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Stagnant levels of household wealth, high unemployment rates and unclear economic conditions resulted in low disposable income levels in the five years to 2012. With less discretionary spending money available, American consumers cut back on their purchases of luxury goods, including jewelry and watches, according to IBISWorld industry analyst Justin Waterman. Retailers' revenue subsequently declined, which caused them to reduce inventory traditionally purchased from jewelry and watch wholesalers. As a result, the Jewelry and Watch Wholesaling industry's revenue suffered from falling downstream demand, declining at an average annual rate of 1.1% to $44.1 billion over the five years to 2012. However, as downstream demand increases, revenue rises. Revenue grew 1.2% in 2011 and is expected to rise another 2.3% in 2012.

In addition to weakened downstream demand, wholesale bypass – when manufacturers sell directly to downstream buyers - further decreased revenue in the Jewelry and Watch Wholesaling industry, Waterman said. Over the five years to 2012, discount retailers and supercenters like Walmart and Costco have become more willing to purchase directly from manufacturers and omit the wholesale intermediary to achieve higher cost savings. This reduced the number of supply contracts available to wholesalers and reduced industry profitability. Profit margins are expected to drop during the five years to 2012, forcing weak wholesale operators to exit the industry. As a result, the number of enterprises is expected to fall from 30,751 firms in 2007 to an estimated 25,329 in 2012.

Led by growing downstream demand, the wholesaling industry is forecast to grow in the five years to 2017. Growing consumer sentiment and household disposable incomes will encourage consumers to spend on industry items that they had delayed buying during the recession. In addition, rising import levels will likely strengthen the role of wholesalers as distributors. This incentive will boost industry demand as retailers turn to wholesalers to replenish their inventories. Through 2017, revenue is projected to increase. For more information, visit IBISWorld’s Jewelry & Watch Wholesaling in the US industry report page.

After struggling through poor economic conditions and unfavorable trends like wholesale bypass, revenue will begin to climb upward again. Over the next five years, retail demand will pick up, bolstering demand for industry products. Still, downstream demand will remain volatile, with operators consolidating to achieve profitability. For these reasons, industry research firm IBISWorld has added a report on the Jewelry & Watch Wholesaling industry to its growing industry report collection.