Market Place

Who do they trust, where did they buy?

More consumers trust independent jewelers than any other jewelry outlet.

Almost half (48.5%) of the respondents in a nationwide consumer poll say that when making a buying decision based on the integrity and honesty of a jewelry source, they choose an independent retailer. The quarterly poll, conducted for JCK and Jewelers of America by Chilton Research Services in Radnor, Pa., asks 1,000 people about fine jewelry and watch purchases made in the past three months. The latest installment covers the fourth quarter of 1996.

Unfortunately for independent jewelers, trust isn’t the only factor affecting consumers’ buying habits. Asked where they bought jewelry in the past three months, 33.3% said they patronized a national guild store such as Zales or Bailey Banks & Biddle, 19.0% bought jewelry in a department store such as Macy’s or Neiman Marcus and just 3.0% bought from an independent jewelry retailer. This departs from the norm set in previous JCK quarterly studies, when about a third of all purchases were made at independent jewelers. This most likely results from consumers who don’t frequently buy jewelry making holiday purchases at highly visible and heavily advertised mall and department store locations.

Wherever consumers shopped, the majority of the merchandise retailed for under $200. Almost half (45.7%) of all those who bought fine jewelry or watches kept the bill under $100, while 21.5% bought goods between $101 and $200.

Precious metal jewelry without stones was the most popular purchase, with a 12.2% share of the market. In this category, earrings were bought most frequently. Watches made up 7.5% of the whole, while 6.1% chose precious metal jewelry with one or more diamonds. Of all the diamond jewelry purchased, half were rings.

The poll results are statistically reliable enough to be projected nationwide with a margin of error of +/-3%.

THE NUMBERS ARE IN: PEARLS BOOMED IN 1996

Retailers and wholesalers of cultured pearls raved about a sudden sales boom that moved pearl jewelry out of cases and challenged supply in 1996, and now a survey has confirmed the great surge in pearl popularity.

Almost 89% of retailers surveyed in the Cultured Pearls Sales Survey reported an increase in sales, with an average 18% increase in sales over 1995. Forty-one percent of retailers and 40% of importers said they had experienced an “excellent” year in cultured pearl sales. The survey was conducted by the Cultured Pearl Information Center in New York, N.Y.

Retailers and importers attribute the increase to the reentry of pearls into fashion, with pearl jewelry ubiquitous in magazines, on television shows and in movies. Retailers and promotional groups spent more money advertising pearl jewelry, and retail stores had larger inventories. As a result, customers became more aware of quality issues and the variety provided by Tahitian black and South Sea pearls.

Japanese akoya pearls remained leaders in unit and dollar sales of pearl strands and finished jewelry; all retailers and importers surveyed said they carried these pearls in strands or finished jewelry. Retailers and

importers alike reported Chinese akoyas as the first runners-up in unit sales, and importers said these less expensive akoyas brought in the most money next to the Japanese counterparts.

The big South Sea pearls meant big dollars for retailers, who ranked the Australian and Indonesian gems as the second most profitable types of pearls in their stores. Stocking the increasingly popular South Sea and Tahitian black pearls was a lucrative strategy for retailers and importers in 1996. Retailers who stocked these products saw an average 22% increase in overall pearl sales, compared with a 15% increase in stores that didn’t carry the larger variety.

Cultured pearls were everywhere at early 1997 trade shows and were splashed across the pages of trend-setting fashion magazines, so it’s not surprising that survey respondents felt optimistic about strong sales continuing through the year. Retailers expect a 14% sales increase over 1996, while importers look forward to a 12% increase.

SILVER GIFTWARE

A shining category

Giftware is a strong growth category for sterling silver, reports the Silver Information Center. Sterling silver giftware sales totaled about $220 million in 1996, and the center expects that to grow 8% to 10% per year for the remainder of the decade.

“The ’90s are about intrinsic value and acquiring fewer but higher-quality items,” says Linda Meehan, director of SIC. “Today’s consumers are looking to surround themselves with

beautiful objects that not only make them feel good but are functional as well.”

Weddings continue to be the primary purchase occasion for giftware, but christenings and birthdays are not far behind. Graduations, anniversaries and Mother’s Day also draw consumers to the category. The most popular sterling silver gift items are picture frames, serving pieces and baby gifts. Corporate gifts and baby items are the fastest-growing segment of the category.

Department stores are the primary retail channels for sterling giftware, accounting for one-third of all purchases. Jewelry stores account for 20% and large variety stores for 13%. Mail order is positioned for growth, as is TV home shopping, says SIC.

To increase sterling silver giftware sales in your store, look for silver jewelry designers who are adding signature giftware and home accessories to their lines. Add these to your sterling baby gifts and picture frames.

FORECAST UPDATE: Caution marks jewelers’ outlooks

Editor’s note: To get a more accurate reading on the business outlook in the retail jewelry industry, JCK has moved its twice-yearly outlook report from the January and July issues to April and October. This will enable members of the JCK Retail Jewelers Panel to reflect on Christmas sales for the April forecast and on spring sales for the

October forecast before predicting the rest of the year.

Caution and a reliance on “sure things” characterized many jewelers’ business outlooks in early 1997, according to members of the JCK Retail Jeweler’s Panel.

More than half the panelists expect higher sales in the first half of 1997 (with a median gain of 5%) over the same period in 1996. Only about a third (37%) predict profit gains, down from 56% who did so in a late 1996 poll. Two of five foresee no profit change.

This pessimism is surprising because the jewelry industry as a whole had a good Christmas and satisfactory 1996 (see JCK, February 1997, p. 20).

The caution reflects some difficulties at the local level – customers and jewelers seem more conservative in what they are buying in 1997. For example, many panelists reported – by a 2-to-1 ratio – difficulties in convincing Baby Boomers to spend more on jewelry despite personal income gains. Not surprisingly, four of five jewelers also said they – not customers – now raise the issue of excellent-make diamonds in sales talks.

Jewelers said they will rely more on sure-sellers this year. More than a third revised their buying plans to stock up on more diamond, karat gold, platinum and bread & butter jewelry, as well as loose diamonds.

Many said they will reduce planned purchases of colored stone jewelry and loose gems, watches and high fashion/high-design jewelry. Indeed, watches generally may have a tough season. Almost a third of the respondents said they will reduce the number of watch brands they carry, and more than half said they expected flat or lower watch sales in 1997.

Most jewelers said they expect sales gains through midyear, and most said consumer confidence in their markets is healthy (two out of five said it is “strong” to “very strong,” while more than a third called it “satisfactory”). Only a handful were pessimistic.

To boost sales, more jewelers said they are fine-tuning operations. They boasted of shrewder buying, leaner inventories geared to having sure-sellers in stock, better quality goods, more reliance on traffic-pulling customer services (including repair) and more market-oriented retailing.