Things are looking up in the jewelry business…at least that’s what the economic indicators would have you believe. Declining personal debt levels, a rising stock market, and nationwide salary gains prove that the country is enjoying a noticeable, if modest, recovery. But many store owners wonder: Is the economy’s buoyancy just the calm before the next fiscal storm?
As they set out on the 2011 trade-show circuit, many jewelers say they are thinking twice before they make pricey purchases—because an excess of expensive goods is precisely what got them into hot water last year. Mark Enix, owner of Fountain City Jewelers in Knoxville, Tenn., was one retailer who got burned.
“I thought 2010 was going to be the year things turned around, so I bought a lot of high-end merchandise,” Enix says. “That decision bit me in the butt last year, and I’m paying for it now.”
Research by Ken Gassman, head of the Jewelry Industry Research Institute, suggests that Enix is the norm, not the exception. Even with key economic indicators “trending positively”—including news that America’s gross domestic product grew 3.2 percent in the fourth quarter—Gassman says store owners are still smarting from 2008 and 2009, when they got stuck “with too much inventory and not enough customers.”
Enix, for one, expected a stronger fourth quarter and hoped the momentum would carry into this year. But his heavy hitters stayed home or spent less, not only at Christmas but also throughout 2010. Regular customers gravitated toward name brands. That’s what he’s looking to replace as buying starts this spring—silver jewelry by Elle, in particular, for $500 and under.
Brown diamonds were also among his 2010 top sellers. A competitor has been heavily promoting “chocolate diamonds,” trademarked by Le Vian, and many of Enix’s customers are asking for browns—even in bridal, which is steadily being infiltrated by less expensive champagne- and cognac-colored diamonds. “I plan to buy more quarter-carat to half-carat brown diamonds to set with white accents and one-carat chocolates for center stones,” says Enix.
A.G. Becker, owner of Breese, Ill.–based Becker Jewelers, has a different diamond strategy for 2011: no more melee. With diamond and gold prices both inching upward, Becker sees gold as the more volatile of the two and, therefore, a greater liability. “I’ll purchase jewelry that’s more weighted with diamonds than gold,” Becker says.
Not everyone, however, is reluctant to go for the gold. Casey Gallant, manager for Stephen Gallant Jewelers in Orleans, Mass., says silver already constitutes 40 percent of her inventory. She’ll home in on fashion-forward gold—namely long, stiletto-type earrings (see “Great Lengths,” JCK December 2010–January 2011, p. 59)—that retail from $250 to $500.
Watches were a bright spot in 2010, which many retailers attribute to the comfort consumers derive from brand names. For Jamie Hayes, operations manager for Los Angeles’ Feldmar Watch & Clock Center, sport styles sold especially well, reflecting a truism in the market: Regardless of the industry’s move toward slim, sophisticated models, the manly sports watch continues to woo consumers, earning it a place—along with studs, solitaire rings, and other traditional brand-name styles—in the open-to-buy hall of fame.