I think it’s safe to say that the industry seems more “cautiously optimistic” now than it’s been at any point since December 2007, when the economic downturn first came into our lives. Yet, the Great Recession seems unlikely to spur a “Great Recovery”—more small, steady growth that gets us out of the hole we were in, but isn’t much to cheer about.
This also isn’t likely to be a “rising tide lifts all boats” type of upturn. A lot has changed since the economy went south. The playing field has become a lot more competitive. Your jewelry–selling competitor no longer just resides across town; people can buy jewelry at home, at work, and on their phone. They can even buy from a competitor while standing in your store. This will increase the pressure on stores to offer differentiated products—or at least find a way to differentiate their stores.
And this, of course, assumes consumers choose to buy jewelry at all. The jewelry category remains under constant assault from other consumer products. I can’t tell you how many “Valentine’s Day gift” articles I saw that not only talked about traditional items like flowers and jewelry, but seemingly unromantic items like iPad skins.
The consumer has also become more empowered than ever, in part due to the recession, but also due to the rise of social media and sites like Yelp. And once people gain power, they tend not to let it go. As speakers at the social media panel talked about at yesterday’s Women’s Jewelry Association’s “In the Know” conference, where once everyone “talked at” their customer, now everyone must engage in more of a dialogue.
Moreover, the jeweler’s role has changed. When I first started writing about this industry, I remember a retailer saying, “A fine jeweler’s job is to introduce the public to things that are fine.” Not anymore. Today, a jeweler exists to sell things a customer wants to buy—even if that’s lower-end items like charms or silver. Or, more to the point, a jeweler’s job is to make enough money to stay in business—even if that means buying gold or diamonds off the street. As Ken Gassman put it, retailers are increasingly thinking more like businesspeople, less like jewelers.
The tastes of affluent customers have changed as well. Many don’t just shop at high-end stores, but discounters as well, and have no problem with “affordable” brands like Pandora. And they have embraced deals and comparison-shopping. A recent study noted that coupon use has risen 63 percent, and said the average coupon user is “young, affluent, and tech-savvy.”
If anything positive comes out of this recession, it’s that it has forced a lot of companies to up their games. Jewelers are running smarter, leaner, more responsive businesses than they did five years ago. I just spoke to someone who returned from the IJO show, who noticed more independents armed with iPads, making their purchasing decisions based on industry management software like ARMS.
That’s all good. Yet, even if the economy gets better, jewelers still won’t be able to rest easy. In fact, we will likely see continual pressure for improvement. The good news is, the improved economic environment means there are more consumers out there. The bad news is, jewelers will still have to work harder, and smarter, to lure those customers to their store.