JCK Business Report

WHICH ESTATE ITEMS WILL SELL BEST?

You may love a certain period of estate jewelry, but will your customers? One way to determine the answer is to monitor buying trends at auctions. According to a recent analysis of auction data conducted by Artfact Inc. of Providence, R.I., art deco is probably your best bet, with art nouveau a strong second choice and Edwardian a close third.

So says Stephen J. Abt, III, Artfact president, who draws his conclusions from his company’s Jewelry Auction Findings CD-ROM for 1996 and 1997.

“Art deco appears to be the best investment with ready buyers and offers potentially greater profits,” says Abt. Nearly 40% of the estate jewelry lots sold during ’96 and ’97 contained primarily art deco jewelry; of the total dollars spent on estate jewelry at those auctions, more than 70% went for pieces from that celebrated period.

Those results don’t come from just a few spectacular pieces that pulled up the entire category. The median art deco price, $4,025, was more than twice as high as that for competing periods, and the average price, $11,075, was close to three times as high as the average for the next-ranking jewelry period.

Even though art nouveau accounted for only 9.6% of the lots sold at the ’96 and ’97 auctions (each lot typically contains only one piece of jewelry), it commanded the second highest average price, $4,264. Abt cautions that even though jewelry from this era has sold well in the past, the low median price of $892 (the price at which there are an equal number of sales at prices higher and lower) suggests that jewelers have to pick and choose carefully. “There’s a lot of inexpensive merchandise around. While great design pieces like Lalique’s are still a good bet, less striking pieces have a lot of competition from reproductions,” he says.

The auction data analysis suggests that Edwardian jewelry would be a strong third choice for a jeweler’s estate offerings. Edwardian jewelry, which accounted for 9.6% of lots sold, poses fewer downside risks, given that the average price, $4,066, ranks third of the five periods analyzed, and the median price, $1,955, is in second place.

The riskiest period pieces to offer might be Victorian. While close to a third of the lots sold in the ’96 and ’97 auctions consisted of Victorian jewelry, these items accounted for only 7.5% of the total dollars spent at the auctions. Also, the average and median prices for Victorian pieces were lowest, by far, of all five categories.

“Victorian-style jewelry doesn’t bring in good number,” Abt says. “If one is looking to populate a display case with items that command a high price, Victorian isn’t the optimal choice.” But Abt wouldn’t ban Victorniana, recommending a blend instead. “Within the product mix, it’s probably a good idea to de-emphasize those somber Victorian pieces in preference for the formality of Edwardian, the ethereal of art nouveau, and the geometric of art deco.”

He also advises, of course, that jewelers select each piece on its own merits rather than on the basis of its provenance.

The Artfact analysis covered 122,000 lots sold at 2,900 auctions at 82 locations in nine countries, including the U.S., the U.K. and China.

WHEN FINGERS ARE STICKIEST

Shoplifters are busiest on Saturdays, when 18% of all store thefts occur. Shorter store hours rather than religious scruples are likely to account for lower losses on Sundays, when 13% of shoplifting takes place. For whatever reason, Wednesdays and Thursdays are also tied at 13% each.

The pace picks up on Mondays and Tuesdays – each accounts for 14% of the week’s losses – and ratchets up a notch to 15% on Fridays.

That’s the theft picture at stores of all types provided by a national retail security survey. It was conducted for the National Retail Federation by Loss Prevention Specialists and Sensormatic Electronics Corp.

But keep your eyes on the back door as well as the front. According to the survey, retailers believe employee theft is their most significant source of “shrinkage,” accounting for more than two-fifths of total losses. They attribute only about a third of losses to shoplifting.

AVOIDING MILLENNIUM WOES

In years past, computer programmers took a universal shortcut by dropping the first two digits of the year in their coding. Thus, 1998 appears as 98. What that means is that when the year 2000 arrives, your computer will kick the date back to 1900. Unless preventive measures are taken, chaos will ensue.

Here’s a checklist to help you avoid a millennium disruption at your store:

  • Check your office computers – all hardware and software – to ensure that accounting, marketing and store management won’t be affected. You may need a consultant for this task.

  • Check with your bank to make sure it’s on track in fixing its year-2000 problem. If not, banking services such as loan payments, posting of interest income to your account, and even the use of ATMs or business credit cards could be disrupted. The Kiplinger Washington Letter recommends you request a reply in writing, and that you find another bank if the response is ambiguous.

  • Check your cash register and credit-card verification system. Goodness knows, you’ll want cash to continue flowing into your store as the new century begins.

  • Check with product suppliers and service vendors to make sure their billing and payment systems and inventory tracking programs will run without a glitch. Keep those accounts receivables and payables humming.

  • Check every aspect of your business infrastructure that may incorporate a computerized schedule. According to Kiplinger, this might include: fax and copy machines, alarm systems, postal machines and scales, electronic locks, automatic lighting and heating and cooling systems.

The temptation is to avoid thinking about the year 2000 problem because the implications are so wide-ranging. In fact, a National Retail Federation survey released in late ’97 found that fewer than 24% of the nation’s retailers have prepared for 2000. If you’re one of those who haven’t, here are two good on-line resources to get you started:

www.year2000.com.

www.ibm.com/IBM/year2000

FULL-MOON CUSTOMERS

When do the most difficult customers tend to show up? Some jewelers swear they appear when the moon is full. Here’s one such tale:

A snooty, wealthy Manhattan mother pushes her baby carriage into the mid-town store one April morning, casting a critical eye on the merchandise. Suddenly, she plucks her baby out of the carriage, sniffs his little behind and asks, “Do you mind if I change my baby on your display case?”

The jeweler, taken aback, thinks for a moment then says, “Sure, as long as you don’t get _ _ _ _ on the counter.” She departs the store in a swift, offended flurry.

Share your full moon stories with your fellow jewelers. Send them to: Jessica Stein Diamond, JCK Magazine, 201 King of Prussia Road, Radnor, PA 19089, or E-mail her assistant at bwenger@chilton.net.

NINE WAYS TO COOK A STALE FISH

You’ve heard of the accounting terms LIFO and FIFO – Last In First Out and First In First Out, respectively. How about your inventory of jewelry that’s best described as FISH, or First In Still Here?

Getting unpopular jewelry out of your store and off your books – if you haven’t written it off already – isn’t impossible. Here’s a list of inventory-moving suggestions from Dan Askew, CEO of GIA-ARMS, as well as from attendees at his presentation at the American Gem Society’s recent Conclave in Anaheim.

  1. Sell the items at discount.

  2. Exchange the jewelry for another line designed by the manufacturer.

  3. Offer incentives to your salespeople.

  4. Polish it up and raise the price.

  5. Redesign it.

  6. Donate it (beware, though, you don’t want your worst merchandise in front of a new target audience).

  7. Melt it down.

  8. Have a fire (just kidding).

  9. Sell it at auction.

Still not convinced you need to move stale merchandise? Consider the opportunity cost, says Askew. “That three-year-old jewelry is worth nothing to you, and yet if you had put that money into the market over the past three years, you could have realized a 38% return.”

Key stats

Percentage of people who use the web who say they find it indispensable: 82

Percentage of U.S. adults using the Internet in January 1998: 36

Percentage of U.S. adults using the Internet in September 1995: 7

Proportion of people with on-line access who use the Internet to comparison shop before they go to a retail store: 2/3

Proportion who research and shop on-line: 1/3

Proportion who say they enjoy the ease of navigation and the speed of on-line processes: 1/2

Percentage of people on-line who say they’re uncomfortable sending their credit card number through cyberspace: 70

Percentage of retailers that predict profitability in first year of web site operation: 67

Percentage of manufacturers: 40

Of manufacturers, percentage that are now selling products directly to consumers: 9

Percentage of manufacturers that have plans to begin to sell direct: 12

Percentage that have no plans to sell direct: 71

Percentage of small businesses with a web site that have experienced annual sales growth of 11% per year or higher over the past three years: 48

Percentage of small business without a web site that have grown at this pace: 30

1997 licensing revenues from “Teletubbies,” a British children’s television hit (U.S. debut was in April) featuring four furry creatures with rubbery faces, antennae and TVs in their bellies: $80 million

Amount spent on diamond jewelry for Valentine’s Day in 1997: $11 million

Amount spent on all jewelry for Valentine’s Day: $1.2 billion

Number of roses sold that day: 146 million

Percentage of American men, age 18 and older, who are married and have their spouse present in the home: 58

Percentage of women: 53.9

Percentage of men 18 and older who are widowed: 2.9

Percentage of women: 10.9

Percentage of men 18 and older who never married: 27

Percentage of women: 20.2

Proportion of nation’s 2.3 million annual weddings that involve second-time brides: 1/3

Percentage of 1997 weddings at which the groom received a platinum wedding band: 20

Percentage of grooms with platinum bands in 1996: 15

Percentage of the U.S. bridal market that purchased gold rings: 85

Percentage of U.S. bridal market that purchased platinum rings: 15

Of platinum sold by retailers, percentage that was special ordered: 68

Percentage sold from inventory: 32

Total ounces of platinum American Eagle Bullion Coins sold in their first six months on the market: 101,550

Purity of coins: .9995 fine

Tons of gold jewelry collected in Indonesia, Thailand, Malaysia and South Korea between July 1997 and January 1998

for sale abroad to bolster national economies: 300+

Portion of that collected in South Korea: 2/3

Number of jewelry stores in South Korea a year ago: 17,000

Number of South Korean jewelry stores forced to close in January and February 1998 because of gold collections and consumer reluctance to buy new jewelry: 5,000

Total platinum consumption in 1997: 5 million ounces

Number of jewelry manufacturers working in platinum worldwide: 3,800

Number of retailers selling platinum jewelry: 32,000

Percentage of 1,491 retailers who plan to buy or upgrade point-of-sale systems in ’98: 30

Percentage who said the average age of their POS system is under 6 years: 55

Percentage who own their POS systems outright: 87

May Key Stats sources

1 I-Jeweler; 2,3 Louis Harris and Associates Inc.; 4,5,6,7,8,9,10,11,12 Ernst & Young LLP; 13,14 American City Business Journals; 15 The New York Times; March 22, 1998; 16,17,18 American Demographics, February 1998; 19,20,21,22,23,24 U.S. Census Bureau; 25 Platinum Guild, 26,27 Modern Bride, 28,29,30,31,32,33 Platinum Guild; 34,35,36,37 World Gold Council, Singapore office; 38,39,40 Platinum Guild International; 41,42,43 Chain Store Age.

WATCH QUIZ

1. Which timepiece is hardest to repair?

  1. A complication

  2. A quartz chronograph

  3. A mechanical chronograph

  4. Big Ben

2. Which brand was worn by an astronaut during the first moon landing in 1969?

  1. Omega’s Speedmaster

  2. Eterna’s Porsche Design watch

  3. Girard-Perregaux’s Ferrari watch

  4. Rolex’s Daytona watch

3. Which type of watch needs no battery?

  1. Kinetic quartz

  2. Autoquartz

  3. Mechanical

  4. a, b and c

4. Which watch will be worn during the first manned mission to Mars?

  1. Armitron’s Marvin the Martian Looney Tunes watch

  2. Fortis Official Cosmonaut Chronograph

  3. Omega X33

  4. IWC Fliegerchronograph

5. Which brand won an American Marketing Association award in 1997 for its marketing excellence?

  1. Breitling

  2. Raymond Weil

  3. Rolex

  4. Tag Heuer

6. Which watch category is currently the hottest seller in the United States?

  1. Haute jewelry watches

  2. Sport watches

  3. Classic watches

  4. Divers’ watches

7. Which brand is widely credited with creating the fashion watch market?

  1. Joseph Abboud

  2. Calvin Klein

  3. Versace d. Swatch

8. Which athlete just signed on to endorse Tag Heuer watches?

  1. Golf’s Tiger Woods

  2. Basketball’s Grant Hill

  3. Tennis’s Pete Sampras

  4. Basketball’s Michael Jordan

9. Which styles are in vogue today?

  1. Digitals

  2. Stainless steel

  3. Chronographs d. a, b and c

10. What is a tourbillon?

  1. A calendar watch that automatically adjusts for leap years and varying month lengths

  2. A painful body-piercing procedure

  3. A counter on a dial that shows how long the watch will run without being wound

  4. A watch that automatically corrects timekeeping errors resulting from the effects of gravity

11. Which brand was the official timer of the Nagano, Japan, Winter Olympic Games in February?

  1. Seiko

  2. Citizen

  3. Swatch

  4. Omega

ANSWER KEY:

1-a; 2-a, although there are rumors that Buzz Aldrin wore a Rolex during the first lunar landing; 3-d; 4-c; 5-b; 6-b; 7-d; 8-b; 9-d; 10-d; 11-a.