The business is showing growth but remains uneven
After the holiday, JCK talked to nearly two dozen jewelers about their Christmas sales. Most provided positive reports. After 24 Karat weekend, I’d like to add to that.
It seems the holiday was no better—and no worse—than holidays have been since the financial crisis. For the last few years, the industry has posted small but steady growth—usually in the single digits. This holiday looks to continue this pattern. Sales grew, but not by a huge amount.
In a way this isn’t surprising—the overall economy has been showing slow but steady growth for the last few years. In the third quarter, it grew 2 percent. Given that the industry still advertises less than others, there seems little reason it should outpace that. As Jewelers Board of Trade president Dione Kenyon told me: “If the [U.S.] economy can’t grow more than 2 percent, jewelry sales aren’t going to grow more than that.”
What is striking is how uneven business is—some jewelers did great, some did okay, and many were flat or slightly below last year. But business was also uneven throughout the year. Some told us December sales outpaced the rest of the year’s; others reported the opposite.
At the Forevermark cocktail party on Jan. 11, De Beers CEO Philippe Mellier said his stats showed sales for both the holiday season and the year rose 7 percent at Forevermark jewelers. (He also took a minor shot at Martin Rapaport, noting Rapaport released his anti-Mellier jeremiad just “before the selling season.” Mellier added, “I’m still here.”)
Diamond sales likely did outpace general jewelry sales, with bridal and studs being particularly hot last year. Signet’s 5 percent gain in November–December was in part fueled by the success of Ever Us.
Concerning the diamond business in general, the overall (but certainly not absolute) consensus is that it is starting to bottom out, and we should see a turnaround by this summer. One possible danger is the ripple effect. Clearly, the dramatic cessation of buying this year was out of proportion to the moderate drop in demand. Yet, if things improve, companies could overreact in the other direction, buy too many goods, and end up stuck again.
What do we see for the year ahead? The industry has woken up in a big way. and we are seeing a lot more marketing. That is a great sign. The U.S. economy remains healthy, at least compared to the rest on the world. On the minus side, many worry that the bad news from overseas might slow down growth here. Election years generally don’t help retail, and this looks to be a particularly unpredictable and maybe even unsettling one.
One final point: Some people called my recent post about independent jewelers closing depressing, even if they liked the idea of saluting their departing comrades. Believe me, it wasn’t fun to write. Consolidation is a fact of life in this industry, and it likely isn’t over. I can only stress, as I did in that post, that most of the closings are retirements, rather than bankruptcies. There are still more independent jewelers than other types of retailers, and this thinning of the herd, while not particularly pleasant, should make the remaining players stronger.
These are not easy times, but there are a lot of opportunities out there.