More Than a Few Aspirin Needed For Industry Hangover

I attended the JA Show in New York this week. There were a lot of designers and manufacturers conspicuous by their absence, and space filled with a variety of vendors hawking everything from sunglasses and fur coats to beads and baubles of all types, along side more traditional jewelry companies and aspiring designers.

I didn’t see or hear of much ink written on many order pads, but I know there were at least a few who found the show worthwhile.

It is hard to imagine much more than two-thirds of these vendors will survive the year. There are simply too many suppliers and not enough buyers. Take bridal, for instance. It has long been viewed as, and experienced to be, the only real recession-proof part of the jewelry industry.

Each and every year, and the statistic hasn’t changed in 25 years, there are about 2.3 million marriages in the U.S. It is a finite pie, yet manufacturers are jumping on the bandwagon right and left this year to try to get a piece of that most stable part of the business—even fashion and pearl companies.

Here’s the problem: there are already about a thousand companies who are in the bridal jewelry business to one extent or another. There are simply too many vendors in our industry and sadly many of the people working for them will be out of a job by October or January at the latest.

By October, if some vendors haven’t had the fall orders to produce and keep people working, they won’t be able to sustain themselves.  There are certainly others who are teetering but may be able to hang on through Christmas, clinging to the hope of filling last minute orders.  If the orders don’t come, they won’t make it.

I don’t mean to be a doomsayer here, but the reality is all around us.  We have been talking a lot about how the industry’s model of business is broken.  We need to crush it and put it out of its misery.  The fact is, vendors have relied primarily on stock orders and sell-in for their volume for decades.  It has gotten us to where we are today with overstocked inventories of all kinds.

Why has this accelerated so much in recent years?    

Significant blame has been placed on the explosive growth and “power” of brands the past 8-10 years, but if you look back there was a fundamental change in the way diamonds are bought and brought to the marketplace. The growth and power of designers and brands can be traced directly back to the site holders’ and diamond suppliers’ need for more down line flow and control of their goods into the market, partnering with manufacturers and designers to ensure the use and sale of their diamonds.

It became easy to build merchandise and jam it into showcases in every way possible.  The industry got drunk on it and now we have a massive hangover.

What is going to happen to the jewelry business when all these vendors go under?  What happens to the inventory?  Where does it go?

There will be a flood of goods on the market through all kinds of channels, making good jewelry easy to find and cheap to acquire.  It has to go somewhere.  Even if goods are broken up and melted down, it has to go somewhere.  All of this will make it tougher for manufacturers to sell stock into jewelers’ inventories.  

Maybe it will be absorbed by those brass and glass vendors who are spending money developing sample lines they will basically give away to jewelers.  They can hold onto inventory as they wait for the orders to flood in off of their samples and use the parts to fill the orders.

The jewelry industry’s "correction" is going to take some time to right itself, but there is no doubt the focus of sales must be placed on sell-through, which is why my last BLOG entry focused on training and education.

Focusing on sell-through, training sales associates and store owners on how to present and sell a manufacturer’s merchandise of course is only part of the equation.  There must be customers coming through jewelers’ doors.

These things are what I mean when I say we have to get better at what we do.  We have to continually work toward changing our ways of promoting, attracting, persuading, and satisfying jewelry consumers.

Knee jerk reactions (brass & glass dummy samples), jumping on bandwagons (vendors thinking getting into bridal will save them), and dumbing down (e.g. titanium and steel being sold as bridal jewelry because they are cheap and that’s "what the customer wants") are all band-aids—aspirin.  They are easy paths.

Getting better at designing, manufacturing, buying, merchandising, presenting, selling and managing.  That is hard work.  Understanding why people buy jewelry and finding better ways to tap into those reasons is hard work.  Making jewelry people will buy is hard work.  Providing a more engaging shopping experience is hard work.

Let’s not look for the easy things to pull us out of this.  Let’s continue to work at getting better individually for the betterment of the whole industry.  Let’s remember why people buy jewelry as we search for ways toward better business.

Continue to hone Who You Are, What You Do, and Why.