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U.S. Retail
By Lara Ewen
It’s an election year, and some stores were already feeling the ensuing customer caution, with slow sales and light traffic. Although custom pieces, especially custom remounts, were doing well, new purchases were sluggish. Additionally, more customers were paying in cash. This slight pullback led some retailers to question whether they were doing all they could to capture new Millennial customers. Stores that have expanded their technological footprint have found it easier to attract and interact with younger customers. However, most owners indicated that after the election is decided in November, one way or another, they expected to see sales stabilize.
Although some stores felt the impact of elections even in 2015, the real brunt of the cycle began in early 2016. “An election year is always one of concern because of the uncertainty of a leader,” said Tonia Leitzel Ulsh, chief operating officer (COO) of Mountz Jewelers, with three stores in Pennsylvania. “This affects spending of the middle-aged consumer and Boomers. The good news is there will still be people falling in love and couples getting married. I have found the biggest concern of the Millennials who are making bridal purchases is debt because of their student loans. Their debt has them deciding where to spend the little money they have, and high-end jewelry is not a priority. The debt is so high that decisions on spending will last through much of their adult life.” Cash purchases and credit issues also impacted consumer behavior in Bozeman, Montana, where Babs Noelle, owner of Alara Jewelry, noticed changes in how her customers spend. “I’m getting an unusual number of cash transactions,” she said. “I sense a difference in the retail consumer. If they have the cash, they want to spend cash and not apply for outside credit. That said, for us, things are going really well. My whole year in 2015 was good. And for 2016, based on January and so far, February, it’s a pretty rosy picture.” Even stores that were seeing improvements saw slower traffic over the past several months. “Christmas 2015 was up about 4 percent, which is better than being down,” said Kevin Gorkofsky, owner of Kevin Edward Jewelers in Avon, Connecticut. “2015 overall was also about 3 percent to 4 percent up. But we’re seeing less foot traffic now. Sales have been a little larger, but margins are lower.” And of course, the election continued to be an issue countrywide. “Christmas 2015 was down about 5 percent year on year,” said Richard Lee Mathis, owner of Symmetry Jewelers in New Orleans, Louisiana. “I think people are going to be holding back until after the presidential election.” Eve Alfillé, owner of Eve J. Alfillé Gallery and Studio in Evanston, Illinois, a Chicago suburb, noted election year concerns are not so much about specific issues as about an overall sense of uncertainty. “In my experience, an election year is never a good business year,” she said. “Customer attention is elsewhere, and it forces people to grapple with larger issues, and the economy as a whole.” For Alfillé, that grappling began back in late 2015. “Last year was a little disappointing at the end of the year. I think that’s probably true of a lot of businesses. The 2015 holiday rush wasn’t much of a rush, and the volume was down. Overall, the pace was slow.”
One of the bigger problems store owners mulled was how to capture a disinterested Millennial market. Gorkofsky explained, “I feel like the generation who bought jewelry is getting older, and they have their basics, so it’s very hard to keep finding things that are going to intrigue them. Plus, they get to another stage in their lives and they don’t need jewelry anymore. And for the younger generation, jewelry isn’t as important to them as electronics and vacations and good times. So the industry needs to figure out how to get the younger people in.” Noelle said that enhancing in-store customer experiences, such as allowing her shoppers to take a hands-on approach to the design of their jewelry, has increased her sales. “My customers are going a lot for something that’s experience-based, which is how the whole consumer economy is going,” she said. “We have a CounterSketch CAD system that gives my customers an experience, and lets them design things. Obviously, I go and fix it to make sure it works, but then they get a certificate saying they designed the piece and they really respond well to that. And overall, the stuff that seems much more unusual and techie is working well for me. For instance, the smart Galatea Momento Pearls are very popular.” It’s not only about finding new products and clever technology, though. Capturing younger customers is also about interacting with them on their terms. An updated online presence was key for Mathis. “We improved the website, and we’re selling more that way, and getting an initial contact online,” he said. “Now we’re able to send artwork and quotes without customers even coming in.”Article from the Rapaport Magazine - March 2016. To subscribe click here.
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