Holiday Wrap-Up: Improved Results This Holiday, Analysts Say

Industry analysts told JCK
the 2010 holiday was strong for jewelers, although they report that the good
news is tempered by a still-cautious consumer mood.

Better-than-expected initial reports had caused longtime trade
observer Ken Gassman, founder of the Jewelry Industry Research Institute in
Richmond, Va., to lift his holiday forecast from a 2 percent to 3 percent
increase to as much as 4 percent.

“The average ticket was up modestly, but jewelers aren’t
selling that ‘one big piece’ like they did pre-recession,” he says. “An AGS
jeweler might have had 15 sales over $10,000 at Christmas in the pre-recession
period. Today, they are lucky to get one or two of that size.” 

The biggest disappointment this year, according to Gassman: diamonds.

“Some jewelers reported a last-minute increase in diamond
sales by men who couldn’t think of anything else to buy,” he says. “Otherwise,
diamond demand has been relatively lackluster.”

Stevan Buxbaum, president of Agoura Hills, Calif.-based Buxbaum
Jewelry Advisors, feels that “people bought but spent less.”

“Price points are down,” he says, adding that silver and
low-end watches did well. “The holiday wasn’t one smooth, consistent upward curve,” he
says. “It was up, and then a dip here and there. There was no consistency. The
consumer remains cautious. The people who are employed are happy to be employed
but nobody feels incredibly secure.”

He also thinks the erratic weather throughout the country,
including heavy rains in Southern California, likely dampened sales.

Things seemed better to Ellen Fruchtman, president of
Toledo, Ohio–based Fruchtman Marketing, who says clients reported “double-digit
increases” and did well with higher-end product.

Yet she claims that “the economy is not better.” 

“Jewelers are all seeing customers they have not seen in
over two years,” Fruchtman says. “The customers obviously have pent-up
buying frustration. They’ve gone a few years not buying—and they are back.
That doesn’t mean that they will be back every year, however.”

Dione Kenyon, president of the Jewelers Board of Trade,
feels that Christmas was “better”—but not for everyone.

“There is a feeling that we are starting to come up the
curve,” she says. “But I would say business is being done by fewer people. It’s
not a case of a rising tide lifting all boats.”

And, she adds: “What is worrisome is that most jewelers were
cautious and they didn’t do much buying this fall. So even if someone walked
into the store, would the store have what they wanted to buy?”

She concludes that jewelers still face “fundamental
challenges,” including high metal prices and a lack of available financing. “People need to find a way around those two problems.”