry Stores, Are Most Popular Place to Shop for Jewelry Figure 48: Where Most Recent Jewelry Item Bought, 2007 & 2004 About Shopping for Jewelry Jewelry shopping is "Special" and "Personal" Get a good price Trust is key Special, unique shopping experience Togetherness makes it special Sales are a motivator for shopping for jewelry Some stores mark up jewelry just to mark it down Self-purchase done on impulse; gift buying is purposeful Independent appraisals are important for higher priced jewelry Customizing jewelry is new specialty Shoppers want more special services and wider selection of items In store lighting can be deceptive Shoppers need knowledgeable salespeople to provide guidance Shoppers want specialized service Superior sales service will pay back in repeat business, more word of mouth Sales people can be a turnoff when shopping for jewelry Shoppers want to shop in a store that has the right price selection Getting a Good Price Is Top Influencer on Places to Shop Figure 49: Why Shopped for Jewelry Most Recently in This Particular Store, 2007 & 2004 About Selecting a Store to Buy Jewelry Trust in the store Close to home & convenient A store that will stand behind the purchase Store with appealing displays and attractive products Chain stores can sometimes get merchandise from other stores Attractive sales make for a good jewelry store While Satisfied with Shopping Experiences, Jewelry Shoppers Were Less Satisfied with Shopping than with the Item They Bought Figure 50: Level of Satisfaction with Most Recent Jewelry Item Bought & Most Shopping Experience What Shoppers Say about their Most Recent Jewelry Shopping Experience Trust is key when choosing a jewelry store Shopping around to find the best item at best price is common Being able to easily return a jewelry piece is critical to confidence in jeweler Internet is favorite way to comparison shop and research new purchases Jewelry customers hesitant to buy off internet or television shopping because they can’t see and touch Television shopping has its appeals to some jewelry buyers Self-purchase of jewelry is a special gift to reward oneself Jewelry was bought in memory of one who had passed away Shopper buys jewelry for two different jewelry wardrobes: one for work and one for play While some shoppers like the variety and ability to haggle at Jewelry Exchange, others are turned off Some jewelers give special services, including ordering special pieces or making custom pieces Travel motivates jewelry shopping with duty-free shops and good prices Jewelry is frequent impulse purchase with shopper attracted by special sale prices Chapter 5: About Pricing of Jewelry The Frugal Jewelry Shopper Price is important in jewelry selection, but Price/Value relationship is even more so The price one expects to pay impacts the store where one chooses to shop Getting a Bargain Is How Consumers Measure their Winnings in the Shopping Game Consumers want a FAIR price, not necessarily the lowest price What Shoppers Pay for Jewelry Provides Parameters for Pricing Jewelry Right Rings are the most expensive women’s fine jewelry item Figure 51: Pricing Parameters: Women's Fine Jewelry Rings also were the highest priced category in men's fine jewelry Figure 52: Pricing Parameters Men's Fine Jewelry Narrower price ranges characterize women’s costume jewelry Figure 53: Pricing Parameters Women's Costume Jewelry Watch buyers spent the most buying men's fine watches Figure 54: Pricing Parameters Watches, Fine and Costume for Men and Women Spending Parameters by Type of Store Figure 55: Range of Spending on Jewelry Purchases by Store Chapter 6: About Where People Shopped for Jewelry Where Jewelry Consumers Shopped for Jewelry in Past Year Figure 56: Where People Shopped for Jewelry in Past Year Specific Stores Where Jewelry Shoppers Frequented Figure 57: Top Ten Stores for Jewelry Shopping Chain Jewelry Stores Figure 58: Chain Jewelry Stores Shopped at in Past Year Women and men have different feelings about jewelry stores Jewelry stores tend to cater to the male shopper more than female Fortunoff's is noted as store that does an outstanding job serving both male and female jewelry shoppers Department Stores Figure 59: Department Stores Shopped at in Past Year Sometimes department stores are not the right store for jewelry Some department stores have fine jewelry counters staffed by trained jewelry people Some department stores have too much similar, uninventive product Department stores not appropriate for more expensive purchases Differences between department store selections and discount department store selections Luxury Department Stores Figure 60 Luxury Department Stores Shopped at in Past Year Fashion & Clothing Stores Figure 61: Fashion Stores Shopped at in Past Year Discount Stores Figure 62: Discount Stores Shopped at in Past Year Television, Mail Order and Internet Sources Figure 63: Non-Store Retailers Shopped at in Past Year Few have ever bought fine jewelry online, while more have browsed for jewelry information online Personal touch is missing online Factors Influencing Choice of Store to Shop for Jewelry Figure 64: Factors Influencing Where to Shop for Jewelry Trust in a store builds loyalty What Is Missing from the Jewelry Shopping Experience? Marketing Profiles of the Top Ten Jewelry Retail Outlets Wal-Mart is Nation’s Number One Jewelry Retailer Macy’s Kohl’s JC Penney’s Target Zales and Zale Corporation Kay Jewelers EBay Tiffany’s Figure 65: Tiffany & Company Jewelry Retail Sales by Type, 2006 Amazon.com Sears & Kmart TJ Maxx Fossil QVC Chapter 7: About the Luxury Segment of the Jewelry and Watch Market Purchases of both Luxury Jewelry and Watches Declined in 2007 Figure 66: Personal Luxuries Purchase Incidence, 2005-2007 Total Spending on Luxury Jewelry Dropped while Spending on Watches Rose in 2007 Figure 67: Personal luxury spending, 2005-2007 Luxury Consumer Spending on Jewelry and Watches by Demographic Segment Figure 68: Luxury Consumer Spending on Jewelry & Watches by Demographic Segments, 2006-2007 Jewelry ? Purchase Details Type of Jewelry Bought Figure 69: Type of Luxury Jewelry Bought, 2006-2007 Type of Women’s Jewelry Bought Figure 70: Type of Women’s Luxury Jewelry Bought, 2005-2007 Type of Men’s Jewelry Bought Figure 71: Type of Men's Luxury Jewelry Bought, 2005-2007 Material of Composition Figure 72: Material of Composition Women’s Luxury Jewelry, 2005-2007 Figure 73: Men's Luxury Jewelry: Material of Composition, 2005-2007 Amount Spent on Jewelry Where People Shopped for Jewelry Figure 74: Luxury Jewelry Shopping Choices Jewelry Brand Usage Figure 75: Jewelry Brand Usage, 2006-2007 Key Influencers for Jewelry Purchases Figure 76: Jewelry Key Influencers for Purchase (2Q2006 Luxury Tracking) Luxury Watches ? Purchase Details Type of Luxury Watches Bought Figure 77: Type of Luxury Watches Bought Material of Composition Formal/Dress Watches Figure 78: Material of Composition Formal/Dress Watches, 2006-2007 Amount Spent on Watches Where People Shopped for Luxury Watches Figure 79: Luxury Watches Shopping Choices, 2005-2007 Watches Brand Usage Figure 80: Watch Brand Usage Key Influencers for Watch Purchases Figure 81: Watches Key Influencers for Purchase (2Q2006 Luxury Tracking) One-Third of Jewelry and Watch Consumers Own One Luxury Watch Figure 82: Luxury Watch Ownership Luxury jewelry purchase motivation Chapter 8: About Jewelry Consumers’ Attitudes and Personalities Attitudes about Shopping for Jewelry Figure 83: Attitudes about Jewelry Attitude Differences Between Men & Women Attitude Differences between Younger vs. Older Jewelry Consumers Attitude Changes from 2004 to 2007 Three Female Jewelry Shoppers and Two Male Jewelry Shoppers Discovered Segment’s Attitudes about Jewelry Figure 84: Attitudes about Jewelry by Personalities The Jewelry Market Is Composed of Three Different Types of Women Shoppers Fashionista Frances Favors Fashion Jewelry But Has Misconceptions about Fine Jewelry Connoisseur Catherine Wants Only the Best and She Is Willing to Pay for It Dime-Store Debbie Buys Only What She Has To and Looks for the Best Deal Field Guide to Female Jewelry Buying Segments Figure 85: Field Guide to Women Jewelry Consumer Personalities Men Are Distinguished by Their Propensity to Spend More or Less Buying Jewelry The Women in Extravagant Xavier's Life Get Lots of Jewelry Traditional Tom Is a Lot Like Xavier but He Is Not Anywhere Near as Extravagant When Shopping for Jewelry Field Guide to Male Jewelry Buying Segments Figure 86: Field Guide to Men's Jewelry Consumer Personalities Chapter 9: About Maximizing Sales to the Jewelry Market Review of Key Business Building Tactics to Increase Sales in the Jewelry Market Next Steps for Jewelry Marketers to Increase Sales and Build Market Share Marketing Opportunity #1: Increasing Gifting among both Men and Women Gift-Givers as Way to Increase Revenues and Build Loyalty Figure 87: Gifters Spending on Jewelry Marketing Opportunity #2: Internet Is a Growing Outlet for Jewelry; Marketers and Retailers Need to Commit to It as a Channel for the Future Internet Is Right at the Top of Places Where Luxury Consumers Shop for Jewelry, along with other things Marketing Opportunity #3: Pricing Is a Powerful Psychological Tool to Get People to Shop and Buy Marketing Opportunity #4: There Isn’t Just One Jewelry Market — Men and Women Represent Two Distinct Markets Driven By Totally Different Needs and Desires Marketing Opportunity #5: Give the Jewelry Customer an Exit Ramp Off the ‘Mass Track’ Marketing Opportunity #6: Jewelry Shopping Is a Special, Highly Personal Experience Marketing Opportunity #7: Branding of Jewelry Is Wide-Open Opportunity, both for Retailers and Marketers Figure 88: Luxury Brand Loyalty Index Appendix A: Jewelry Buyers Survey Questionnaire Jewelry Buyers Survey Questionnaire

Companies Mentioned

- Amazon.com - Ashford.com - Bacarrat - Bailey Banks & Biddle - Banana Republic - Barneys New York - Ben Bridge - Bergdorf Goodman - Bloomingdales - Blue Nile.com - Bradford Exchange - Brequet - Bulgari - Cartier - Casio - Chanel - Chico's - Chopard - Citizen - Costco - Danbury Mint - David Yurman - DeBeers - Di Modolo - Diamiani - Diamond.com - Dillards - eBay.com - Ebel - Fope - Fortunoff - Fossil - Fred Meyers Jewelers - Friedmans - Gap - Gordons - Gucci - H Stern - Harry Winston - Hearts on Fire Diamond - Helzberg Diamonds - HSN - Ice.com - Invicta - Iridesse - Jaeger-LeCoultre - Jareds - JC Penney - Jewelry Exchange - Jewelry TV - Jewelry.com - Judith Ripka - Kay's - Kmart - Kohl's - Lalique - Lenox - Leo Diamond - Littman Jewelers - London Jewelers - Lord & Taylor - Louis Vuitton - Macy's - Marshalls - Mervyn's - Mikimoto - Mont Blanc - Movado - NBC Shop - Neiman Marcuse - Nordstroms - Omega - Patek Philippe - Polo Ralph Lauren - Pulsar - QVC - Raymond Weil - Reeds Jewelers - Robert Lee Morris - Roberto Coin - Rolex - Ross-Simons - Saks Fifth Avenue - Sam's Club - Scott Kay - Sears - Seiko - Sterling Jewelers - Swarovski - Swatch - TAG Heuer - Talbots - Target - The Limited - Tiffany - Timex - Tissot - TJ Maxx - Tourneau - VanCleef & Arpels - Wal-Mart - Whitehall - Wittnauer - Yvel - Zales