“Younger and More Diverse” Customers Will Fuel Luxury Jewelry Market, Report Says

By Rob Bates | January 17, 2025

The jewelry sector is poised to grow faster than the overall luxury market, as it attracts a “younger and more diverse client base” that increasingly seeks branded jewelry, according to a new report on “The State of Fashion Luxury.”

The report’s authors, consultants McKinsey & Company and publication Business of Fashion, predicted the jewelry market will grow 4% to 6% in the next two years, making it among the “most resilient” luxury categories (along with leather goods).

Growth in the jewelry sector will be fueled by “rising demand from ultra-high spenders and continuous investment from luxury houses in technology and expertise,” the report said. But it warned that considerable uncertainty remains regarding how lab-grown diamonds will affect the natural gem market and if engagements will rebound post-pandemic.

The study was less optimistic about the luxury watch market, forecasting 2%–4% growth between 2025 and 2027. The so-called “Big Three” watch brands—Rolex, Patek Philippe, and Audemars Piguet—will increase their production capacity in the next five years and be available in more multibrand retailers, the report said.

But traditional watches face competition from smart- and sport watches, according to the report, and the pre-owned market, which has cooled, could continue to put downward pressure on prices.

The study authors don’t see the overall luxury market maintaining the average 5% growth it had from 2019 to 2023—never mind the eye-popping 9% increases it enjoyed from 2021 to 2023. They noted that most of those gains stemmed from higher prices, rather than an increase in volume, as well as the strength of business in China.

But now the Chinese economy has slowed down considerably, and consumers have become wary of constant price hikes.

“As demand surged, brands increased prices but failed to sufficiently adapt their creative strategies and supply chains to meet new scale requirements, thereby weakening their core value proposition and, ultimately, failing to keep their promise to customers,” read the report.

It advised luxury brands to redouble their commitment to quality and craftsmanship, while recruiting new talent and developing new ways to communicate with customers. They also must take care to get the basics right: One-third of aspirational customers surveyed felt the in-store experience has gotten worse.

“I came in [to a store] looking to purchase a watch,” said one U.S. luxury customer quoted in the report. “My adviser was not knowledgeable of the timepiece, couldn’t find a strap, gave me the wrong info. Horrible.”

The report concluded that the industry must use the current “slowdown as an opportunity to reflect and recalibrate.”

“Luxury leaders must play a long game rather than relying on quick fixes to their most pressing challenges,” it said. “Now is the time to take bold risks, rebuild connections with clients, and invest in the critical areas of your business—even if the returns may not be immediate.”

(Photo: Getty Images)