Rapaport Magazine

Midyear Assessment

U.S. Retail Market Report

By Lara Ewen
The dead of summer is a time for many  stores to take stock of the year so far, and make plans for the coming months. Although the economy in some parts of the country has been slower to recover than in others, customers are beginning to open their wallets again almost everywhere, though not with the fervor they had in prerecession times. Bridal continues to be the strongest category, and fashion jewelry — from colored stones to silver — is still a challenging sale for many stores. However, midyear figures indicate that the coming Christmas season will bring optimism for retailers in need of a little cheering.

Up To The Challenges

After half a year’s worth of sales, most retailers are feeling slightly more confident that the worst is over. “I think 2011 will be a better year than 2010,” said Fernando Schlaen, general manager at Richard’s Gems and Jewelry in Miami, Florida. “The perception has changed. A couple of years ago, people talked to me like the world was coming to an end. Even if financially, it hasn’t improved much, the fear is gone. I think people understand that it’s not going to get any worse.”

The year has also been going well for Steve Quick, of Steve Quick Jeweler, with two stores in Chicago. “We are in the fortunate position of having had the best six months ever in both of our stores,” he said. “Our biggest challenge is to keep our momentum and energy. We know we are the exception, and the only way to maintain that is for our entire team to be exceptional. Nothing can be taken for granted.”

Even for stores that are doing well, though, it’s been a white-knuckle ride. Gary Gordon, of Samuel Gordon Jewelers in Oklahoma City, said that maintaining profitability is his biggest challenge these days. “The recession is not over yet,” he said. “People are still not buying like they used to.” Even though he said his store is doing slightly better in 2011 than it did in 2010, he said he’s had to be more aggressive in seeking new business.

For Judith Arnell of Judith Arnell Jewelers, with stores in Portland, Oregon, and Chicago, it’s been hard to sell anything other than bridal. “People are really holding onto their money,” she said. “They just want to negotiate under your cost. The engagement business is always there, but they’re forgoing the fun jewelry. We’re trying to buy things that are more fun, but not over-the-top expensive.”

Color Stories

Supplying customers with alternatives to bridal has its challenges, however. Hank Davis, owner of Davis Jewelers in Louisville, Kentucky, said that selling fashion pieces, and color in particular, is difficult. “My customers are buying less fashion jewelry than they used to,” he said. “A lot of the money that was spent on fashion jewelry is now being spent on silver and gold jewelry. And to tell the truth, part of it is that the suppliers of colored gemstone jewelry are the least sophisticated. They’re not supplying us with what we need, and the support is weak.”

Schlaen is also not moving colored stones. “We’re selling fewer colored gemstones now than we used to,” he said. “It might be my market. There’s not much demand for it.”

Other retailers, however, are doing well with colored stones. “We love color and always have,” said Quick. “Our enthusiasm translates to our customers. We have a couple of colored stone events yearly that bring in famous cutters and dealers with extensive inventories. These events definitely help expose our clientele to the world of color. We have increased our sales of color this year partially because of our marketing. Also, the price point of some of our color is more palatable in these more difficult economic times.”

Arnell, too, has been seeing a positive response to color. “Colored gemstones are one of our stronger points, actually,” she said. “With diamonds, we work on very slim margins. There’s so little profit in diamonds. But sapphires, especially with the royal wedding, are going strong.” The only resistance she gets is age-related. “The younger crowd isn’t interested in fine color. They don’t understand color. They understand diamonds.”

Looking Ahead

Regardless of what’s selling, the big question right now is whether sales will be strong come Christmas. Many stores feel the economy is recovering, and that the holidays will be better this year than they have been in years past. “If the show in Vegas and my personal business is any indication, it will be a solid Christmas season,” said Quick. “May 2011 was bigger than December 2010, and barring a huge new economic issue, we should all have reason to celebrate New Year’s Eve.” 

The Marketplace

• Round is still selling best, with cushion and Asscher tied for second.

• 1.5-carat and 2-carat stones are top sellers.

• SI1 is the most popular clarity.

• H-J is the best-selling color range.

• 14-karat white gold still outsells platinum in settings, but platinum is gaining momentum again.

• The average price for an engagement ring, including stone and setting, is $6,280.

Article from the Rapaport Magazine - August 2011. To subscribe click here.

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