Rapaport Magazine

Adjusting to the New Normal

U.S. March Retail Market Report

By Lara Ewen
Now that the winter holidays are over, and Valentine’s Day has come and gone, jewelry stores can get back to normal, or at least attempt to discover what normal means in today’s economy. By all accounts, things are improving, and customers are coming back, but no one expects to see numbers return to their prerecession levels. Ideas like “stability” have replaced more exuberant goals, and the new hope is that the coming year will bring, if not prosperity, at least calm.

All’s Quiet

After a rocky few years, confidence these days comes from a belief that 2011 will see a leveling off, not a dramatic upturn. “I believe 2011 will be a great year,” said Tim Harold, owner and manager of William Harold Jewelers in Newport Beach, California. “I’m not confident that sales will be hugely better, but as far as business overall goes, we’ll be more efficient.”

The hope of an end to the constant fluctuations seen in recent years is pervasive. In Denver, Colorado, Avi Bulow, diamond buyer for Jay Feder Jewelers, is also looking ahead to a more even flow of business. “We had a solid 2010,” he said. “It was better than 2009. I expect an extremely strong 2011, and I think 2012 will see a flattening out.”

Some stores are seeing a calming effect already beginning. “I feel like things have stabilized in terms of the economy,” said Tara Silberberg, co-owner of The Clay Pot in Brooklyn, New York. “We had a solid Christmas season in 2010, and generally, things are pretty good, though the high end is a little soft, and we’re mostly selling in the under-$800 range. But 2009 was really rocky, and the fall of 2008 was like a free fall, and really scary. 2010 was a recovery year, and I saw a lot of cash. But now, people are returning to credit cards.”

Ted Koester, vice president of Herzog Jewelers in Fort Mitchell, Kentucky, agreed. “I think 2011 will be better than 2010,” he said. “I think people have gotten more comfortable with the economy, and things have slowly turned around. Two years ago, you were lucky to get $1,000 out of people. Now, it’s more like $2,500 or $3,000. The economy has stabilized, and we already had the midterm elections, so politics have stabilized. We’re on cruise control.”

However, in the Midwest, optimism is tempered by pragmatism. “I would say that we’re going to see a better 2011 than 2010, but we’ll see more of a flattening out,” said Eric Wagner, co-owner of Showcase Jewelers, with three stores in Kansas. “I think that you’ve seen some people not spend as much. Where we’re going to see a problem is if fuel prices go up. Then some of our customers’ disposable incomes will be gone. I think we’ll see a decrease in the category of $350-to-$750 sales in 2011, and an increase in sales from $5,000 up. If we don’t fall in the stock market, higher-income people will feel wealthy again.”

Changing Tactics

One aspect of the new economy is that customers are increasingly eager to ensure they’re getting the best price possible. Many are checking store prices against online prices, and bringing that information with them when they shop. J.J. Slatkin, Jay Feder’s general manager, said that coordinating the store’s online marketing efforts with its traditional marketing is part of their strategy moving into 2011. “I think the biggest concern we have is ensuring that we’re generating the right amount of traffic in our store,” he said. “If we have people coming through our door, we’ll close our sale. So we’re putting our marketing plan in place. We’ve dipped our foot into Facebook over the past year, and we also want to update our web page and probably start tweeting as well. And integrate it all.”

Stores that have discovered how to marry their online presence with their brick-and-mortar presence are seeing real rewards. “The comfort level with online shopping has really increased,” said Silberberg, whose store just launched a massive new website. “People really can preshop our store now, and people are using our website as a resource. But the other thing that is happening is that people are price checking our store against other stores that are online.”

For Koester, online partnerships have been a boon. “I want to continue to capture the bridal market with more website interaction and general social networking,” he said. “And I’ve just started working with The Knot in the past two weeks. I can do email blasts through them, and I’ve gotten a lot of leads. I can’t say I’ve seen a lot of results yet, but I’d be happy with a 3 percent return, which is the same as we get from direct mail.”

According to Harold, the coming year will be about staying on top of a changing business model. “My biggest concern for 2011 is not being able to stay ahead of the curve,” he said. “This industry is unique in the sense that the ball of progression moves slowly. My goal is to stay ahead of that ball, and when the economy really turns around, we’ll be at the front of the pack.”


The Marketplace

• Round is the best-selling shape, with cushion cuts second.

• Light carats and 1-carat stones continue to be top sellers.

• SI1 is the most popular clarity.

• F-G is the best-selling color range.

• 14-karat white gold is the most popular choice for settings, though palladium is getting increasing play.

• The average price for an engagement ring, including stone and setting, is $5,600.

Article from the Rapaport Magazine - March 2011. To subscribe click here.

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