2008 has been dubbed “the worst holiday in decades” across all categories of retail, and jewelry was no exception. Luxury retail in general has been hard hit by the recession, and of the luxury sector, jewelry especially took a pounding.
But despite the grim overall picture, not all was a washout. In its annual post-holiday survey of independent jewelers across the United States, JCK found a number who either had better holiday results than they expected—or who had already positioned their businesses to withstand a downturn. In particular, it seemed jewelers in the Mountain region—from Montana to Arizona—were best poised for the season.
Rian Robison, manager of Goldsmith Co. Jewelers in Provo, Utah, said “We actually did really well. We were on par with last year. It’s what we expected. We were hoping to do a little bit more. I think Utah hasn’t been hit so hard with recession as of yet.
“Hearts On Fire did very well; Pandora, Breitling, both very strong this year. We’re a college town (Brigham Young University). Our bread and butter are wedding sets, that’s always great and that’s been booming.”
Ruth Batson, executive director of the American Gem Society, said the prevailing trend among her member stores was that December was way down, but the year overall was up, a trend JCK also noted in its research. For example, Fred Peterson, general manager of Goldsmith Gallery Jewelers in Billings, Mont., said, “Things were okay. They weren’t great, but we got through it. Down for the season [25 percent] and up for the year. There were new customers, but no big spenders.
“We still did well with our bridal and engagement rings. No matter what the economy, people are still going to get married. Strong sellers included Tag watches and diamond earrings. We just didn’t get that big 50-, 60-grand sale. But January has been good and the week after Christmas was very good.”
Alan Friedland, owner of Ream Jewelers in Lancaster, Pa., said, “The holiday fell off a little bit compared to last year, [about 8 percent down] but overall, we finished ahead for the year [up about 10 percent], which we are very pleased with. We’re in a very conservative area, so we don’t feel as much of the fluctuation.”
Ream Jewelers fared better than many of its counterparts in the Northeast, where, overall, jewelers reported the worst holiday results. Jewelers in the South reported declines, but to a lesser degree. Along with the Mountain region there were pockets of resiliency in areas of the Midwest, and even some jewelers on the West Coast—much of which has been beleaguered with real estate woes—did fairly well.
Emily Vargas Smith, the owner of Vargas Jewelers in Santa Barbara, Calif., called the holiday “pretty good.”
“It was a lot better than I expected,” she said, noting, “it was saved by the last four or five days.
“We sold a lot of diamond pendants, stone pendants, a lot of silver, and men’s jewelry,” she said. “Diamond earrings did well but not like other years.
“We really didn’t have such a bad year,” she said. “I can’t complain about the business. It was a little better than last year.”
In her area, she said a lot of stores have closed, but her store has a license to buy gold from the street. “We have a case full of estate jewelry and we did very well with it. You really have to diversify into other things.”
Ron Olsen, owner of Olsen and Son, in Bellevue, Wash., said Christmas was “okay.”
“It wasn’t our best. Had we not brought in clearance items on consignment from a couple of vendors, we would not have done as well. People were looking for sales and you had to give them a good sale. But his big problem wasn’t the economy—it was the weather, the worst snow in 31 years.
“It was a tough December for us to get through but we were okay. We weren’t at last year’s numbers but we ended up okay.” And once the weather cleared up, he reported better sales after Christmas.
Sissy Jones, CEO of Sissy’s Log Cabin in Pine Bluff, Ark., said this was the best December she’s ever had—but she’s never worked harder for it. The store beefed up its marketing, extended its hours, and stayed open Sundays, which it typically doesn’t do. She acknowledged the month’s sales were helped significantly by the closure of a competitor, whose inventory she was able to buy for a very good price, but she also credits a huddle-and-hustle session with the staff.
“December started off slow, and it could have been a disaster. We called everybody together and said we’ve got to hustle. I also gave an extra 1 percent commission for selling inventory we owned—but not for selling memo goods. Boy, were they just checking those tags and if it was our own merchandise, saying [to customers] ‘I’ve got something you’re just going to love!’” While she said having a lot of lower-priced merchandise was important this year, big diamonds also did very well.
Curt Stubbs, owner of Potter & Anderson Jewelers in Peoria, Ill., said, “Actually, I was happy with it, all things considered. It wasn’t as good as last year, but it wasn’t bad. I think we’re a little fortunate than other parts of the country. The crops were really good this year—we’re a really big farm community—we have the headquarters of Caterpillar tractor company [the world’s largest maker of construction and mining equipment], and they’re a good solid company. We have a really good hospital complex here that does pretty well.” And, he joked, people weren’t speculating on real estate in Peoria. “After all, this is Peoria,” he said, noting that the weather was more of a drag on sales than the economy. The store was very busy on days when the weather was okay, but not so much when the weather was bad.
“But all things considered, it was OK. The more expensive things were not as strong, and the less expensive things weren’t as strong. It was kind of more of the middle that was good for us.”
Rian Robison in Provo, Utah, says his store did a lot of advertising, and it paid off. “The last two weeks definitely strong. People are still excited and want to make things happen. People still wanted to make their Christmas happen.”
Most of the jewelers JCK spoke to concurred, but not all. Some cut back on advertising. Said Anthony Folco, owner of Folco Jewelers in New Bedford, Mass., “When you realize it’s going to be kind of a lost cause, you don’t want big advertising bills come January.”
Brenda Reichel, owner of Carats and Karats in Honolulu, Hawaii, reported “the worst Christmas in 21 years.” Her area has been especially hard-hit by the economy, and three jewelers have closed in the last six months, she said.
“I’ve had people tell me that their retirement is totally gone because of the 401Ks. It was just a down year.
“I’ve hunkered down. I’ve cut print advertising, TV advertising, and employees. Obama is talking about change so I’m going to look at what I can change about my business.”
Heather Maertens, owner of Maertens Fine Jewelry in Solomon, Md., changed her advertising tactics somewhat, decreasing print but increasing radio. Still, she said, it was hard to track results.
Personal contact with customers—the tried and true—remained the most effective sales tactic for jewelers.
Jeannie A. Phelan, CG, co-manager of Dick Bundy’s Regency Jewelers in Madison, Tenn., said, the firm advertised and telephoned customers.
“We have wish lists that we accumulate throughout the year, and we call husbands and boyfriends and try our hardest to get them to buy. We start calling that week after Thanksgiving.”
Brad Hart, sales manager of Hauser’s Jewelers in Newport News, Va., said, “We really think that the personal contact is important. We were a lot more proactive with the phone calls and that really paid off.”
Chalo Luna, owner of Bianca’s Fine Jewelry in Roseville, Calif., said, “More than anything it was a referral Christmas. There were not many walk-in customers.”
As Stubbs and Olsen observed, the weather—good and bad—added its punch for a number of jewelers. In some areas even where snow is fairly common, such as the Pacific Northwest or Syracuse, N.Y., the weather was especially bad. Don Lemp of M. Lemp Jewelers in Syracuse said it was terrible leading up to Christmas—but as a result, the week after Christmas was surprisingly strong.
“Sales were down somewhat, but it was okay. Given the economy, the holiday was better than I expected. I was pleased with it.”
Tom Madison, owner of Crown Jewelers in Clackamas, Ore., actually had to close for a few days. “Mail didn’t come, FedEx didn’t come, and it all happened right at Christmas. We were hoping to do substantially more.”
Ironically, a lack of snow caused problems for Barry Peterson, owner of Barry Peterson Jewelers in Ketchum, Id., as his store is in a ski area that did not have any snow until five days before Christmas.
“We did have cancellations because of lack of snow. We also have a large second home population, and we didn’t see many of those people either, even though they were here.”
In terms of product sales, watches proved surprisingly strong this holiday season, as a number of jewelers cited them as best-sellers. Brands like Tag, Breitling, Cyma, and Rolex were named.
Carl Carstens ,CG, owner of C. A. Schnack Jewelry Co. in Alexandria, La., said, “Watches were our best seller, which is strange. We were up 27 percent in watches and up 24 percent in colored stones (the guts of these sales were rubies, emeralds, and sapphires) and we got hammered everywhere else. We did have one unusual watch deal, a corporate deal for 80 watches, but still we would have been up [without it].
Bridal jewelry, as usual, did well—as many jewelers point out, people are going to get married no matter what the economy. Apart from that, like Jones in Arkansas, some jewelers still did well with big diamonds, while many jewelers reported significant increases in lower-priced merchandise such as sterling silver and add-on jewelry like Pandora or Chamilia bracelets.
Jeff Corey, president of Day’s Jewelers, a six-store chain based in Waterville, Me., said the Chamilia line, new for him, was a blowout success. He ran a special promotion giving away the silver bracelets—which he admitted was a costly initial investment—but it paid off handsomely. He advertised the free bracelets heavily and customers lined up to get them. Many of those were new customers who’d never even been inside a Day’s store. Then, for Christmas, they all came back to buy the add-on beads, he said. Mothers brought daughters, daughters brought sisters, sisters brought friends, and so forth, and many of these sales were for multiple beads.
“The sales themselves were small, but boy did they add up,” he said.
Still, it wasn’t the kind of holiday the industry has gotten used to. A few jewelers were really discouraged, and more than a few blame the media for making things worse than they might otherwise be. Leslie Kinder, owner of Melange Custom Jewelers, in Wichita, Kan., thinks so.
“Wichita doesn’t have a bad economy, or at least we didn’t have until we started hearing the bad news. And when people around here heard that, they stopped buying.” Kinder did not invest a lot of money into advertising and stock and is now happy about that, but overall, she’s struggling. She’s hopeful that her shop will stay open, but says it depends on the economy—and whether she gets tired of the struggle.
“Wichita has a great economy. I don’t know anybody who does not have the same job they had last year. But as soon as they started hearing the news, they started thinking, ‘we’re next.’ The average consumer thinks that if you are in business you have resources so even if they don’t come in for two or three years, you’ll still be there when they’re ready. So, it’s real frustrating right now.
Still, jewelers remain cautiously optimistic for the long term.
Says Kinder, “Because I’m in Wichita, and because the economy here is still pretty good, I’ll still be able to keep the business going. I’m holding my breath and keeping an eye on my budget.”
David Fineblit, owner of Pearson’s Inc. in Manchester, N.H., said, “We’re going to get through this. We’re not going to stick our heads in the sand and cry that the sky is falling.”
He plans to pick up no new designers or suppliers, but will continue to work with his existing vendors. “They’re hurting; we’re hurting. But we’re going to work together to get through this.”
Says Brenda Reichel, “I think we’ve bottomed out. Things can only get better.”