All of this points to a pretty stark fact: This industry is getting smaller.
Dione Kenyon, president of the Jewelers Board of Trade, has noticed this, too. “We see a continued decline in the size of the industry,” she says. “It’s been happening for a while and it’s still happening.”
This is, in one sense, puzzling: If a company survived the last few years, you would think they could make it through anything. But, as Kenyon notes, the bankruptcies from 2008 to 2010 mostly involved credit issues. The companies leaving today just seem to have reached the end of the line. “We aren’t seeing a lot of bankruptcies and business failures,” Kenyon says. “It’s retirement, people looking for exit strategies, or just feeling that business is too hard.” You could argue the entire business model of Richline is built on acquiring companies that are looking for a way out.
Part of this is due to another challenge the industry is coping with: A lack of new faces. “I don’t see many young people coming into this business,” says Kenyon. And that means many business owners don’t have anyone to pass the company down to.
On some levels, this is understandable. Many feel the business isn’t as attractive as it used to be. Time was, if you were a long-established jeweler and you worked hard, you could make a nice living. Now, the hours are longer, business is tougher, and owners have to be constantly strategizing and mastering new skills. And even with all that, sometimes the money still isn’t there.
I’m not trying to depress anyone. I’ve heard from many retailers that they have had their best year ever. Consolidation is also part of the normal business cycle, and the thinning of the herd, as brutal as it can be, often helps the companies that remain. But at some point it becomes self-perpetuating. I recently heard of two well-known mid-sized chains, which are both up for sale. They are both decent operations, but they are running up against the problem faced by many businesses looking to leave this industry: There are not many companies around to buy them.