Business Outlook:: Caution Ahead!

Independent jewelers enter this election year with tempered optimism about their businesses. A national poll of the JCK Retail Jewelers Panel shows that while most expect solid sales and profit gains, few are confident enough to speculate on unproven products, add more stores or enter new retailing venues such as computer selling.

Their caution has two causes:

  • When polled a year ago, many jewelers were overly optimistic about their 1995 business prospects. At that time, 78% predicted higher sales and 71% expected higher profits than in 1994. As 1995 neared its end, however, the outlook had dimmed. Only 65% still expected sales increases and only 56% expected higher profits. (Year-end figures weren’t available yet, of course; a strong Christmas could have greatly brightened the picture.)

  • A significant minority (23%) of independent jewelers say consumer confidence will be uncertain or very low for the first half of ’96; chain jewelers offer similar evaluations (see related story). This reflects consumer concern about a slowing economy, burgeoning credit debt and slow wage growth.

Still, jewelers were doing relatively well. Government figures through August 1995 – the most recent available at press time – showed retail jewelry store sales up an average 8%, compared with 6% for all U.S. retailers and less than 1% for apparel stores.

The outlook: For this year, four in five panel members (78%) predict sales gains and two in three (68%) predict profit gains. Diamond and karat gold jewelry will remain the best-sellers, so that’s where jewelers will invest the most of their inventory budget. A majority also will increase ad spending for diamonds, but only one in 10 will do so for gold.

Other product categories fare worse. Panelists plan little additional promotional support for colored gemstone, platinum and high fashion jewelry. While panel members will buy routine “bread-and-butter” jewelry heavily, most plan no changes in promotional support for the category. And even though some jewelers say watches – especially luxury models – are strong sellers, one in four will cut promotional support for them.

A look at panelists’ 1996 inventory shopping lists shows that more plan heavy buying of loose diamonds than of diamond jewelry. This suggests that more will be producing their own jewelry. Almost half the panelists expect the most popular diamonds this year to be 0.5 ct. to 1 ct., G to I color and VS2 to SI1 clarity.

Blue remains big in colored gems; panelists expect sapphire and tanzanite to be their best sellers. (Blue topaz and iolite also have their supporters.) As with diamonds, say jewelers, bigger will be better this year in colored gems.

Retail changes: Most independent jewelers say they’ll be content with business as usual this year. “We’ve shown increases every year for years and will do more of the same,” says one long-time Alabama jeweler candidly. “If it ain’t broke, don’t fix it.”

Still, a small but significant number of panelists will try to strengthen or expand operations. Some plan staff and management changes, store openings or redesigns, and stricter inventory control. For example, a Southern California jeweler wants to convert most of his “dead stock” into cash, a Maryland jeweler will hire an administrative assistant to give salespeople more time to sell and a Wisconsin jeweler will scrutinize his computer data to concentrate his inventory buying in the strongest-selling categories.

Some panel members hope to boost business by adding in-house credit cards and increasing advertising. Pat Gilmore of Dunbar Jewelers in Yakima, Wash., now offers a credit card through a bank. “Results are unbelievable,” says Gilmore. “It offers our customers lower interest, longer terms and lower payments” than conventional credit programs.

A limited number of panel members (one in six) will try new retailing channels this year, primarily sending videocassettes or computer disk catalogs to customers. However, most of this tiny band of electronic retailing pioneers will rely on the worldwide Internet computer network to sell and promote products. Several are uncertain about selling via computer, but as one Kentucky jeweler says: “We’re testing the waters because it may be the wave of the future.”


Retail jewelry chains are more bullish about 1996 and have more aggressive business plans than do independent jewelers. That’s one finding of a poll of about two dozen chains nationwide.

The aggressive strategies outlined for this year follow 1995 profits that some chains said would be lower than expected. In fact, a quarter (27%) said in October that profits would drop in 1995 (only a tenth of independents said that).

Despite the disappointments of 1995, three quarters of the chains expect solid gains in ’96. They’re counting on hard work and aggressive marketing rather than consumer confidence, about which they’re somewhat less optimistic than independents.

Some chains are bullish enough to announce expansion plans. Thus Friedman’s Inc., which had 229 stores in late 1995, plans to add 60 to 80 more this year. Zale Corp. plans to add 250 stores within three years. Two thirds of regional and local chains will add an average of two to three stores each, according to the JCK poll.

Chains also are a little more aggressive than independents when it comes to planning operational changes. Two in five plan some sort of change – ranging from boosting advertising to making more use of consumer credit programs. And one in three (twice as many as independents) will experiment with new forms of retailing, including TV shopping shows, video catalogs and computer selling.

Chain stores agree that diamond and gold jewelry will be the big sellers this year and they’re stocking accordingly. They’re more likely than independents to be buying heavily in many types of basic merchandise – loose stones, diamond and colored stone jewelry, watches and especially bread-and-butter and karat gold items (see chart). But they’re even more likely than independents to plan “light” buying of platinum, high-design and cultured pearl jewelry.


  1. Most independents expect to boost sales and profits by conducting business as usual rather than taking risks. Jewelry chains will be more aggressive.

  2. Diamonds and karat gold will be the top sellers. Third will be bread-and-butter jewelry for chains and watches for independents.

  3. Consumers will show more interest in bigger, better-quality diamonds and colored gems.

  4. A small but significant number of independent jewelers plan staff or management changes, store openings or redesigns, stricter inventory control, new credit programs or more advertising. Chain stores are even more likely to be planning such changes.

  5. A few independent electronic retailing pioneers are getting their feet wet now because they feel this may be the wave of the future. Chains are more likely to be trying TV shopping shows, video catalogs and computer selling.

(% of all respondents)

Up 78% 88%
Down 4% 4%
No Change 14% 8%
No Answer 4%


Up 68% 78%
Down 7% 9%
No Change 21% 9%
No Answer 4% 4%

(% of respondents who plan to buy in each category)

Source: JCK Retail Jewelers Panel
Independents Chains Independents Chains Independents Chains
Diamond Jewelry 36% 65% 59% 30% 5% 5%
Loose Diamonds 43% 45% 55% 50% 2% 5%
Colored Stone Jewelry 13% 40% 78% 50% 8% 10%
Loose Colored Stones 7% 16% 67% 63% 26% 21%
Cultured Pearl Jewelry 9% 6% 76% 94% 15%
Karat Gold Jewelry 44% 89% 55% 11% 1%
Platinum Jewelry 9% 63% 71% 28% 29%
Watches 13% 45% 72% 55% 15%
High Design Jewelry 10% 61% 70% 27% 20%
Bread and Butter Jewelry 42% 94% 52% 6% 6%


Source: JCK Retail Jewelers Panel
Very Strong 5%
Strong 36% 30%
Satisfactory 34% 44%
Very Low 3% 4%
Uncertain 20% 22%
No Answer 2%

Source: JCK Retail Jewelers Panel
Diamonds Diamonds
Karat Gold Karat Gold
Watches Bread and Butter Jewelry