Rapaport Magazine

U.S. Retail

Holiday Hopes

By Lara Ewen
As 2012 winds down, a strong holiday season is the gift at the top of everyone’s wish list. The general election is over, but there is tension in the air as retailers gear up for the year-end shopping season. A still-weak economy has many store owners wondering whether customers will be confident enough to spend freely this December, especially considering that some of their customers were not altogether pleased with the national election results. 
   But there is a bright side, relatively speaking, in that most businesses are currently running either even with or slightly ahead of 2011 returns year on year. So despite concerns, the situation may not be as grim as it seems.

Down in Defeat
   Disappointment with the election results is one of the
biggest reasons
for the trepidation leading into the holiday season. “It’s very difficult,” said Don Hamann, president of Sartor Hamann, with three stores in Nebraska. “I don’t think a lot of people out here thought Obama would be reelected president. So holiday depends on how depressed the public is. Christmas
is awfully close, and we’ve got a tremendous amount of inventory
and we’re gambling that it’ll be okay. I think it’ll be okay, though. By and large, I would think that we’ll probably be similar to 2011. Not a lot better, but better.”

   Paul Geiss, owner of Paulo Geiss Jewelers in Charleston, South Carolina, has similar concerns. “I think the 2012 holiday season is going to be like 2011 — not good,” he said. “Our customers are not making big purchases and are very cautious about spending money. A lot of people are disappointed with the election results and are very pessimistic about what’s to come, so that influences their decisions.”
   When customers are feeling bad, getting them to spend means struggling to adjust their attitudes. “Everyone I talked to said they were voting for Romney, and then Obama wins,” said Russ Varon, co-owner of Morgan’s Jewelers, with two stores in Southern California. “So we’re working very hard to change everybody’s feelings about the economy. I’m hoping. I think I’m going to do the same business this year as I did in 2011.”
   Not everyone is concerned that Obama’s reelection will affect business, however. “Every four years, it’s the same cycle,” said John Hayes, owner of Goodman’s Jewelers in Madison, Wisconsin. “September softens, October is lousy, November starts getting better and December is okay. Things are picking up. Now that the election is settled, people know where things are going, and they can make definite plans. I’ve projected an
8 percent increase this year for holiday, and I think that’s viable.”

   Some stores are even more confident. “The election results are not
going to make a big difference,” said V. Paul Michaels, vice president
of Michaels Jewelers, with ten stores in Connecticut. “I think the people who have the money will spend it regardless, and while the Republicans are disappointed, it’s not going to affect our business or our customers’ decisions. I’m looking for a 15 percent increase this holiday season,
and I think we’re going to get 20 percent.”

Tough Competition
   Adding to the uncertainty of the coming season is the fear that shoppers may choose to spend their money elsewhere if they spend at all. Michaels said that while half of his competition comes from online and local jewelers, that’s not the whole story. “The other half of our competition
is people who sell experiences, such as vacations, spa days, going to a concert, those kinds of things,” he said. “There’s been a shift over the
20 years. People are less into acquiring stuff and more into
experiential things.”

   For Hayes, the biggest competition comes from electronics. “Our
biggest competitor for normal dollar amounts and average sales is
tablets and new phones,” he said. “There’s a lot of different new gadgets out there that have been introduced with some pretty smart marketing.”

   Matching the prices available online is another huge issue. “The
biggest competitors, I believe, are online sites that sell jewelry at a
fraction of retail,” said Geiss. “You can find most major names and designers online nowadays, even lines that are supposed to be exclusive
to brick-and-mortar jewelers.”

   Online stores are also a big problem for Hamann. “The internet is our biggest competitor,” he said. “If it’s a Bulova watch, you can buy it on the internet for less than we can sell it for. I have to compete with the internet stores and be smarter than the other stores.”

Looking Ahead
   The overarching hope is that things will return to normal after the holiday season. Of course, some people are more hopeful than others. “Next year will be the same as this year, no better, no worse,” said Varon. “It’s going to take a while to turn this economy around.”
   Then again, even small improvements would be welcome. “I think we’ll have steady but slow growth in 2013,” said Hayes. “I think 2013 will be better than 2012.”

Article from the Rapaport Magazine - December 2012. To subscribe click here.

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