RAPAPORT... The reports are in, and they’re grim. Holiday sales across the U.S jewelry industry for 2008 were down and, in some areas, that downturn was significant. Retailers reported being off by as much as 50 percent from 2007 figures, and many of them are going to have to make up for those losses by purchasing less than ever in 2009. This, in turn, will likely affect the manufacturing industry and the upcoming show season. However, some of those same retailers reported that, despite the year-end drop, overall yearly sales figures for 2008 were even with 2007, and that the bridal category is still steady.
December sales down
“December 2008 was a lot slower than in 2007,” said Paul Geiss, owner of Paulo Geiss Jewelers in Charleston, South Carolina. “It was 50 percent down. For the first ten months, we were ahead by 10 percent, but December was just terrible. We were always expecting that last-minute rush, and it never came.”
The situation was similar across the country. “This was the weakest Christmas we’ve had in the last three years,” said Uziel Haimoff, president and chief executive officer (CEO) of IDG Jewelers, which has stores in the Northwest and Midwest. “It started out okay, and it got gradually slower. The price of gas didn’t help. We’re dealing with the middle class, and so that was a factor. Unemployment and layoffs had a lot of people concerned about the economy.”
In Los Angeles, California, Gail Friedman, owner of Sarah Leonard Fine Jewelers, also saw a significant drop in sales at the end of the year. “In October, it was like someone turned the faucet off,” she said. “Our total holiday 2008 sales were down about 15 percent. But actually, we’re up for the year even though December was down. So overall, we’re still up 6 percent. I’m more concerned now, after Christmas.”
For many retailers, just breaking even in 2008 was a relief. Gary Gordon of Samuel Gordon Jewelers in Oklahoma City said that although his 2008 sales were down 22 percent overall “excluding several megasales we made,” his overall numbers for the 2008 calendar year were about even. “We did better than we expected,” he said. “We braced ourselves for fewer sales than actually occurred. Our calendar year 2008 was approximately even due to good business up until November.”
At Frost & Co. Diamonds in Pittsburgh, Pennsylvania, Abraham Frost, president, said his holiday sales in 2008 simply weren’t as high as they had been for 2007, but that his overall numbers were even. “Volume was off,” he said. “In the end, though, our 2008 numbers were the same as in 2007.”
No spending in 2009
Wallet tightening is one of the most common responses retailers are having to the slow holiday season. “My biggest concern is what lies ahead of us,” said Geiss. “Is the worst over? How long is this going to last? I think it’s going to last about a year, so we’re not going to spend any money this year.”
Friedman agreed. “We don’t need to spend another dime,” she said. “There is nothing we have to buy. Not a darn thing. It’s hard for the designers and the manufacturers. I’m nervous for them, too. I want to keep them in business, but I can’t buy just to buy.”
Bridal still strong
On a positive note, the bridal category is still doing well. Said Friedman, “People still get engaged and they still get married, so they’ll buy what they need.”
The bridal category might even be getting a boost from the recession, according to Haimoff. “Ironically, I think more people are getting married now than ever,” he said.” Economically, it’s easier to live as a couple, so the bridal area was not as affected as other areas.”
Generally speaking, the retailers who saw the best margins coming out of 2008 were bridal-based. “I think 80 or 90 percent of our business is bridal,” said Frost. “That means kids. And if a girl wants a ring, she’s going to get a ring.”
Attitude is everything
Regardless of whether 2008 ended in the red or in the black, the push forward is going to be all about staying positive in 2009. “There will be absolutely no conversations instigated about the recession,” said Gordon. “We sell romance and happiness, and the conversations will stay within that spirit.”
Haimoff agreed. “I think we as jewelers have to be the feel-good therapists,” he said. “All the jewelers in America have to say that in our stores, things will always be positive and happy. People are going to carry bad news into the stores. We have to make every effort to keep the atmosphere in the store positive and boost the morale of the public.”
The Marketplace
• The best-selling shape for engagement rings is round.
• 1.5 carats is the most popular size.
• SI1 is the clarity most people buy, though VS2 is a tempting alternative.
• The top color is G, though more budget-conscious customers trend toward H, and more-well-heeled clients prefer F.
• Platinum is strong again, though it’s neck-and-neck with 18-karat white gold at all but the most high-end stores. Palladium is increasingly popular as well, while yellow gold has all but vanished.
• The average price for an engagement ring, including stone and setting, is $7,500, though sales in the $3,000 range are becoming more common.
Article from the Rapaport Magazine - February 2009. To subscribe click here.