The first two months of 2020 were relatively strong for retailers. Then, in March, everything changed. As the COVID-19 pandemic spread across the United States, government officials called for a shutdown of all non-essential retail establishments, leaving jewelry store owners scrambling to salvage their business in any way they could. Even online retailers struggled, because widespread job losses meant less disposable income. As weeks of quarantine piled up, jewelers had to resign themselves to the prospect of an uncertain future for their clients and themselves.
Difficult choices
After the coronavirus closed New York, retailers found themselves making hard decisions.
“I took all my jewelry out of the [brick-and-mortar] store and moved it to a vault,” said Tara Silberberg, owner of The Clay Pot, which is currently selling online-only after over 40 years as a physical location in New York. “We closed the store on Friday, March 13. And I won’t reopen it [in Manhattan]. I feel like it’s the right move for us.”
Stores were also shuttered in Texas, which didn’t feel the full impact of the virus until later in March.
“The beginning of the COVID-19 effect for us [was] the second week of March,” said Matt O’Desky, owner of The Diamond Room, which has locations in Austin and Dallas. “Come the third week in March, which was spring break, Disney had announced their shutdown, and companies were slowly starting to close. That’s when we stopped taking appointments. Business after that never recovered for the rest of the month.”
Online retail suffered as well. “In mid-March, American consumers began to realize that the virus was not under control, and [brick-and-mortar] traffic started to drop precipitously,” said Ajay Anand, CEO of Rare Carat, a diamond-sourcing website for consumers. “Some of that brick-and-mortar demand will accrue to e-commerce, but we still expect e-commerce to be net down for 2020. Companies with large fixed costs will not survive.”
New rules
Silberberg is planning to do eight virtual trunk shows online before Mother’s Day. “Me and my manager are now working remotely,” she explained. “And I’ve asked everyone who’s ever worked for me as an employee to help put together a section of my website called ‘We Made It.’ We launched that on April 10 and already sold 30 pieces. And I’ve gotten so many nice emails. My brain is exploding with so many ways to make things better. And I’m talking to stores that don’t have websites, and helping them build that out.”
O’Desky said his company was making adjustments to its business, but he had no plans to close. “As a company, we immediately decided not to shut down, and to offer virtual appointments,” he said. “In addition, we’ve added e-commerce, frequent emails to our clients, and personal texts to see if there’s anything anyone needs. Custom has been our savior, and the virtual appointments have been fairly simple for custom.”
What happens next
The industry will likely be feeling the effects of the pandemic through the holiday season, and possibly into 2021.
“We anticipate consumer demand for diamonds to be down massively throughout 2020,” said Anand. “Brick-and-mortar demand will crater for the remainder of the year, as we believe the virus will still be in circulation, barring a therapeutic miracle. And even if stores reopen, consumers will not feel safe visiting.”
Small businesses will be especially vulnerable. “You’re going to lose a ton of small stores,” said Silberberg. “This is going to kill all the micros. And you’re going to have a big backlash against people selling imports. Stores that have…goodwill with their customers and sell American-made and support local will do okay. But the companies that are just venture-capitalist backers with no business experience won’t.”
It’s not all grim, though. “No matter what happens, women and men will still want to get engaged, and still celebrate the special occasions in their life with diamonds and jewelry,” O’Desky concluded.
Article from the Rapaport Magazine - May 2020. To subscribe click here.