Recession has Already Hurt Half of U.S. Jewelry Industry Businesses

The deepening U.S. recession, and credit and banking crises, has already impacted more than half of the businesses in the North American jewelry industry, including retailers, manufacturers and suppliers, according to JCK national surveys. And most expect it to get worse over the next couple years before it gets better.

Retail jewelers. Conducted in late November and early December 2008, the surveys found almost half the retail jewelers polled (48 percent) said their businesses have already been affected “somewhat” or “great deal” by the financial crises. Two-thirds (69 percent) said the biggest impact is on their sales. Far behind in second place (10 percent) is difficulty in getting loans, credit, and other financing.

How is the U.S. credit and banking crises affecting your retail jewelry business?
It hasn’t affected my business yet           30%
It has affected my business a little          23%
It has affected my business somewhat     22%
It has affected my business a great deal  26%
Total                                                100%
Source: JCK editorial retailer survey, early December 2008

Most expect it to get worse. Nine out of 10 expect the financial crises to have “some” or “great” effect on U.S. retail jewelers in the next two years.

Jewelers are confronting the situation in various ways. Many are focusing on “outstanding customer service and paying attention to the basics [which have] always served us well,” as Jan Fergerson of Ford, Gittings and Kane, Rome, Ga., put it. Indeed marketing, service and quality are this recession’s mantra for many jewelers. Alex Laferriere, of Laferriere & Brixi Diamantaires, Montréal, Quebec, Canada, will “Focus spending on marketing activities to recruit new customers and maintain loyal ones,” and “continue to improve on product quality, service and price.” A Topeka, Kan., jeweler plans to “stay the course [with] the wide variety of services we provide, including all types of repair (watches, clocks and jewelry).”  In Decatur Ind.,  Eileen Eichhorn, of Eichhorn Jewelry, will spotlight “many of the services regular customers don’t even know we provide.”

Many jewelers say they’re buying less new inventory and only what they can afford; selling from what they already have; being creative in new designs; using alternative, less expensive metals; lowering their price points and avoiding borrowing as long as they can. And some, as one jeweler put it, will buy now “only from manufacturers that have stood by us, and look for replacements for those who haven’t.”

What one area of your retail business has been most impacted by the financial crises?
Lower sales                                                         69%
Getting loans and/or credit                                      8%
Buying inventory                                                    6%
Customer services                                                  3%
Pricing of merchandise                                             3%
Securing other forms of financing                               2%
Closing or being sold to another company                    2%
Increased competition with other retail jewelers           2%
Other, please specify                                              6%
Total                                                                100%
Source: JCK editorial retailer survey, early December 2008

Some jewelers are taking a militantly positive approach to business now. “We’ve chosen to not participate in the recession,” declared Pennsylvania jeweler David Mazer. “We’re paying more attention to existing clients, and how we can increase the business they represent, inclusive of referral business from them.”

In your opinion, how will the U.S. credit and banking crises affect independent retail jewelers over the next two years?
It won’t have any effect                 2%
It will have a little effect                9%
It will have some effect                42%
It will have a great effect             47%
Total                                       100%
Source: JCK editorial retailer survey, early December 2008

Manufacturers, suppliers and wholesalers.
This survey found 64 percent of them say the financial crises have affected their business “somewhat” or “a great deal.” Only one in four hadn’t felt any impact yet, as of late 2008.

How is the U.S. credit and banking crises affecting your jewelry manufacturing, supplier or wholesaler business?
It hasn’t affected my business yet             20%
It has affected my business a little            16%
It has affected my business somewhat       34%
It has affected my business a great deal    20%
Total                                                  100%
Source: JCK Manufacturers, suppliers & wholesalers survey, late November 2008

Unlike retailers, though, for two out of five (41 percent), the biggest effect is in getting loans, credit or other forms of financing to underwrite their operations. 

They also are more pessimistic than retail jewelers. Three out of four (76 percent) expect this recession to have “a great effect” on jewelry manufacturers, suppliers and wholesalers in the next two years.

What one area of your jewelry manufacturing, supplier or wholesaler business has been most impacted by the financial crises?
Getting loans and/or credit                                     29%
Pricing of merchandise                                           15%
Securing other forms of financing                            12%
Increased competition with other manufacturers,        7%
suppliers, wholesalers 
Customer services                                                 4%
Securing raw materials (gemstone, metals, etc.)         3%
Merchandise quality                                               2%
Closing or being sold to another company                  2%
Increased competition with other retail jewelers          2%
Other, please specify                                            25%
    (Inc. slowdown in sales, orders, being paid)
Total                                                               100%
Source: JCK Manufacturers, suppliers & wholesalers survey, late November 2008

To cope—in addition to downsizing, boosting advertising, and operating “as lean as possible”—a number of manufacturers, like Suzanne Metaxas, of Beads & Baubles, Oakland Gardens, N.Y., will “make more unique pieces and increase the quality of the items I offer, while keeping the price in the affordable zone.”

Others are providing more marketing assistance to create interest in their products, switching from 14k gold to mixed metals and sterling silver, and investing in internal systems to—as one put it—“position the company for success when the market turns.” 

In your opinion, how will the U.S. credit and banking crises affect manufacturers, suppliers & wholesalers over the next two years?
It won’t have any effect                 0%
It will have a little effect                2%
It will have some effect                22%
It will have a great effect             76%
Total                                       100%
Source: JCK Manufacturers, suppliers & wholesalers survey, late November 2008

For manufacturers, suppliers and  wholesalers—as with their retail clients—customer Service remains a top priority and key tool. “We’ll continue to offer our customers even greater marketing support than we have in the past, so they can keep their names in front of the consumer to do business,” noted Bob Kagan of Cordova of Fine Jewelry, Flushing, N.Y. In Las Vegas, Nev., Diana Michael, of The Michael Group, declared, “We’ll keep coming up with promotions, incentives, keep in touch with them, and reminding them they can order what they need.”