It’s been a challenging spring for jewelry retailers. The beginning of 2020 was strong, but by early March, sales had slumped due to COVID-19 fears, which in turn affected the US economy. Store owners throughout the country reported a noticeable early-March drop in store traffic, which they found deeply troubling — especially since there was no way of knowing how long the situation would last. Even stores that were seeing strong sales in areas such as watches said they couldn’t predict how the virus might affect the rest of the spring, or the year.
‘Uncharted territory’
“The year has been good and steady,” said Ted Koester, owner of Herzog Jewelers in Fort Mitchell, Kentucky. His store was on track with previous years, he added, but he was unsure if that would continue. “The rest of the year will be cautious, because of uncertainty regarding the coronavirus, and political election,” he said. “It will slow down for sure.”
The trajectory was similar elsewhere in the country.
“January was slow, February was excellent, and March started off real good,” said H. Bredemeier, owner of H&H Jewels in Coconut Grove, Florida. “We’ve had a couple of key sales. But now we’re in such uncharted territory. I don’t think [the impact of] the election has anything on the coronavirus.”
Michigan retailers were also feeling the effects. “The year was great, and both of our stores were up considerably,” said Joe Strong, co-owner of Waterfall Jewelers, which has two locations in Michigan. He said sales had begun to drop precipitously sometime around March 5 or 6. “It has a lot to do with [COVID-19],” he said. “The economy, too, but that’s related to the virus, because the economy and the stock market are tied, and it’s scary.”
Watch sales
One bright spot in the retail landscape has been watch sales, although some brands have done better than others. Koester’s timepiece sales were good, even though he’s never really been a watch-focused store. “We only have Shinola watches, and they sell well,” he said. “The brand is cool and hip, with good price points. They have a great story.”
Rolex is also a strong market force, even affecting stores that don’t carry the brand. “Unless you have Rolex, watch sales won’t carry your business,” said Strong. “Rolex is a license to print money. Even a typical Submariner [model] has a two-year wait list.” Still, he said his customer base didn’t skew toward Rolex. “I don’t see our clients wanting a $100,000 watch,” he said. “But we picked up Shinola at our new location, and we’re selling more than one watch a day. We do great with that brand.”
In Florida, Bredemeier also said Rolex was popular, although his store also wasn’t carrying the brand. “Rolex is on fire, as far as what I’m hearing,” he said. “I can tell you that’s all we see people wearing. Watches were a huge part of our jewelry-store sales, but they’ve slowed down.”
Wait and see
Retailers expressed uncertainty about the coming year. “If you’d have asked me [in February], I’d have said this would be a great year,” said Strong. “Usually presidential election years are bad for retail, but this year has been good. Investors like the fact that Trump has a pretty good chance of winning [in November], and that helps. But I think the coronavirus could possibly shut everything down, like in China and Italy, though I also think it’s going to be temporary. And I would assume March isn’t going to be very good.”
By press time, his prediction seemed to be playing out, with major retailers including Signet Jewelers, Macy’s, and Watches of Switzerland temporarily closing their doors all over the country.
Most store owners were playing a wait-and-see game. “I think it’ll be an interesting year,” said Bredemeier. “I have to see what happens. It could be that people get sick, and people get nervous, and calm down, or it could be a game changer. But it’s like nothing I’ve ever seen. And there’s nothing I can do about it.”
Article from the Rapaport Magazine - April 2020. To subscribe click here.