A capsule look at business, economic and demographic trends affecting the jewelry industry
JEWELRY SALES: THE MOMENTUM BUILDS
Jewelers have good reason to be cheery this holiday season. Business has been good &endash; very good &endash; this year, according to the U.S. Department of Commerce.
It’s true that sales were slow in the beginning of the year, but they’ve picked up considerably since then. In fact, jewelry stores outperformed most of the 18 other major retail categories in the first seven months of the year (the most recent figures available).
Jewelry stores reported $8.3 billion in sales from January through July, up 8.0% from the same period of 1994. The only major retail categories with bigger increases were furniture group stores (up 10.4%); automotive dealers (up 9.1%); non-store retailers, such as vending machine, door-to-door and mail-order vendors (up 9.0%); and optical goods stores (up 8.4%).
Jewelers rang up the largest share of their sales and the biggest percentage increases in May and June, when the monthly totals rose 19% and 12%, respectively. Even July sales ran a respectable 6% ahead of the previous year, despite oppressive heat that discouraged many consumers from leaving their homes to shop.
Coupled with lower unemployment and fairly steady consumer confidence, this buying trend bodes well for Christmas.
What exactly have customers been buying besides jewelry? Who are your likely non-jewelry competitors this year? The same Commerce Department report that tracks the major retail categories also examines numerous subcategories. According to these figures, consumer spending rose most at stores devoted to household appliances, radios, TVs and computers (up 16.9%) and at discount department stores (up 9.9%). Others reporting increases above 5% included music, sporting goods and book stores, as well as eating places.
Where did consumers spend less? Hardware stores, most types of apparel stores, national chain department stores, bars and gas stations all reported decreases from the first seven months of 1994.
LUXURY IS BACK IN VOGUE
Jewelry isn’t the only luxury product with significant sales increases this year. Just consider some recent reports in the fashion and apparel trade press:
· Sales of designer apparel and accessories are rising while those of basic jeans and T-shirts are falling, according to the Fashion Newsletter forecast report.
· The Financial Times of London reports business in the Ferragamo boutique in New York is so brisk that the Italian leather retailer has limited customers to five handbags or 10 pairs of shoes. Customers at the city’s Hermés shop are on a waiting list for some items, and sales of its famous scarves, priced at $245 each, are up 28%. And the local Chanel, Louis Vuitton and Gucci stores are posting the biggest sales gains in years.
· Logo goods are growing in popularity, says W magazine, regenerated by the success of Prada’s black nylon tote with discreet logo.
Why now? Many of the sales are to foreign tourists, according to Massimo Ferragamo, though U.S. consumption of luxe goods is also on the increase. “After a recession, customers look for more value in what they buy,” he says in the Financial Times article. “They look for names and brands and goods that represent better quality.”
Another reason for the growth of luxury product sales is a shift toward the European mind-set in fashion, says Marion Davidson, U.S. head of marketing for Hérmes. That mind-set encourages people to buy one thing of quality rather than three of something else, Davidson says in the Times article.
Fine jewelry fits the trend perfectly, says LynnRamsay, president of the Jewelry InformationCenter. “People are looking for quality and lasting value and are willing to spend a little more for it,” she says. “The message [of fine jewelry’s lasting value] is getting through.”
Officials at Jewelers of America agree. “This trend reinforces JA’s message about the lasting value of real jewelry,” says Eileen Farrell, JA’s public relations director. “When consumers want to purchase a fine quality product with lasting value, we think real jewelry will be a choice they make more often.”
White-collar professionals commit crimes on the job more frequently than many people assume, according to a new study by Reid Psychological SystemsTM of Chicago, Ill., a leader in preemployment screening programs.
The study’s results are important because “they point to a potential degradation of business ethics among the professional work force,” says RPSPresident Stephen Coffman. “Uncovering this problem could prevent the loss of tens of million of dollars for many organizations.”
The study used a new test, the Reid Business Ethics ReportTM, which measures “tendencies toward white collar infractions,” according to a company spokesman. It was administered to a sample of some 200 executives, managers and other professionals across the U.S. Three-fourths are male college graduates earning at least $50,000 a year. More than a third (37%) have held their jobs 10 years or more. Among the study’s findings:
· Almost 60% of white-collar professionals admit to using company property &endash; most often cellular telephones &endash; for personal business. Of those, 46% use the phones for personal calls at least once a month and 11% daily.
· 35% admit to “misrepresenting the truth” &endash; in the study’s words &endash; to their clients, customers and co-workers. Of those who admit lying, more than 20% say they’ve padded their expense accounts for personal gain.
· More than 20% have by-passed internal control systems for personal or department gain; 17% admit to falsely “adjusting” accounting, payroll, financial or other records.
· A “smaller but surprising” number of professionals also admits to more serious crimes. About 5% say they’ve committed shoplifting, larceny, embezzlement, forgery, fraud or theft at work. Three percent admit to diverting more than $10,000 from their company for personal gain.
“In this age of downsizing, business professionals are expected to perform a greater variety of tasks,” says Coffman. “Today’s technology enables them to be more mobile and, at the same time, more autonomous. These and other factors combine to challenge the integrity of today’s business professional.”
Recession has dethroned Japan as the world’s fastest-growing market for diamond, pearl, gold and platinum jewelry. Diamond sales are down 25% and pearl sales are off by 50% since 1990, and some economists fear the worst is yet to come.
Japanese analysts say policymakers may have waited too long to fight the recession. The country’s banking system is severely strained by a staggering $400 billion in bad debt (higher than the U.S. government debt), real estate has lost half its value, the stock market index is falling to 1985 levels, the yen keeps growing in value (making manufacturing wages uncompetitive) and companies have started to lay off workers and reduce bonuses and overtime (which account for about half of take-home pay).
While pressure builds for a government bailout of the banking system and radical business deregulation to reduce costs, consumer spending on luxury products such as jewelry will continue to fall, say economist.
This means gem dealers and jewelry manufacturers will continue to face stagnant prices and supply guts. But it could be good news for U.S. retailers, who won’t be priced out of top qualities &endash; especially of diamonds and pearls &endash; by Japanese buyers as often as they used to be.
Ever wonder who wins those lucrative contracts to supply costume jewelry to the world’s airlines, cruise ships and duty-free shops? Attwood &Sawyer Ltd. of Porthcawl, Wales, wins a lot of them, says the 1995-’96 Best ‘n’ Most directory for the duty-free industry.
The company manufactures the Attwood Collection, which the directory ranks first among 25 costume jewelry lines. Ray Martin, managing director of Attwood &Sawyer, attributes the company’s success to its investment in customer support. “We work in close partnership with duty-free operators to help select a portfolio of styles and price points to suit varied passenger profiles and buying patterns in different parts of the world,” he says.