RAPAPORT... After a few uneven months during the first half of 2010, sales are beginning to steady. While big-ticket purchases are not yet the norm again, most stores are seeing an increase in smaller gift buys, and bridal is as strong as ever. Looking forward to the holiday season, the mood is cautiously optimistic, as it has been ever since the recession began to wane. The main difference between two years ago and today isn’t so much the bottom line as the attitude. Playing smarter and keeping inventory tighter is now the rule rather than the exception, and the businesses that play the game well are slowly but surely seeing a light at the end of the tunnel.
Ups and Downs
Store owners seem almost surprised by the traffic they’re seeing in their stores, but they’re certainly not knocking it. “What’s been interesting is that on the whole, people are buying,” said Debra Schultz, business manager at Dodson’s Jewelers in Spokane, Washington. “They’re not buying large, but people are still buying gifts and still getting engaged.”
Hank Davis, owner of Davis Jewelers in Louisville, Kentucky, is also feeling good about business. “We’re up double digits from 2010,” he said. “Our bridal business is still strong, and our Rolex business is still strong, and our silver business, like Pandora, is still strong. I mean, even though we’re a Rolex store, we carry moderately priced lines, because we’re always price-conscious, and we want to be everything for everybody.”
In the Northeast, Rick Beaulieu, president of Springer’s Jewelers, with two stores in Maine and one in New Hampshire, is seeing more spending in locations that are closer to urban markets. “Overall, it seems like we’re in a positive mood,” he said. “The closer our stores are to the Greater Boston area, the better we’re doing. Further up in Maine, it’s taking longer to recover. But what is encouraging is engagement rings. And watches are starting to sell again. It seems the consumer who had the funds didn’t feel it was politically correct to spend, but people are spending again, and they want brand names and they want quality, but they want to stay on a budget. So, to a degree, people are spending again, but they want to have a reason to spend.”
Value, quality and need are important factors for customers in the Midwest, too. “When customers need to, or when they see value, they spend,” said Steve Quick, owner of Steve Quick Jeweler, with two stores in Chicago. “Many people are affected by the recession, and many are not. Our customers tend to be a younger demographic, and they did not have huge 401Ks. They did not see wealth leave them, and they still have their large incomes.”
Still, even as business is picking up, it hasn’t completely leveled out. In Miami, Fernando Schlaen, general manager at Richard’s Gems and Jewelry, has seen some ups and downs in 2010. “The year has been inconsistent,” he said. “We’ve had some busy weeks and some slow weeks. South Florida has a busy bridal season in the early part of the summer, but for back to school, they get the credit card bills from their vacations, and then they get nervous.”
Christmas Stocking
At summer’s end, most stores have begun eyeing and buying the first of their Christmas goods. But while four years ago, inventory may have been deep and wide, this year, retailers are keeping the reins tight. “Everyone’s a little bit gun-shy, because there’s no guarantee we’ll have a wonderful Christmas, and we don’t want to see all our profits sit on the shelf,” said Beaulieu.
One of the reasons for the low expectations is that Christmas seems to be starting later and later each year, and store owners don’t know when the rush will come, if at all. “I started to buy for Christmas in July,” said Schlaen, “not heavily, but some. In the past few years, Christmas has been the last two weeks of the year, so we’re probably looking to buy in early November. We don’t want to overstock, and we want to see what the trends are.”
Schultz agreed. “We’re being really cautious about what we’re buying,” she said. “We have been buying for Christmas, and we still do quite a business in giftware and annual ornaments, so those were in the store in July, and we started buying those in the spring. Recently, we’ve been trying to expand our engagement settings, too. Our customer base is interested in a nice selection of merchandise.”
Other stores began their holiday shopping at the June shows in the hopes of a positive end to 2010. “We started buying for Christmas at the Vegas show,” said Davis. “We probably bought more than last year. I’m the ever-optimist and I anticipate a good year.”
The Marketplace
• The best-selling shape is round, with princess and cushion in a distant tie for second place.
• 1-carat stones are top sellers, though light carats and ¾-carat stones are also popular.
• SI1 is still the most purchased clarity.
• G/H is most popular color range.
• 14-karat and 18-karat white gold outsells platinum, and men continue to lead the market for palladium.
•The average price for an engagement ring, including stone and setting, is $5,000.
Article from the Rapaport Magazine - September 2010. To subscribe click here.