Sunday, April 08, 2007

A Month’s Salary Spent on Diamond Engagement Ring in U.S.

Below is a research study that was done by the International Diamond Exchange.

Young men spend an average of one month’s salary on the engagement ring for their betrothed, based on recently released figures from the U.S. Department of Commerce and the Diamond Information Center.

The typical first-time groom in American is 27.1 years old and earns about $38,500 annually, according to newly released figures from the U.S. Department of Commerce. The Diamond Information Center (DIC) recently reported that the average ticket for a diamond engagement ring (DER) in the U.S. was $3,200 in 2006. This average ticket is almost exactly one-twelfth of the average wage for a young single American male.

Depending on your source, jewelers typically recommend that a groom should spend at least two months’ salary on a diamond engagement ring, though recently some jewelers have upped that recommendation to three months’ salary.

The following graph illustrates the recent trend in the average ticket for a diamond engagement ring in the U.S. market, according to statistics provided by the Diamond Information Center.

Source: DIC

Diamond Engagement Ring Average Ticket Jumps in 2006

During 2006, the average amount an American shopper spent on a diamond engagement ring jumped by more than 16 percent to $3,200 from the prior year’s $2,750. While research conducted by IDEX Online Research confirms that the average ticket for a diamond engagement ring rose, some of the increase in value reported by the Diamond Information Center is due to a change in research methodology. In prior years, the DIC sampled consumer spending via postal surveys. However, in 2005, it began conversion to internet sampling, and in 2006, virtually all of its results came from a sample of U.S. households conducted via the internet. While roughly two-thirds of all U.S. households have internet access from their homes, the one-third of the households who do not have internet access are generally lower income consumers. Though the DIC researchers apparently made allowances for this sampling disparity, it appears that the results may be biased to reflect the spending by higher income households. This may, in part, explain the jump in some of the DIC’s reported figures.

The percentage change in the average ticket for a diamond engagement ring in the U.S. market is illustrated by the following graph.

Source: DIC

Source: DIC

While the overall average ticket for the diamond engagement ring market showed significant growth in 2006, not all merchants registered gains. Tiffany & Co., the world-renowned jeweler, said its average diamond engagement ring ticket was $10,400 in 2006, flat with 2005.

Blue Nile’s estimated average ticket for diamond engagement rings fell slightly to $5,600 in 2006 from $5,700 in 2005, largely due to the company’s strategy to cut prices of its diamond jewelry in an effort to boost sales and leverage expenses.
Engagement Ring Market Grows

Last year, diamond engagement ring sales were $6.2 billion in the U.S., up 8 percent from the prior year according to the DIC. This represented about 17.6 percent of total diamond jewelry sales. This was up slightly from the prior year’s 17.2 percent of sales, based on restated numbers. The DIC also restated the size of the diamond engagement ring market, based on its new research methodology. In the past, it had estimated that diamond engagement rings were slightly fewer than 15 percent of total diamond jewelry sales; its new research shows that diamond engagement ring sales are really closer to 17-18 percent of diamond jewelry sales.

The table on the left summarizes new and restated numbers for the U.S. diamond market and the diamond engagement ring market.

More Brides Receive A Diamond Engagement Ring

Diamond engagement ring penetration continues to rise. While the DIC did not formally release diamond engagement ring penetration for 2006, IDEX Online Research estimates that 84 percent of all brides-to-be received a diamond engagement ring, up from 83 percent in the prior year. Historically, just over 80 percent of all brides-to-be – or about four of five brides – received a diamond engagement ring.

The following graph illustrates the trend in engagement ring penetration among brides-to-be in the U.S. market. The trend line on the graph shows that diamond engagement penetration rates have risen over the past seventeen years.

Source: DIC

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