RAPAPORT... The holiday season was a solid one for U.S. retailers, but varied. Some reported a fast and early start that then slowed, while others had a sluggish start that gained momentum in the last few weeks. Some sold at lower price points but had more transactions, while others saw sales of their more expensive pieces jump.
Busting the Internet
Most retailers have something unique that helps them break the commoditization the internet has bred in diamond retailing. Bill Honeycutt, gemologist and manager of Begeman’s Jewelers in Willowbrook, Illinois, saw sales start a little earlier than usual, with the first two weeks of December 2006 a little bit better than the first two weeks of December 2005. It was spread out, with the usual rush at the end. He thinks the relatively mild weather meant shoppers were out more. Diamond sales were down, with solid staples such as diamond solitaire earrings and bracelets somewhat soft, but Journey necklaces did well.
Honeycutt has found that one way Begeman’s can differentiate itself from online retailers is in colored diamonds, because colored gemstones are not as standardized as white. “Color is in the eye of the beholder,” he said, adding that the proof of that can be found with any woman who has tried to match a red skirt to a red blouse. “I advise a customer who is choosing between a white diamond and a colored gemstone, but can only afford one, to buy the colored stone because color is much more subjective and no two colored gemstones are alike. Diamonds are easier to buy online because they’re more of a commodity.”
For Valentine’s Day, Begeman’s will again market what has become its trademark, a jeweled Hershey’s kiss —“the kiss that lasts forever” — and a three-stone diamond heart the store makes in-house.
ExcitementMark Levinson, owner of Levinson Jewelers, Plantation, Florida, described his store’s holiday season as “very exciting,” saying that they sold more of the larger, more expensive pieces, many with natural colored diamonds. Colored diamonds predominated in jewelry — pinks, cognacs and yellows mixed with whites, “things that are a little more exciting and different and unique,” according to Levinson. White diamond jewelry sold well and diamonds overall were up.
For Valentine’s Day, Levinson is focusing its marketing on romance, with an emphasis on heart-shaped pieces and colored diamonds. Business remains strong and steady, helped in part by the fact that snowbirds have arrived and are shopping. “We have a very strong, upbeat attitude for the coming year,” he said.
Diamonds did well at Traditional Jewelers, Newport Beach, California, where owner Marion Halfacre said holiday business was up over last year, with diamonds doing very well, particularly diamond solitaire earrings, pendants and bigger diamonds in general. As always, most of the store’s diamond sales were white diamonds, but it also sold more colored diamonds than usual, pieces such as yellow earrings and pink bracelets.
Sid Stevens, chairman of Sid Stevens Jewelers, Albany, Oregon, said that his store’s holiday sales were as good as in 2005, which was the best year the store had ever seen. Diamonds, as always for the store, did better than other jewelry.
Pendants sold “incredibly well,” said Stevens, and he expects those to continue to do well. Earrings and rings are also doing well and he is seeing a fair amount of demand for right-hand rings for women, especially those featuring clusters of diamonds instead of large stones.
Stevens Jewelers always advertises aggressively for Valentine’s Day. “It’s like stepping on the gas pedal; you’ve got to keep your foot on the pedal to make the car go,” said Stevens. About half of the store’s business is custom work, according to Stevens.
Josh Jennett, owner and president of the Jewelry Cache, Anchorage, Alaska, had a fast and early start for the holiday season. He sold all of the inventory he’d bought for the holiday season before it really began, replenished his supplies and then saw sales slow. The store had had a very busy summer; Jennett expected that momentum to continue, but it did not.
The good thing, he said, is that a disappointing holiday season no longer is the disaster it could have been 20 years ago. He said his store and other jewelers have managed to round out their business so that the all-too-brief holiday period doesn’t make or break the year for a store.
Diamonds as a whole did very well for Jennett, with diamond solitaire earrings continuing to be “huge.” He expects Valentine’s Day to be strong, but not set any records. Overall, he expects 2007 to be a good year and thinks that the 2007 holidays will be stronger because he sees a cyclical nature to the holidays.
The Marketplace• The internet keeps squeezing margins.
• Gift cards show some growth but are not a major part of the business.
• Wholesale prices stay firm.
• Big and rare diamonds are available, but can take time to locate.
• Response to Journey diamonds is mixed—some stores see strong consumer response, others very little.
• “Blood Diamond” movie causes some conversation but appears to have little or no impact on sales.
Article from the Rapaport Magazine - February 2007. To subscribe click here.