Rapaport Magazine

U.S. Retail

By Lara Ewen
A Seesaw Season

While fourth-quarter results are not yet in, one thing is clear. This has been a tumultuous year, and as stores head into the final selling weeks of 2013, strong sales for holiday will be crucial to most bottom lines. Some businesses have reported record slowdowns in 2013, while others are managing to stay stable, or even chalk up a bit of improvement. Stores that focus heavily on bridal seem to be doing best, as do stores that maintain a strong in-house design shop. But there’s no single ticket to success right now, which has led many stores to curtail any unnecessary buying until business improves.

Start With the Good
   First, the good news. There is money to be made, and some retailers saw very good numbers. “Summer was slow, but 2013 has been a strong year so far,” said Ted Koester, owner of Herzog Jewelers in Fort Mitchell, Kentucky. “This year is better than 2012. I think it will be a strong fourth quarter, and I think it will outpace the 2012 holidays.”
   Numbers are also up for John Hayes, owner of Goodman’s Jewelers in Madison, Wisconsin. “Our business has been good overall in 2013,” he said. “So far, the fourth quarter is shaping up well. October sales were up over 2012, and we met our goal. November got off to a good start, too, and we’re on track to hit our projection.”
   Still, Hayes has some concerns. “December is always the wild card,” he said. “Depending on the weather, I think it will be as good or better than 2012, even without Rolex. We were one of the Rolex casualties, with our marketplace of only 500,000 people,” he said, referring to the watch company’s decision to pull back on its number of sales outlets. In 2012, Rolex sales and service accounted for 18 percent of Hayes’ business. But, he said, “losing the Rolex line has actually given us a better focus on bridal, with less money in inventory and a better bottom line.”
   Even for businesses that saw profit, the sales did not come easily. “Business has been a little soft, but not that bad,” said Jason Laudick, owner of Leo Alfred Jewelers in Dublin, Ohio. “Do I think I can grow? Yes. Do I think things need to change? Yes. But is it better? Yes. Is it a lot better? No. Consumer confidence is getting better. In 2012, we had a very strong fourth quarter. I don’t know that we’ll beat that in 2013, but I’m very optimistic that we will.”

Now, the Bad News
   Not all stores have done so well. “I have to say that all in all, we’re holding our own,” said Benny McNair, owner of McNair Jewelers in Gadsden, Alabama. “We’re fortunate because we do a lot of shop work and a lot of in-house work and appraisals. But as far as people just walking in off the street and making the big purchases? Those have been greatly reduced. We’re down for fourth quarter. It’s been slower as far as traffic, sales and business over the past month. Sprinkled in there, you do some decent business, but those people were already going to buy, because they have the money.”
   Slower traffic is not the only reason sales have been scarce. “This has been one of the most difficult years in memory,” said Katie Goode, co-owner with Stephen Doubleday of Amidon Jewelers, with three stores in New Hampshire. “We were buying gold like crazy, and selling Pandora like crazy, and selling inexpensive tchotchke bridal sets and then it all kind of stopped. The pendulum has to swing back to people buying real jewelry, but that hasn’t happened yet. People are still buying sterling silver.”
   In addition to changing consumer desires, Goode’s retail landscape also changed. “Our biggest store had a Kay’s come into the market, so the conversation had to change,” she said. “We’ve had to find merchandise comparable to Kay’s and sell it for what it ought to be sold for, and say, ‘This is the same stuff, just priced better.’ So that’s been a huge change for us. We’ve never had to compete with a national before. And we’re going to be down from 2012, by more than 10 percent.”

New Year’s Wishes
   Despite the conflicting reports about consumer confidence, independent jewelers are a hardy bunch. Optimism is more prevalent than not, and since no one seems to have a crystal ball, gut feelings often mean as much as economic indicators. “I’m not an economist, but hopefully, the stock market keeps going up,” said Laudick. “With what I sell, if people see their 401(k)s go up, they’ll be eager to buy.”
   Goode agreed that 2014 has a lot of positive potential. “I think it’s finally going to get back to normal next year,” she said. “The nature of our economic cycle is that it’s cyclical. And you say, ‘Enough already.’ If people start spending more, then people will start hiring more, and vice versa. But I don’t know what’s going to happen first. And 90 percent of the country has a job. So, okay, everyone, let’s go.”

Article from the Rapaport Magazine - December 2013. To subscribe click here.

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