RAPAPORT... Times are hard for luxury in general, and jewelry in particular. In a recent survey by McKinsey & Company, jewelry was one of the luxury products consumers were most willing to forgo post-Covid-19, considering the financial crisis the virus has left in its wake. The question is, how does discretionary spending fit into the “new normal,” and what does the future hold for the average independent jeweler?
Local community jewelers have been hard hit by the pandemic, which essentially cut off their primary source of income for more than two months. As US businesses grappled with mass closures, furloughs and government aid, they worried not only for their own livelihoods, but for those of all the employees who relied on them. Most of all, they struggled with the uncertainty of day-to-day life: With 50 different states issuing different rules for how business could or couldn’t operate, they had to figure out how to keep customers and workers safe while also reigniting consumer sentiment for a product deemed nonessential.
The road to reopening
The days of simply showing up, unlocking the door and turning the store sign to “We’re Open” have passed. Depending on how hard the coronavirus hit their state, many jewelers are taking alternate — and sometimes long — roads to reopening. Some states, like Arkansas, never closed, while parts of the northeast are only able to offer curbside pickup. And then there are New York and Washington, DC, which were still tightly shut as of press time.
“Our governor never shut us down,” says Craig Underwood, who runs Underwoods Fine Jewelers in Fayetteville, Arkansas. “We were one of the few states where things were left open. They pretty much asked that we minimize contact and do the best we could to operate safely, but they didn’t have any hard, strict rules.”
While Underwood did take precautions, closing his door to foot traffic and operating on an appointment-only basis for the first few weeks, others have had
it tougher.
“We’re only open for curbside pickup right now, which is just great,” bemoans Stewart Brandt, owner of H. Brandt Jewelers in Natick, Massachusetts. “I’m walking a $5,000 diamond outside to
go put in somebody’s back seat? I don’t think so.”
Although Brandt has had difficulty selling with the restrictions state leaders have placed on him, that’s a problem other jewelers wish they had.
“We haven’t reopened yet,” reports Caroline Hill, head of Van Scoy Jewelers in Wyomissing, Pennsylvania. “We’re still waiting. Our governor is basically telling us maybe [at a later date] he’ll move us
to a zone where we can maybe open. It’s been horrible.”
Tiny Jewel Box in Washington, DC, also remains closed. While the company has managed a few small sales online, it has not been able to service most customers because the district’s mayor has not yet permitted it, says Grace Tumminelli, its marketing and communications director. Even when the store does get the all clear, it will likely need to operate by appointment only, and later move to walk-in in a limited capacity.
Taking matters into their own hands
Many jewelers are not just disheartened by the long-term loss of business, they’re downright angry — to the point that many have taken matters into their own hands in an effort to save their stores.
“We might not have been given permission for curbside service, but we’ve been doing it,” declares Hill. “I don’t care whether I’m allowed to or not. People have jewelry here, and if they want to come pick it up, it’s their right to come pick it up.”
Gary Long, owner of Gary J. Long Jewelers in Stockton, California, shares Hill’s sentiment. Not only were the rules unclear, he believes, they were also sometimes flawed. While he only received permission to open his store in late May, he “unofficially” opened on May 7, just before Mother’s Day.
“The way I interpret it, that’s not against government rules,” he maintains. “The governor said florists and clothing stores could open up, so I took that to mean stores in which people shop for Mother’s Day, and that was us, so we opened up along with them. And I did it because it was Mother’s Day, and we’ve been closed for seven weeks, zero revenue, nothing. Nothing at all. And I just got tired of listening to the politicians. They’re getting paid, their staff is getting paid, and yet they’re demanding we stay closed. And I just said, that’s it, I’m going to open.”
That frustration is also a familiar feeling for Jimmy Green. The owner of J Green Jewelers in San Antonio, Texas, continued to do business even though his storefront remained closed. He would make rounds each day to the homes of his jeweler and CAD engineer, place things on their porches, and then wait for them to pick the items up. Once they finished working on them, he would stop by and retrieve the goods from their porches, turn around, and make drop-offs to customers by the same method.
“I mean, grocery stores and liquor stores are open, and they can have as many people as they want, and nobody says close liquor stores,” he notes. “Why was it fair that Costco and Walmart were allowed to open and sell anything they wanted, including jewelry and clothing, but jewelry and clothing stores had to be closed? What if you’re a mom-and-pop jeweler and you need a $200 sale to make rent that month, and Walmart and Costco were allowed to sell as much jewelry as they wanted and you couldn’t? How is that fair?”
Brandt, too, has been operating. “If one of my customers calls me up and says, ‘I want to buy something’ — of course.”
Occasionally, it seems, even those in authority might turn a blind eye to businesses running during lockdown.
“One of the people in my store last week was a local police officer,” relates Brandt. “She’s a regular customer and she bid on one of my Facebook auctions and won, so she came in to pick it up.”
Promising sales
The sheer fact that jewelers had someone to open up for in the thick of the virus was good news for business owners. While customer numbers are far from pre-pandemic levels, stores have been seeing promising sales since reopening.
“We had terrific business just before Mother’s Day,” reports Long. “And all this month, since we opened up, it’s been pretty good business-wise.”
While much of the activity has consisted of repairs and cleanings that customers had put off, new jewelry purchases are also high on the list, with many customers feeling celebratory at being out and about again.
“Business is reasonable,” says Joel Siegel, who co-owns Siegel Jewelers in Grand Rapids, Michigan. “Down a little bit from the usual, but not substantially. The first day [after reopening] was one of our best days, and we’ve had people in continuously since then.”
Mills Jewelers in Lockport, New York, was lucky enough to have consistent interest even during the closure period.
“Every week that went by, the phone rang more and more, and more emails and texts came in, so it became nearly impossible for me to manage,” says owner George Fritz. “I had quite a few regular customers that were having a special occasion and would just call and ask me, ‘What do you have in stock, can you send me a picture?’ Some of those were major purchases. I mean, birthdays, anniversaries, those things still happen whether you’re in lockdown or not.”
Reopening his doors proved an even greater boon to business.
“The first day, I felt quite like a McDonald’s drive-thru,” Fritz laughs. “It was very busy, and people were happy. Yesterday, I would say we saw the same number of customers that we would usually see on a given day before the pandemic. I think to myself, ‘Yeah, you might have been kind of busy for the first two weeks, but it’s going to slow down’ — but so far, it hasn’t. It was surprising that we were making sales of jewelry on the street and at the car window. I just didn’t think that was realistic.”
A steady flow of major purchases
Not only are people out and shopping again, but surprisingly many are shelling out more than they were before the pandemic, when business was booming, according to many jewelers.
“We’ve had a variance of 20% to 100% in the number of people coming in compared to our pre-pandemic average,” reports Ed Menk of E.L. Menk Jewelers in Brainerd, Minnesota. “But all it takes is one good sale, and it’s a great day, and we’ve had a bunch of those.”
Green, too, has found that the higher value of purchases is offsetting the lower customer count to some degree.
“We’re steady — I wouldn’t say busy, but there’s always at least one customer in the store, and it’s increasing every day. And while I’m selling all over the board, I’ve made several sales over $50,000.”
Kelly Newton, owner of Newton’s Jewelers in Fort Smith, Arkansas, is also benefiting from customers’ renewed eagerness to spend. While it’s dramatically different from his business in January and February — which broke 106-year records — he’s happy with client engagement.
“Business is, knock on wood, really pretty good,” he says. “Everything we’re selling, for the most part, is pretty good, big. We sold two Rolexes yesterday, and we’re seeing more higher-value purchases.”
The reasons for the higher spending are varied, according to jewelers. While part of it is “freedom” spending, much of it also has to do with the emotional aspect of jewelry — the strong feelings generated by a crisis situation in which so many have lost loved ones and which has taught the world to appreciate personal relationships.
“Our foot traffic is probably 20% to 25% of where it normally is, but value-wise, we’re up to about 75%,” notes Underwood. “People aren’t out buying smaller stuff. When they come in, they’re looking to do a major purchase. And the engagement ring people are coming in, and the anniversaries, and the big birthdays.”
People are also more intent on making a commitment; the fear resulting from the pandemic has accelerated that endeavor.
“We’ve sold a bunch of diamonds — some caraters, carat and a half, even 2 to 2-plus carats,” says Long. “We’ve had a lot of couples coming in looking for engagement rings — more so, I think, than we did before.”
What about funding?
Of course, not all news is good news. The frustration of not being able to open has been replaced by the frustration of employee furlough issues and the ambiguity of how much debt jewelers will face as a result of getting government aid.
While most jewelers found that procuring funds through the Small Business Administration’s Paycheck Protection Program (PPP) was relatively simple and effective, some say it also posed challenges to their operations.
“Many, many, many of my friends who own businesses are having a horrible problem trying to get their employees to come back to work right now, because while they’re getting federal money, they’re getting paid more to stay home than they would be if they were working,” says Green.
Another problem is the limited duration of the funding. While the PPP covers two months of employee wages, many states have been locked down for longer, which means that if owners want to retain employees, they have to bear the burden of payment for the remainder of the time.
“I bit the bullet and paid my employees and kept them going,” says Menk. “While I was able to get some financial help from the government, it doesn’t cover everything. And three, four weeks was directly out of my store’s pocket.”
Additionally, while the PPP helps pay staff, there are still the jewelers’ own needs to consider. “I got the deposit right into my account within two to three weeks of applying,” says Hill. “The problem is, I have to spend about 75% of that money on payroll, and yet I’m not allowed to open my store and can’t make any money. So what am I supposed to do? It’s ridiculous.”
Many jewelers are also concerned about the debt they may incur from the PPP.
“We’re still waiting to see what’s going to be forgiven and what will be rolled into a loan,” says Siegel. “We know what the rules are, but it’s still somewhat fluid, so we are waiting to see how it’s going to shake down.”
Long, too, is uncertain on that score. “I’m curious to see what’s going to happen with the forgiveness part of the loan. I don’t know if they’ve even determined [it] yet.”
An optimistic future
For local jewelers, being the guy around the corner may actually be the best plan for rebuilding. A crisis will often spur communities to rally around their local businesses, according to experts, and loyalty can be a strong motivator.
“I think a lot of people will buy locally now, which is great,” says Long.
Green, who often runs campaigns to help his San Antonio community when they are in need, has seen that caring reciprocated.
“I’ve had an incredible outpouring from the community, wishing me well, coming in my doors, literally so happy to see that I’m open,” he relates.
Newton, meanwhile, has an “if you build it, they will come” approach to getting business back to its normal flow. “It can’t be about money in this environment, because that’s not achievable,” he cautions. “It’s about building relationships. Because it’s going to take a long time to go back to how things were, and right now we’re just going to have to do the best we can. And hopefully it’s good enough to pay all our bills. So far, it has been.”
For him, attitude is important. “I’ve got to choose between being positive and negative, so I’m just going to be positive. If things turn bad, you just work harder, or work differently. You just can’t expect things to stay the same, because we are in a different environment right now.”
In the meantime, some jewelers are prepared to hold out until things get back to a state of normalcy.
“People aren’t going to be coming out in droves like they did before,” says Long. “I think it’s going to take a couple, three, four, five months to recover. Hopefully, it gets better by Christmas time.”
Fritz thinks it may even be sooner, given the business he’s seen so far. “I really believe that by fall, we’ll be close to normal. That’s what I’m hoping for, anyway, if the trajectory continues as it is now.”
Green has a simpler answer for why customers will return to pre-pandemic buying habits sooner rather than later: “As long as men continue loving women, and women continue loving jewelry, we’ll be just fine,” he chuckles.
This is an edited version of an article that appeared in the July issue of Rapaport Magazine.
Image: A jewelry display. (Shutterstock)
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