Business Forecast: Jewelers Remain Cautions About The Road Ahead

More independent jewelers seem to be slipping back to the caution and uncertainty that characterized the early 1990s, according to the 1996 edition of JCK’s midyear business outlook poll.

Two out of three retail jewelers expect higher sales and half expect higher profits. But that’s down about 10% from the two previous years.

Jewelers also are less certain about their customers. Thirty-eight percent say consumer confidence is fair or poor now, more than double the 15% who said so in 1994.

The caution reflects the uncertainty and wait-and-see attitude that many financial analysts had about the economy in late spring. Let’s face it. Christmas was tough; even those who did well had to work harder. And after Christmas, retailers had to contend with the effects of heavy consumer debt, continuing corporate downsizing and unusually bad winter weather. For example, Friedman’s Inc., the third-largest U.S. jewelry chain, noted its record half-year and second-quarter results came in spite of a “slow start in January and early February due to poor weather which closed a number of stores.”

Jewelers tell JCK their biggest concern right now is maintaining cash flow. Not far behind on their list of concerns are the need to maintain adequate margins and profits, staff productivity and the effect on business of misrepresentation by competitors. (Interestingly, while jewelers are more concerned than ever about misrepresentation by competitors, they’re less concerned about too much competition.)

Justifiable? Jewelers’ pessimism may be a little overdone. This year’s early Easter (and some early tax refunds) enabled many of the nation’s retailers to post solid gains, reports The Chicago Sun-Times. Sears Roebuck & Co., for example, reported a 6.8% comparable store gain for March, while Dayton-Hudson sales rose 12%. Overall, retail sales were up 5.2% in February and 5.4% in March.

Jewelers also are doing better than they may think. Forty-one percent of the JCK Retail Jewelers Panel reported sales gains of 10% or more for the first two months of 1996. In fact, JCK panelists have reported some substantial early-year gains for the past several years. Valentine’s Day shopping is one reason, say some jewelers, but shrewd and aggressive marketing also has helped.

And while jewelers may be more cautious now than in the past couple of years, most of those polled by JCK are still bullish about their own prospects. Two-thirds expect second-half sales gains (with a median gain of 10%, up from last year’s median of 5%) and half expect higher profits (again, a median gain of 10%).

How to succeed: Almost all JCK panelists who predict lower sales and profits for the rest of 1996 blame factors over which they have no control: cautious customers, local or national economies, the presidential election.

Those expecting gains say their future is in their own hands. As a cartoon character once proclaimed: “We have met the enemy and he is us!” Translation: Your attitude has a big effect on how successful you are. To achieve success, these panelists say they’ll rely on more aggressive marketing.

Topping their marketing list are more ads on local TV and radio stations; ads that promote specific items, such as diamonds; more direct mail; more target marketing; and more holiday and in-store events, such as remount sales and business anniversary promotions.

Concerning operations, jewelers expect to exercise tighter control over inventory (focusing on replacing key sellers), cut overhead, provide more staff training and even relocate to better business areas.

When it comes to stocking the showcases, panelists plan to play it safe with their best-sellers. The heaviest buying will come in karat gold and bread-and-butter jewelry.

Custom design and loose diamonds also are doing sparkling business for a number of independent jewelers. One-third plan to buy loose diamonds heavily now in anticipation of a brisk second half. Sixteen percent will buy colored gem jewelry heavily, up from 12% last year and 7% the previous year.

More expensive and/or cutting edge products will be treated with more caution. Few jewelers plan to increase their high-fashion/high-design jewelry or watch inventories. Fewer still plan to make big commitments to platinum or pearl jewelry or loose colored gems in the second half.


A JCK review of about two dozen local, regional and national jewelry store chains found that sales staff productivity is the No. 1 business concern as they enter the second half of the year. By comparison, less than half of independent jewelers polled put it at the top of their list.

Not surprisingly, at least one in four of the chain operators plans to emphasize training and sales incentives in the second half to boost business.

Other top concerns of chain operators are cash flow and maintaining adequate sales, margins and profits. They are less concerned than independents about deception by competitors.

But jewelers big and small do share some common opinions midway through 1996:

  • They don’t think the presidential elections this year will have much effect on their business.

  • About half of chain and independent jewelers expect profits to increase, though chain jewelers are a bit more bullish about their overall business.

  • Both groups are pessimistic about consumer confidence. But chain operators are much gloomier, with more than half rating consumer confidence in their markets as fair or poor.

  • Karat gold and bread-and-butter jewelry are at the top of the inventory list for chain and independent jewelers, but a larger proportion of chains will make major purchases.


Source: JCK Retail Jewelers Panel
% of respondents who say these concern them:
Not at all No answer Greatly Somewhat
Cash flow 69% 21% 6% 4%
Inadequate profits 49% 36% 13% 2%
Inadequate margins 47% 39% 11% 3%
Sales staff productivity 47% 33% 16% 4%
Inadequate sales 46% 37% 13% 4%
Competitor misrepresentations 44% 45% 8% 3%
Consumer confidence 40% 41% 17% 2%
Local jobless rate 25% 36% 34% 5%
Possibility of national sales tax 24% 37% 34% 5%
Empty stores near you 0 0 0 6%
National economy 21% 59% 15% 5%
Ability to borrow money 19% 26% 49% 6%
Too much competition 16% 58% 23% 3%
Diamond prices 14% 61% 20% 5%
1996 presidential election 11% 46% 38% 5%
Precious metals prices 4% 57% 34% 5%


Source: JCK Retail Jewelers Panel
% of respondents
SALES 1996 1995 1994
Expect an increase from previous year 64% 72% 76%
Expect a decrease from previous year 14% 4% 7%
Expect no change from previous year 22% 24% 17%
The median expected gain: +10%
The median expected loss: -6%
The median change of all replies: +7%
Expect an increase from previous year 53% 62% 60%
Expect a decrease from previous year 10% 5% 7%
Expect no change from previous year 37% 33% 33%
The median expected gain: +10%
The median expected loss: -5%
The median change of all replies: +5%


  • More advertising, 42%.
    Includes more TV and radio ads and more product-specific ads.

  • More sales & promotions, 20%.
    Includes business anniversary and holiday sales.

  • Marketing improvements, 15%.
    Includes more direct mail, including catalogs, and target marketing.

  • Operational improvements, 12%.
    Includes tighter cost controls, lower overhead, staff training, staff reductions, renovations, relocations and general programs such as in-store credit cards.

  • Inventory, 11%.
    Includes “better buying,” quicker restocking of bestsellers and more custom design.

  • General changes, 7%.
    Includes generalizations such as “work harder,” “be more aggressive,” “be more committed to staff and management” and “strive for customer satisfaction.”

  • Sales-related changes, 6%.
    Includes more sales events, sales training and expanding sales area.

(Note: Adds up to more than 100% because of multiple answers. Source: JCK Retail Jewelers Panel)


Source: JCK Retail Jewelers Panel
% of respondents who plan to:
Buy heavily Buy lightly Buy none No answer
Diamond jewelry 22% 70% 6% 2%
Loose diamonds 34% 61% 4% 1%
Colored gem jewelry 16% 69% 14% 1%
Loose gems 4% 56% 39% 1%
Cultured pearl jewelry 6% 67% 26% 1%
Karat gold jewelry 41% 52% 6% 1%
Platinum jewelry 8% 55% 33% 4%
High-fashion/high-design jewelry 7% 56% 34% 3%
Bread-and-butter jewelry 40% 50% 7% 3%
Watches 8% 73% 12% 7%


Among those who expect higher profits:

  • Operational changes, 32%.
    Includes new locations, the effects of less overhead and cost cutting, and a variety of other factors, including better cash flow, more employee incentives, more advertising and changes in markup.

  • Inventory changes, 16%.
    Includes more control, “better buying” and increases and better selection in certain merchandise categories.

  • General factors, 16%.
    Includes such undefined factors as “setting goals,” “working harder” and “attention to details.”

  • Sales-related, 11%.
    Includes sales training and more special sales and promotions.

  • Economic conditions, 11%.
    Assumes that local or national economies are strong or improving and includes the impact of the bullish stock market.

  • Local market conditions, 7%.
    Includes higher consumer confidence and downtown shopping area improvements.

  • Effect of November national elections, 3%.
    Among those who expect lower profits, or no change:

  • Economic conditions, 11%.
    Assumes local, state or national economies are soft and includes the effects of joblessness and interest rates on the economy.

  • Local market conditions, 9%.

Includes financially overextended consumers, competition, slow economic growth, declining population, downtown reconstruction and exodus of businesses from downtown areas.

(Note: Adds up to more than 100%. because of multiple answers. Source: JCK Retail Jewelers Panel)


What change do you expect in second-half sales volume compared with second-half 1995?

Source: JCK poll of chain jewelers
SALES % of respondents
Increase 71%
Decrease 0%
No change 29%
No answer 0%

PROFITS % of respondents
Increase 57%
Decrease 5%
No change 33%
No answer 5%


Source: JCK Retail Jewelers Panel
% of respondents who expect levels to be:
Just right No answer High Low
Diamond jewelry 47% 16% 37%
Loose diamonds 26% 37% 37%
Colored gem jewelry 47% 11% 42%
Loose gems 26% 5% 58% 11%
Cultured pearl jewelry 26% 74%
Karat gold jewelry 16% 16% 68%
Platinum jewelry 31% 58% 11%
High-fashion/high-design jewelry 21% 74% 5%
Bread-and-butter jewelry 10% 11% 79%
Watches 29% 71%


Source: JCK Retail Jewelers Panel
% of respondents who plan to:
Buy heavily Buy lightly Buy none No answer
Diamond jewelry 33% 67%
Loose diamonds 33% 67%
Colored gem jewelry 28% 56% 16%
Loose gems 56% 33% 11%
Cultured pearl jewelry 6% 72% 22%
Karat gold jewelry 67% 33%
Platinum jewelry 11% 56% 28% 5%
High fashion/high design jewelry 6% 76% 12% 6%
Bread-and-butter jewelry 61% 33% 6%
Watches 17% 72% 11%