The value of tangible assets may change in a recession but the intangibles are what matter more in such times.
This is likely the underlying cause of the phenomenon that has taken the jewellery industry by surprise.
In spite of the downturn, the sales volume of jewellery for special occasions such as engagements, weddings and anniversaries has kept up and, in some cases, even increased.
'Relationships matter even more now. More people are tying the knot. The last six to eight months has seen a boom in the wedding industry,' said Suresh Hathiramani, vice-president of the Diamond Exchange, Singapore. He believes that regardless of the economic situation, there is a market for such jewellery and this is an opportunity for local jewellers to look in this direction.
In fact, sentimental value may be worth more in the eyes of many now, especially in the form of traditional jewellery.
In a bid to bring traditional jewellery into the spotlight, this year's Singapore International Jewellery Show, which ran until yesterday at the Suntec convention centre, boasted a highlighted showcase of peranakan jewellery in its VIP lounge area.
The vintage pieces that have been passed down from our ancestors may not be such white elephants after all, as the recession opens the eyes of consumers to their true values.
Like relationships and kinship which do not depreciate tremendously in value in a recession, gemstones and diamonds alike saw a less steep decline in value as compared to other asset classes. For example, the value of gemstones and the value of diamonds fell by about 10 and 25 per cent respectively, compared with the lows seen in the equity markets.
Savvy investors are picking up on this and according to the World Wealth Report 2009, high net worth individuals in Asia are investing 22 per cent of their wealth in jewellery, gems and watches.
'With the financial crisis, as assets are being re-valued, people begin to realise the value of inherited jewellery. Pieces they might have previously deemed as old-fashioned are beginning to have a new meaning. This brings about a greater sense of belonging to their roots, a greater sense of continuity,' he said. 'I expect traditional jewellery to make a comeback.'
However, Ho Nai Chuen, president of the Singapore Jewellers Association and managing director of On Cheong Jewellery, begs to differ. He feels that unlike the older generations who viewed jewellery as assets and stores of value and invested in pieces that contained more pure gold, the generation of today are more adventurous in their jewellery tastes, exploring precious stones and pearls.
According to him, the recent years have seen a 60 to 70 per cent decline in the sales of pure gold jewellery. 'These days, buyers are geared towards design and are less focused on the composition of gold,' he remarked.
Steven Choong, chief executive officer of Degem Singapore and DeGem Bhd, agrees. 'The jewellery industry is shifting. Today, jewellery is becoming more of a lifestyle than a mere luxury,' he remarked.
While industry experts may not agree on a common trend, they unanimously feel that creative direction holds the key to survival in the long run.
'Our local brands need to create their own individual style and brand appeal to compete in the long term,' said Mr Hathiramani.
'It is better to look into design than a mass-market strategy in the long run,' advises Mr Ho. 'Many of our local jewellery retailers operate a chain-store concept, targeting the middle-income group. The recession has affected the working class and these retailers have been hit hard.'
For example, the acquisition value of jewellery has taken a hit as consumers have taken a more conservative stance on consumption, especially in the luxury sector.
Looking ahead, however, the outlook for the sector remains positive. 'Singapore has potential to become a jewellery hub for trade buyers in the near future,' said Mr Ho.
Industry experts expect the sector to bounce back and prosper within the next two to three years with help from the predicted positive impact of integrated resorts.
'I expect the jewellery industry will see a surge across all categories as it capitalises on a greater consumer base as a result of increased tourism,' said Mr Hathiramani.
