On the surface, the latest Jewelers Board of Trade stats appear good for the industry.
There were only 104 business discontinuances in the third quarter of 2020, down from 296 the prior year.
Those 104 discontinuances translate to 83 retailers, 12 wholesalers, and nine manufacturers. JBT uses discontinuances as a catch-all term for companies that declared bankruptcy, ceased operations, or were merged or acquired.
But like last quarter, when JBT logged a surprisingly low 78 discontinuances, those statistics can be deceiving, says JBT president Erich Jacobs (pictured), given the whole economy has been frozen. There may be many companies that are going out of business that have yet to make it official.
“There are some companies that may still be doing a small amount of business so they’re not off the grid,” he says. “Fewer companies are filing for bankruptcy, that’s usually a clue for us. Fewer companies have been kicked out by their landlord, that’s usually a clue for us. Our suspicion is there is a bunch of firms out there that are struggling, but they’re not gone yet. They are just hanging on. A lot of their landlords are forgiving as far as rent, as they don’t want to lose their store frontage. So they’re alive, but what does that really mean?”
He thinks his group won’t have a clear picture of the post-COVID-19 jewelry industry for some time.
“It will just take a while to figure who survives and who doesn’t and what survival really means,” he says. “We have had a couple of anecdotes where the storefront is still there, but it’s no longer doing any business, but the owner of the storefront is still selling a few things online.”
He notes that the K-shaped recovery is also affecting the jewelry business.
“There’s haves and have-nots,” he says.
But when JBT tracks stores that are doing well, and those that are not, one factor seems pretty clear: The ones that are doing well have an online presence.
Overall, he sees stores still “burning through inventory” and not looking for more stock. And he’s hearing growing concern about the fourth quarter.
“What we’re hearing from retailers is there’s some fear around the holiday season, especially those stores in malls, with COVID numbers going back up,” he says.
And with online ordering likely to be at an all-time high, and the postal service slow, consumers and jewelers might not be able to rely on overnight shipping like they used to.
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