I don’t have to tell most of you that this industry is in a downturn. Even at the AGS Conclave, whose high-end members have generally proven pretty resilient, there is not the spirit I have seen in previously years. Consider this: Signet apparently just had its first sales decline in 15 years. Stuller’s recent layoffs were apparently the first in its history. In the first three months of the year, we have already seen one Chapter 11 filing (Fortunoff) and one liquidation (Friedman’s.) This is a tough climate.
Talking to people at last night’s AGS cocktail reception, many people noted that business is cyclical. The industry, they said, has weathered many downturns before — and will weather this one. All true, and it’s the optimism and spirit of people in this industry that has made it so successful.
Still, I believe we have to look at how much of this downturn is caused by the economy (which we can’t control) — and how much is the result of structural problems in this industry, which we do have some say about but may take a little longer to fix.
The advertiser that for 70 years or so has sustained the jewelry business — De Beers — seems to want to reliquinsh that role, at least somewhat. So the question is: Where do we go from here? Who takes the place of De Beers? How does this industry promote itself to an increasingly fickle buying public?
Last year’s Christmas was disappointing for a lot of industries. But don’t kid yourself: Plenty of IPODs were sold, as were plenty of high-definition TVs. (Remember, it was the diamond industry making snarky comments about IPODs in its ads. Not the other way around.) The handbag craze may be cooling off but that’s only after several years of explosive growth this industry can only envy. The industry’s big hope – Journey diamond journey – surprised many by slowing down. On top of that, the Internet has made it difficult to raise prices, even as gold and metal prices are soaring. Nor does it help that the biggest publicity this industry has received in the last few years was from a movie saying how terrible it was.
There have been some efforts to turn this around, including all the branding initiatives that grew out of Supplier of Choice. Of course, not all of these worked, and people can argue about their execution, and all the rest. But the elemental problem they were meant to address still remains.
Yes, people will always get engaged, and the overwhelming majority of people still love (and desire) jewelry. The economy will eventually turn around. But let’s not let this downturn be an excuse for this industry failing to get with the times. This is an industry that seriously needs to brainstorm ways to reach new consumers – or this downturn may be nastier than any of us expects.