The world may be reeling from instability and chaos, but the diamond business is finally beginning to settle down. After 2010’s numbers got crunched, most store owners found that they were on the long, slow road to economic recovery. Customers who have money are spending it again, and manufacturers are eager to help bring fresh product to the shops. But the best news of all is that words such as “excited” and “hopeful” are starting to replace the stalwart phrase “cautiously optimistic” when jewelers talk about the future.
March Forward
Even after Mardi Gras wrapped up, tourists and locals alike were coming in to shop at Symmetry Jewelers in New Orleans, Louisiana. Owner Richard Lee Mathis called business very good. “We’re such a specialized bridal shop and our niche is pretty established,” he said. “We’ve been up every month for the past several years. I’ve found if I keep the name out in front of people, it keeps people coming in.” Mathis also finds that keeping the in-store conversations close to home helps. “I hear customers comment about how their business isn’t doing as well as it should, but I don’t talk politics or economics. I talk family stuff. I talk personal stuff.”
Susie Molenaar, owner of Molenaar Jewelers on Broadway in Boise, Idaho, reported good sales. “This year, our January was the best we’ve had in our history,” she said. “We had a couple of really large sales, and that put us way over. I think people are starting to feel better about the recession. We didn’t have our best Christmas in 2010, but even so, we’re back to about 80 percent.”
In West Virginia, recovery has been slow. Chuck Wallace, owner of Wallace Jewelers in Bethlehem, West Virginia, said his business has been a little sluggish in 2011, year on year. “We’re down about 3 percent, and there’s no doubt the economy has had an effect,” Wallace said. “Unemployment and naysayers are scaring people to death. Even if you are living comfortably, that makes you want to go someplace and cry.”
Stock Options
Whether business is brisk or slow, the coming show season has many retailers thinking about inventory levels, and how best to predict their customers’ needs for the coming year. “Our numbers are up over 2010, and we’ve put together some fairly aggressive targets,” said Kathy Corey, vice president of merchandising at Day’s Jewelers, with five stores in Maine and one in New Hampshire. “But we’re still trying to increase our turnover, so it’s a delicate balance. We are going to be expanding our inventory slightly, and now more than ever, it’s important to bring in new and fresh merchandise. Our customers and associates respond to that.”
To that end, Corey relies on memo goods to help keep her cases full and fresh, but she is reserved about how much memo she will stock. “Memo is important, and we use it to fill inventory voids, like large diamonds, or when we’re testing a new line that’s a little risky in style or price. But I try to stay away from memo goods that compete with goods I own. Memo is good for enhancing our inventory or for trying things out. But you have to get the return on the inventory you’ve paid for first.”
At Neustaedter’s in St. Louis, Missouri, owner Richard Neustaedter also uses memo to help fill his store. “We’re increasing our inventory moderately, but we’re not going crazy like we did years ago,” he said. “I think memo is very important, because of the cash flow situation. You can’t foolishly go out and buy inventory the way you used to. And who has everything? You have to depend on memo to have variety.”
Molenaar agreed that memo has its place in the business. “I think memo is helpful to a lot of jewelers, if they can’t afford to purchase inventory outright,” she said. “But that’s not how I run my business. My inventory is high enough, and I don’t really have a void.”
According to Wallace, there is also a downside to memo. “If you get it on memo, you’re going to sell it on a shorter margin, because there’s a shorter markup,” he said. “If it’s coming in as a memo piece, the manufacturer is going to charge me more for it. But if it’s 8 percent higher, I can’t price it 8 percent higher.”
Looking Up
Despite tighter cash flows, store owners are feeling good about the coming year. “I see us continuing to have really good sales month after month,” said Mathis.
Corey agreed. “2011 will be better than 2010,” she said. “We’re starting to recover. I don’t think we’ll see huge growth spikes, but I’m optimistic.”
The Marketplace
• Round brilliant sells best, followed by princess and cushion cuts.
• 1-carat stones and slightly larger stones, such as 1.25 carats, are the most popular.
• SI1 and SI2 are the most popular clarities, in that order.
• G-H is the best-selling color range.
• 14-karat far outsells platinum in settings.
• The average price for an engagement ring, including stone and setting, is $4,900.
Article from the Rapaport Magazine - April 2011. To subscribe click here.