We are seeing an interesting contrast: Business wise, this industry is doing okay. Psychologically, it’s a mess.
In fact, the mood is probably as bad as it’s been since the recession. Clearly, business isn’t as bad as it was back then, when many retailers and manufacturers saw business drop by as much as 50 percent. Instead, there is just a general feeling of softness and a lack of expected forward motion.
So why the funk? Some theories:
– People are disappointed. With the economic numbers seeming pretty strong, we all thought the industry would be enjoying the fruits of the upturn. However, jewelry sales have fallen for the last six months, according to the U.S. Department of Commerce. That gap between expectation and reality is fueling the doldrums.
– The industry is consolidating. And less jewelers mean less sales. Eventually, the surviving retailers will pick up business, but for now things are still sorting themselves out.
– The millennials. I wrote about this topic last week, and it’s being discussed more and more. They are buying bridal—and often their own spin on bridal—and maybe charms, but not much else.
– A lack of advertising support. This is perennial problem for the industry—other sectors are out-marketing us. Many hope that generic marketing will come back. That isn’t likely. But we need to do a better job at getting our message out.
– Metal prices are down, and that has hurt not only jewelers that depended on trade-ins, but it has caused overall average sales numbers to fall as well.
– The worldwide market is soft. India and China have cooled off. Diamond manufacturer margins are zero. That has hurt the general industry mood, even if America remains the best-performing market.
All this said, there are good signs are out there. Many dismiss MasterCard’s study of 25 months of increasing jewelry sales, which seems to contradict the Commerce Department data. But Jewelers Board of Trade president Dione Kenyon tells me her group has seen “orders of credit reports rise for the first time in I don’t know how many years. For inquires to rise 7 percent is a big deal for us.”
JCK Las Vegas is right around the corner, and that typically gives the industry a psychological boost. It needs it.