Rapaport Magazine

U.S. Retail

By Lara Ewen
Economic/Election Uncertainty Grips Retail

“Flat” and “challenging” were spring’s jewelry buzzwords, but the news wasn’t all bad. Many store owners blamed slow sales on a still-struggling economy, coupled with the hesitation that comes during every election year. Despite that, though, it was notable that numbers were not dramatically down. Flat year-on-year sales are more common than they were in 2006, certainly, but large single-ticket sales have begun to trickle back in, however unpredictably. So while store owners aren’t resting on their laurels, they’re also not terrified. There’s a grudging acceptance that the rest of 2016 will be erratic, but maybe not terrible. At least until the general election is behind them, that is. Then all bets are off.

Hard-won Numbers
   Although the beginning of 2016 wasn’t record setting, stores were making do with their available customer base. “There’s a little bit of activity out there, and we’re staying busy,” said Stew Brandt, owner of H. Brandt Jewelers in Natick, Massachusetts. “There’s some custom work going on, and diamonds going out the door. When you have low expectations, especially in an election year, anything above that is good. And let’s face it, the people walking through the doors of jewelry stores are high earners.”
   Some stores were less optimistic, but trying to take the slowdown in stride. “First quarter of 2016, we’re flat,” said Robert F. Moeller II, president and director of sales at R.F. Moeller, with three stores in Minnesota. “Certainly it’s easy to blame the economy, but there’s a myriad of factors. We have three stores and our downtown location has been a little more challenged.” Moeller suggested that area layoffs and new construction of a downtown football stadium were negatively affecting traffic. “Also, our downtown store is more of a watch store,” he said. “And the watch business is a fair amount off.”
   Even store owners who have so far seen positive year-on-year returns were unsure what the rest of the year might hold. “I think 2016 is going to be unpredictable,” said Lorraine Barker, co-owner of Barker Diamond Company in Nashville, Tennessee. Barker said that her year so far has been up a little, even with a slow April and a faltering stock market. “I know people always say election years are bad, but I think this is more economy-related. Even so, as of 2015, we’re seeing disposable income being spent on jewelry again.”
   For Steve Samaras, owner of Zachary’s Jewelers, with two stores in Maryland, the year so far has also been unsteady but mostly positive. “We’ve had some local challenges, because of some construction in the harbor,” he said. “But we had a tremendous March, which brought us back to where we were last year. Actually, we’re a little ahead of 2015 already. And we’re always hopeful for a better year this year than last.”
   Overall, there was a sense from even the most successful stores that any profits in 2016 would be hard-won. “I don’t see the economy changing soon in a way that will have an impact,” said Steve Quick, owner of Steve Quick Jeweler, with three Chicago-area stores. “If the election brings changes, and that’s a big if, those changes won’t get here until 2017. That said, a lot of jewelry will be sold in 2016, and how much of it we sell is entirely up to us.” Quick said although his spring has seen steady business, future sales would depend on how hard he was willing to work. He also said that shrinking diamond profit margins were negatively affecting his sales figures. “It will be tough, and we’ll have to fight for our success,” he said. “But jewelry’s share of consumer dollars continues to shrink, and the diamond business is almost a loss leader for us at this point.”

Looking Ahead to Vegas
   Perhaps as a reaction to an uncertain year, plans to attend the shows in Las Vegas were mixed. Brandt and Barker do not plan to go at all, since neither feels the shows serve smaller, independent jewelers. Moeller, who does plan to attend the Vegas shows, said he expected them to be tense, since the election year will make both buyers and sellers more cautious.
   Samaras is also planning to attend the shows, largely because he’s looking for something fresh. “We use Vegas to seek out new lines and to see a greater abundance,” he said. “It gives us a chance to see the breadth of a line.”
   For Quick, the Vegas shows are going to be less important, perhaps, than they have been in years past. “We will be in Vegas for the full nine days’ worth,” he said. “But Centurion was a treat, and this was our first year there, so it will definitely impact our Vegas buying, since many of our vendors were extending Vegas terms in February.” That said, Quick is still looking forward to the Vegas experience. “It’s big and confusing and essential to our business,” he says.

Article from the Rapaport Magazine - May 2016. To subscribe click here.

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