Rapaport Magazine

U.S. Retail

By Lara Ewen
Holiday Makes It or Breaks It

At the close of 2012, retailers were hoping that their customers
would be true to form, coming in at the absolute last minute for holiday gift-buying. For some, end-of-year sales are such an important
part of the annual bottom line that a disappointing holiday season can
mean disaster while, for others, December is just another month. Most
store owners and managers agreed that it was good to finally be seeing
an end to a rocky 2012, one way or another, and most looked forward
to a fresh start for 2013.

   Retailers who depend on year-end sales to plump up a sagging bottom line were on edge in December as they waited for customers to make
last-minute gift buys. “It all comes down to the final few days of December,” said Paul Becker, owner of Becker’s Diamonds & Fine Jewelry in West Hartford, Connecticut. “Christmas always happens that last week because men wait.” The waiting, however, can be stressful. “Holiday makes or breaks our year,” he said.

   It’s also a critical time for Katie Goode, co-owner with Stephen Doubleday of Amidon Jewelers, with three stores in New Hampshire. “Holiday represents 20 percent of our gross income and nearly 100 percent of our net income, so this fourth quarter has been so stressful for me,” she said. “If I were flat to 10 percent down for 2012, I’d be ecstatic. October and November were soft, but we were ahead coming into December. So if Christmas is flat, we’ll be behind. October and November were some pretty ugly months.” Why has it been so rough? “I think there’s a sense that buying jewelry is sort of frivolous and potentially unseemly when people are tightening their belts,” she said.

   For others, however, holiday is not as important. “Holiday isn’t
make-or-break for us,” said Brant Kane, diamond buyer, general manager and partner at E.E. Robbins, with two stores in Washington State. “It constitutes around 13 percent or 14 percent of our total annual bottom line. For 2012 overall, I’m really looking at a likelihood of a very tiny to flat increase, and I haven’t seen much improvement in the overall economy. But 2011 was a decent year, so going flat for 2012 isn’t the worst thing.”

   For Benny McNair, owner of McNair Jewelers in Gadsden, Alabama, traffic has not been a problem, but he’s concerned about other issues.
“It has been busy,” he said. “We haven’t just been looking at the walls,
so I’m encouraged. But I think the holidays will be the same or a little bit below 2011. People’s mind-set is somewhat negative because the election didn’t go the way we wanted it to go.”

   On the plus side, McNair doesn’t see holiday sales as having the importance they once did. “Holiday sales are not that big a deal,” he
said. “There once was a time, years back, when it was, but in the jewelry business, at least for independent jewelers, even Black Friday is not
that busy.”

   On a more positive note, Ted Koester, owner of Herzog Jewelers in
Ft. Mitchell, Kentucky, has seen a good December so far, and a good year overall. “I believe this holiday season will be better than 2011,” he said. “We’ve had more traffic and more spending in December, and the number of transactions in 2012 overall is up compared to 2011. Average price point is up as well.” This is all good news, especially because holiday plays a big role in Koester’s accounting. “Holiday sales are important,” he said. “They count for about 25 percent of our annual bottom line.”

   After holiday sales are done and the New Year’s Eve champagne has been poured, though, it will be time to look ahead to 2013. Most retailers are hopeful. “You have to be optimistic for whatever comes,” said Becker. Paraphrasing Napoleon Hill, an early writer on the secrets of business success, Becker added, “There’s always opportunity for every seed of adversity. That’s what Napoleon Hill said. So even if you think there’s adversity, find the opportunity.”
   Kane also is feeling good about what’s to come. “I’m very optimistic
for 2013,” he said. “2012 was a unique situation because of the election. Roller coasters are fun, but not in business. I don’t think we’re going to
see a strong economic outlook for three more years, but I think things are getting back onto a more even keel.”

   McNair agreed. “2013 won’t be an earth-shattering year, and people will still be nervous, but I think it’ll be all right,” he said. “I’ve been encouraged by the traffic in here despite the election. If you put in the time and you put in the effort, and you’re conservative, but you stick your neck out just a little, then I think it’ll be all right.”

Article from the Rapaport Magazine - January 2013. To subscribe click here.

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