Rapaport Magazine

U.S. Retail: Bumpy, Unpredictable Road

By Lara Ewen
In an unpredictable year, even a predictable slowdown can be somewhat comforting. That’s why, when summer heated up and sales slowed, retailers seemed to take it in stride. In fact, even the fact that it’s a presidential election year and its subsequent consumer hesitation seemed to represent little more than a bump in the road. But the general consensus is that things aren’t too bad, and that by December, there might even be cause for hope again.

Still Bumpy, But Better
   According to retailers, sales in 2016 continue to follow unexpected patterns, which was disconcerting, but not necessarily a negative. “The year so far hasn’t been too bad,” said Richard Hegeman, owner of Hegeman & Co. in Providence, Rhode Island. “May and June sales were pretty strong, but there’s definite bumpiness. There’s no rhythm. Even though we have periods of consistency where we’re rolling along pretty good, it’s not big sales. It’s a lot of smaller stuff.”
   A bit further down the East Coast, sales were also unsteady for Robert Johnsen, director of sales and buying at Bentley Diamond Importers in Wall Township, New Jersey. “We’re doing a little bit better than 2015,” he said. “But we’ve been bumpy, too. I definitely see the bumpiness. One month we’ll be down 10 percent, and the next month we’ll be up 40 percent. And maybe the bumpiness is due to the election year. The media is consistently showing negative things on the news and that might affect the way people feel about buying things for their spouses.”
   Other store owners also attribute the shaky sales to the uncertainty that comes during general election years. “Right now it’s a little slow, but we’re good,” said Joseph R. Villarreal, president of Villarreal Fine Jewelers in Austin, Texas. “We’re around where we were at this time last year. For anybody who’s been in this industry for an extended period of time, in an election year things are unsure. That’s common knowledge. So if history has taught us anything, it’ll be business as usual after November.”

The New Normal
   Still other retailers said the unpredictability was, in truth, the only thing that was predictable anymore. “I think we’re pretty much the same as last year, which I guess is a good thing,” said Gail Friedman, owner of Sarah Leonard Fine Jewelers in Los Angeles, California. “We’ve been busy, but unpredictable. But that’s business now. It’s been unpredictable since the end of 2008. It’s not the election. The recession changed customers’ lifestyles and their mind-sets. So we have this new group of customers that we have to build into fashion customers, and they’re not wearing that kind of jewelry anymore, and they’re not seeing enough ads about jewelry. It’s not that they’re not spending money. It’s just that they don’t think jewelry is what they want to spend money on.” Friedman said the industry as a whole is largely to blame. “Customers are spending money on bridal, and then they think they’re finished. It takes years to see them back again. We used to see them for birthdays and anniversaries, but the industry has done a horrible, crappy job of putting jewelry in the forefront. The only ads you see are for the chain stores. We’re such a fractured industry, and jewelry is not in the forefront of the Millennial mind. They want the new phone, they want to travel. They don’t want jewelry.”

Smaller Markets, New Customers
   Understanding new, younger customers and finding out what they want was also critical for Scott Stambaugh, owner of Stambaugh Jewelers in Defiance, Ohio. And it seemed to be working. “This year has been good,” he said. “Our fiscal year ended June 30, and we were up 19 percent. But you have to stay on top of trends and technology — and some Millennials who want something different, like a blue or green gemstone for an engagement. And the kids want an experience and that’s what you should be giving them.” Stambaugh also said that business improved when he became the last independent jeweler in his area. “We’re a small community of 17,000 people, and I’m the only independent jeweler here.” he said. “We lost an independent jeweler about a month and a half ago, and when they decided to retire, they started to refer customers. And that’s been good, because people want to shop in an independent store. When I found out they were retiring, I congratulated them for being able to have a peaceful Christmas for a change.”

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

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