Choosing a niche market for a new jewellery brand would involve decisions about what type of jewellery the brand will sell, at what price-point, what the buyer-profile will be and what geographies the line will be sold at. The first step would be to find a prevailing need in a particular segment, or determine whether one would be able to create or enhance desire in an existing category. Whatever the case may be, if you want to make sure you're not hit by some unexpected market-forces, you should start with the all-important 'Market Research'
So, in what direction should you be steering your research, exactly? A good way to start would be to be clear about the basic purpose of your new line. If the main objective of your new venture is high profits and not say satisfying creative urge, for example, you should probably start by looking for a category where there is some gap between demand and supply.
You would do best to work with a marketing consultant and a research agency. Together, you should draw up a questionnaire and approach all demographic segments of jewellery buyers. Ask them questions like: "What are the types and value of jewellery purchases you have made over the last five years?; Is there any type of jewellery you would love to see more of in the market?; What are some of the drawbacks of existing jewellery lines as you see them?; How much would you be willing to pay for a necklace / set, etc?; How much of a premium would you be willing to pay for great designs, making quality?" Answers to these questions will likely give you a lot of insight into the market you should be targeting, be it the age-group, price-point, kind of jewellery or geography.
Once you have narrowed down on a few possibilities, you need to delve into the mathematics of the profitability for you. What are your overheads for store space, designing, manufacturing processes, advertising, etc, in the category options you have narrowed on? How exactly will you be able to match the niche perfectly with a product that is profitable for you? One of the most important decisions you will make will be the pricing strategy. Determining a pricing strategy for your jewellery line should not be an ad hoc decision, because amending price positioning at a later stage is likely to have disastrous consequences on your branding and sales.
Your aim from your research efforts should be to have some clear answers about what kind of product you will be manufacturing, at what average profit per unit, what demographic and psychographic audience you will be selling to, where you will be selling, and what your basic USP and branding strategy will be. Once all this is ironed out, you can dive headlong into production and setting up shop.
Choosing a niche market for positioning your brand need not mean filling a vacuum. You may very well choose to operate in a space that already has healthy competition. But, you will need a unique selling proposition - something that distinguishes your brand from the rest. This can be some broad theme for designs, exquisite quality in an already established genre, modern trend-setting and pioneering pieces, or anything else. All the best for choosing and succeeding in your niche market!