The current tough times are but a bump in the road for jewelers, says Kenneth Gassman of Davenport & Co. Gassman, a business analyst specializing in the jewelry industry, was the keynote speaker for the JCK Show – Orlando.
Davenport’s message was extremely optimistic. Historically, he said, the average length of a recession is about 11 months, and this one began in March 2000, indicating it is close to being over. Additionally, this recession has differed from past ones in that the single most important factor in determining consumer spending is the stock market, not unemployment figures as was traditionally the case. Additionally, housing values have remained stable, but are not longer the number one asset of the Baby Boom generation-the stock market is. However, the stable housing value adds to the feeling of perceived wealth.
The stock market, he said, is a very good predictor of economic recovery, simply because so many more people own stock, whether it’s a direct buy or through a 401K plan. But perhaps one of the most critical reasons why jewelry seems poised for an extended boom period is that the Baby Boom generation-voracious consumers-is entering the prime jewelry-buying years of age 50-60. The Baby Boomers already own lots of stuff, he said, but not a lot of jewelry, and that’s about to change as 11,000 of them turn 50 every day.
Generation X, he said, is relatively insignificant-their numbers are relatively few and they’re not consumers. Indeed, many X’ers are almost anti-material, so Gassman joked, “ignore them. They don’t count.”
But what does matter is the group following Generation X, dubbed both Generation Y or The Milliennials. This group of consumers, now in their teens to early twenties, is almost as big as the Baby Boom, equally influential, and also are major shoppers. They are, however, not going to be easy to reach through traditional media. They are individualistic, computer-savvy, multitaskers, and generally optimistic in their outlook, as opposed to the sour, cynical X’ers. But they are also developing traditional values, and a merchant who upsets one of these consumers will find out that he or she can and will tell 10,000 people of the experience via the Internet.
Finally, he offered three observations about the jewelry market in general:
* All jewelers should be on the branding bandwagon. This market is moving toward brands, and it should. Every other luxury market is dominated by branded merchandise, and jewelry is already following suit and will continue to do so even more.
* De Beers/LVMH merger will serve to boost the entire industry by creating a brand that builds awareness and desire for the product overall.
* And, most other categories are dominated by a duopoly of retailers. For example, Home Depot and Lowe’s in the home improvement market, Wal-Mart and Target in discount stores, and Circuit City and Best Buy for electronics. But jewelry is a service item and event driven, just like a florist, butcher, hairdresser, and so forth, and those industries still have many of independent, mom-and-pop operators. For that reason, the future of the independent jeweler should be secure.