The Extent of the Industry’s Shrinkage Is Demonstrated by This Chart

So the theme of the week has been industry consolidation, given the JBT’s year-end stats and Signet’s pending purchase of Zale.

Yesterday, as an experiment, I looked up National Jeweler’s 2003 list of Top 40 jewelry chains.

Here they are the first 10 names:

1. Zale

2. Sterling

3. Friedman’s

4. Fred Meyer

5. Whitehall

6. Helzberg

7. Crescent

8. Samuels

9. Ultra

10. Reeds

These were the biggest companies 11 years ago. Assuming the Signet/Zale merger goes through, five of those 10 names will have either been swallowed up or gone out of business (or, in the case of Crescent, both). In a little more than a decade, that list has been cut in half.

The good news is that the remaining companies (Sterling, Fred Meyer, Helzberg, etc.) are generally considered strong businesses—demonstrating not only “survival of the fittest,” but the adage that a shakeout leaves more opportunity for the companies that remain.

None of this is unique to this industry. Analyst Ken Gassman used to talk about how many retail sectors are dominated by “duopoly”—where two (or sometimes three) companies operate most stores in a sector, under a variety of brand names. He gave as examples Borders and Barnes and Noble for books, and Circuit City and Best Buy for electronics. Now, of course, Borders and Circuit City are gone, and some fields seem like they can’t even support a handful of retail chains. And so OfficeMax merged with Office Depot. Jos. A. Bank wants to buy Men’s Wearhouse. And Sterling is taking over Zale.

Some of these companies were longtime competitors with decades of enmity between them. But they decided to join up because all retailers are under siege from other forces—in particular, big-box discounters and the Internet. Barnes and Noble’s biggest enemy turned out not to be Borders but Amazon.

Where all this goes, no one is sure. As someone wrote on my Facebook page, with so many retail names under the same umbrella, that gives interesting and creative independents a chance to make a name for themselves and stand out. But the winnowing-out process likely isn’t over. And while traditional retail will never die, America has long been considered “over-stored,” and we are seeing a long rationalization process in our industry and many others.



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JCK News Director