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U.S. Retail
By Lara Ewen
This past summer was slower than even the most seasoned retailers expected, although larger-ticket sales made up for the decrease in traffic. While early fall was still too soon to begin seeing holiday traffic, businesses made certain that inventories were fully stocked for the coming holiday season. But even with months of planning, most retailers said they were uncertain about the coming months, since December 2014 was disappointing for so many. But even with less-than-expected traffic, there were bright spots, as larger stones and a healthy engagement business buoyed third-quarter sales, hopefully paving the way for a solid finish to an unsteady year.
While most stores acknowledge that summer is always slow, this year seemed to have been more unstable than usual, with unexpected highs and unprecedented lows. “July was horrible,” said Lance Buttars, owner of Molinelli’s Jewelers in Pocatello, Idaho. “July is never a really strong month, but this year it was alarmingly slow. It was, ‘what is going on?’ slow. Then August was incredible, almost like Christmas. August is typically a slower month, but this year, July was unusually slow and August was unusually busy. At least August was better than July. Then September started out pretty typical, and we’ve been extremely busy ever since.” Of course, August was still a quiet month for many retailers, and most took it in stride. “August was quiet, but we’re having a pretty good year,” said Russ Varon, co-owner of Morgan’s Jewelers, with two stores in Southern California. “We’re up over 2014. But all we’re selling is engagement rings and watches. We’re not selling fashion jewelry, but Rolex is still strong. Fashion is only for holidays and special occasions. The price has gotten high and people are dressing more casually. On the other hand, diamonds 2 carats and up are selling in engagement.”
Although a recovering economy has led to larger single-item purchases, it hasn’t brought in significant increases in traffic. “Things are slow, and a ton of people are still worried, but the economy is not bad right now,” said Patrick Larkin, manager of Burri Jewelers in Cheyenne, Wyoming. “People are still buying, but it feels iffy. Then I’ll look at my numbers and see that they’re not that off. People are buying bigger stuff, but there’s not a huge margin on the more expensive stuff. I’m making money, but I’m not making what I used to make.” Some stores, though, are facing tough times due to particular local economic issues. “2015 has been a bit rough,” said Eric Wagner, co-owner of Showcase Jewelers, with two stores in Kansas. “We are in an oil and farming community, and with the recent downturn in oil prices, and the drought we’ve been in, things have definitely been tough. Our bridal sales have hung in there and may even be up a bit, but lower price-point items that usually sell for anniversaries, birthdays and the like have dropped significantly due to the layoffs in the oil fields.” Still other stores never saw a slowdown at all. “Business is going well,” said Bill Jones, president of Sissy’s Log Cabin, with three stores in Arkansas and one store in Tennessee. “This year we’re up considerably over last year, partly because we recently opened a new store, but also because diamond and diamond engagement are doing well, and Rolex is doing extremely well. So is yellow gold. And we’ve moved more strongly into estate jewelry. We have a lot of fashion through the estate counter, and estate has so much more value for the dollar than newer items.”
At this point in the year, almost every store buyer said inventory was all set for the coming seasonal holidays. Some even indicated that there wasn’t much additional buying to be done this year, because stock was moving so slowly. “The stores are so overloaded with goods,” said Varon. “I’m overloaded with inventory. But I hope we’ll end the year up. Last year, we barely eked out our numbers at the end of the year. It all depends on Christmas.” Buttars also expressed cautious optimism that the year would end on a high note, but voiced concern that the path there would be rocky. “We just had a planning meeting for holiday, and in fact I was stocked up so much that I didn’t have to buy much,” he said. “We had a lot of inventory. Our holiday last year was on par with previous holidays, and we were up for the year then, and we’re up for the year now. I anticipate holiday to be iffy because of the 2016 election. And the weather has impacted us for the first time this year. I quit following the gold market and the stock market, because it doesn’t matter to me as much as the weather. But I think people still hold their breath. That said, in the end, we’ll end the year up.”Article from the Rapaport Magazine - October 2015. To subscribe click here.
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