New Resolution

As sales figures for the 2009 holiday season get tallied up, jewelers are collectively both holding their breath and heaving a sigh of relief. It wasn’t nearly as bad as it could have been, considering the black cloud still lingering from 2008’s debacle, the freak snowstorms that shut some retailers down at the height of the shopping season and the bitter cold that kept shoppers at home. Actually, many stores are up over 2008 numbers, and anticipating, however far off, an end to the recession.

Better Holiday Sales

“Holiday 2009 really felt like a selling season,” said Amanda Coleman, assistant general manager at Nelson Coleman, located in Towson, Maryland, and serving the Greater Baltimore Metropolitan Area. “We had a 17 percent increase in holiday sales from 2008. The best part was the overall feeling we had from our customers. The worst part was waiting for our season to begin. It seems that Christmas music starts earlier every year, but our sales season seems to start later.”

Sales were also good down South, though weather proved to be an issue. “Our holiday season for 2009 had wonderful store traffic, but the weather in the last part of the month, with heavy rain and flooding, made our totals a little down from last year,” said Mark Sanders, executive vice president of Sissy’s Log Cabin in Pine Bluff, Arkansas.

Weather also affected traffic in the Midwest, though sales squeaked in above 2008 figures. “We’re going to be up a little for 2009,” said Don Hamann, president of Sartor Hamann, with three stores in Nebraska. “Not a tremendous amount, but it’s good news. I think the traffic was down. We had one hell of a snowstorm the week before Christmas, and we had to close for two days. But overall, sales were up, and our traffic was good, though not wonderful.”

Traffic was also an issue in California. “We did finish the 2009 holiday season a little above where we were in 2008,” said Rick Velayo of Gleim the Jeweler in Palo Alto, California, and a former president of the California Jewelers Association. “It was a challenging season. The foot traffic sure felt like it was down in 2009. Thank goodness for the last few days, as many seemed to have waited until the last minute to purchase.”

Recession-busting Strategies

In order to compensate for reduced traffic, stores are adjusting their tactics to meet the changing needs of their clientele. “2009 holiday was overall ahead of 2008 by 20 percent,” said V. Paul Michaels, president of Michaels Jewelers, with 12 stores in Connecticut. “And in 2008, we were ahead of 2007, but that’s because we took on a lot of lower-priced lines. Fine jewelry is still our core business, but we added lower-priced products. People will say I’m crazy, but I think we will do well selling lower-priced products and higher-priced products to the same consumer. Our Pandora customers are trading up to Hearts on Fire. I know some jewelers who will agree with me, and others who won’t. There are some who say, ‘It’ll be a cold day in the equator before we ruin our fine name.’ But I don’t think this is going to ruin our name, and it’s how we managed to get past this year.”

Michaels is not the only retailer to take on more price-conscious products. “The biggest concern would probably be, how can we continue to develop new clients and keep them interested,” said Velayo. “We are addressing this by looking to alternative metals and some lower price points. We did take on Pandora in 2009 and we have seen an increase in traffic and sales as a result.”
An End in Sight

So when will the recession end? Opinions differ. Said Sanders, “I think the country will move out of this recession in late 2010 or early 2011.”

Hamann is less certain. “You always want to be optimistic, but you want to be truthful too,” he said. “You have to live in the real world. I think 2010 will be an average year. I hope it won’t be worse than average.”

According to Michaels, it’s already getting better. “I think we’re coming out of the recession now,” he said. “We just experienced it, for the 2009 holiday season, and with some of our high-end brand lines, a 20 percent sales increase. The people who had money are starting to see their money coming back, and there’s a pent-up demand.”

Coleman agrees. “I think everyone has heard different projections” regarding a possible end to the current recession, she said. “But it already feels like we’re coming out of the recession as a company; it’s a really great feeling.”
The outlook is also sunny on the West Coast. “I think the upturn will begin this summer,” said Velayo. “Just a gut feeling, really, but I do think this will be the year that things start to turn.”

The Marketplace

•     Round and princess are the top-selling shapes, though in estate sales, marquise cuts also are moving.

•     1 carat and light carats are the best-selling weights.

•     SI1 is the most purchased clarity and, according to one retailer, SI is the new VS.

•     H-I is the top-selling color range.

•     In settings, 14- and 18-karat white gold currently outsells platinum.

Article from the Rapaport Magazine - February 2010. To subscribe click here.