Rapaport Magazine

First Quarter Encouraging

U.S. Retail April Market Report

By Lara Ewen

There’s been an almost audible collective sigh of relief regarding first-quarter sales for 2012. Holiday pulled through at the end for almost everyone, but the sales came in very close to the end, so much of early 2012 has been spent waiting for a sales slump that doesn’t seem to have kicked in. Even stores that aren’t experiencing record-high sales are still seeing better sales than they expected, which bodes well for the coming show season, since what sells must be replaced.

The big story is that almost everyone feels the recession is waning. “So far, 2012 has been very good,” said Chuck Wallace, owner of Wallace Jewelers in Bethlehem, West Virginia. “We’re up over 20 percent year on year compared to 2011. People had a tendency to hold back in 2011, and in 2012, they’re releasing a lot of that. I’m already on track to make this as good as any of my better years.”

Sales increases aren’t always steady, however, and while the worst of the nail biting is over, even hopeful retailers are playing it cautiously. “So far, 2012 has been interesting,” said Richard Neustaedter, owner of Neustaedter’s Fine Jewelers in St. Louis, Missouri. “The people who have money are spending it, though I think most jewelers are surviving by buying and selling gold, and on engagement sales. Still, we’re excited. In February 2012, we reached one-quarter of our month’s goal in four days, but at the end of the month, it just died. Then March, which is generally slower, was good. I think people’s attitudes are better because of the nicer weather.”

The unseasonably warm weather throughout much of the country certainly has played its part in encouraging shoppers to get out and buy. Even stores that haven’t been excited by 2012’s sales figures have noticed the weather’s role in bringing in business. “For us, 2012 has been down 25 percent over 2011, year on year, which itself isn’t great,” said Eve Alfillé, owner of Eve J. Alfillé Gallery and Studio in Evanston, Illinois, a Chicago suburb. “But on the first warm day, the store was like a mob scene. This winter was warm, but the first really warm day brought people out.”

With the ups and downs of a slow recovery, even slight increases in profit margins are welcome. “The first part of 2012 has been encouraging,” said Kathy Corey, vice president of merchandising and co-owner at Day’s Jewelers, with five stores in Maine and one in New Hampshire. “However, growth has been very moderate, as we expected. During the first few months of 2011, we experienced single-digit increases over 2010. We are seeing a similar type of performance in 2012 over 2011.” 

Jim Jessop, owner of Jessop’s in San Diego, reported “2012 started out comparatively slow for us, slower than I’d like, and it has not picked up yet. Prior to tax time, though, it’s always that way. The first quarter of 2011 also was weak but the year ended with a good strong finish. I have every indication this year will be the same.”

With a decent, but tentative, start to the year, it’s harder to make decisions about which shows to attend. In recent years, many have simply opted out of all but the biggest shows, because there was no need to replenish stock that wasn’t moving. Times are changing, however. “I went to Tucson this year for the first time in three years, and I’m going to JCK,” said Jessop. “Other business owners and other jewelry store owners are optimistic, and we are all anticipating a stronger 2012, and we’re looking forward to JCK, knowing that we’re going to need to buy. It’s a shift up, but it’s a very cautious shift up. We’re just all real shaky, but optimistic.”

Other retailers go shopping not just to replenish, but to stay competitive. Wallace goes to Antwerp each year in order to find special merchandise that will allow him to compete with online retailers. “Some of the best sales I have ever made have been when I have found the exact diamond for a customer in Antwerp,” he said. “I do a countdown clock to tell people how long it will be until Wallace Jewelers goes to Antwerp. And I say, I won’t buy a diamond without seeing it first, and you shouldn’t buy a diamond without seeing it first.”

Whether business travel is in the forecast or not, store owners are feeling pretty good about this year going forward and they’re remaining hopeful for economic recovery or, at the very least, stability. “I think in 2012 we’ll continue to realize small increases over 2011, likely in the mid-single digits,” said Day. “I expect we’ll see diamond sales increase as a percentage of our overall sales.”

Neustaedter is even more upbeat. “If you’re optimistic, then good things will happen,” he said. “Most of the customers who come in my store are in a good mood, and I think 2012 is going to show great improvement.”

The Marketplace

  • Round is the top-selling shape, followed by princess cuts.

  • 1-carat stones are moving the fastest right now, with 1.5-carat stones close behind.

  • SI1 is the most popular clarity.

  • G-H is the top color range.

  • In settings, platinum and 14-karat white gold are practically tied for popularity.

  • The average price for an engagement ring, including stone and setting, is $6,625.

Article from the Rapaport Magazine - April 2012. To subscribe click here.

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