Growing up in West Philadelphia in a working-class neighborhood listening to my parents talk about the Depression never made a dent in my consciousness. We baby boomers have lived in really good times. The most serious economic downturn I have experienced was in the late ’70s during the first oil shortage. Waiting in lines to fill up was more irritation than economic privation.
We married, bought houses, had children, educated them, and started saving too late for “the future.” It’s ironic thinking about the current situation how the mind recalls lessons of the past. Again, one of my favorite expressions of wisdom is applicable: “Those who fail to learn from history are condemned to repeat it.”
I don’t mean for this to be a stroll down the negative paths of our current economic travails. Though talking to many in the industry who have much greater life and business experience than I could lead anyone to stray from the positive path. Despite stories of sales declines of 20 to 40 percent or more at retail in December, despite tales of declines at the manufacturing and wholesale levels of the business, despite it all, people will get engaged, get married, and start families. It’s the bedrock of the jewelry business. We may sell smaller diamonds, we may sell more plain wedding rings, and we may see smaller wedding parties and receptions. And maybe that’s a good thing. Maybe we need things to return to some sensible level of existence.
My grandmother used to say, “Experience keeps a dear school, but fools will learn in no other.” Looking back, we have indeed been foolish. I am constantly reminded of the tendency to do straight-line forecasting. Projecting sales at a constant, stable increase of 5, 7, or 10 percent cannot go on forever. The marketplace doesn’t work that way. Those who counsel prudence are routinely beaten back by the quest for growth.
Looking back over the past 10 years, we can see examples of the excess. When was the savings and loan crisis? Does anyone remember the Resolution Trust Corporation and what it did? Remember the huge run-up in the tech stock market? That was a great personal learning experience! Now it’s the housing crisis, fueledand promoted by lenders and enabled by the federal government and politicians more concerned with their social agenda than they were with common sense.
Our jewelry industry has parallels. Memo programs may be the most egregious. There also are the partnership arrangements with major retailers to eliminate risk of owning inventory, and retailers who beat manufacturers’ prices to death or threaten to go overseas. Let’s not forget the vendors who acquiesce to these demands and forego brand building.
We’ll get through these tough times, but it won’t be easy. The lesson here is contained in an old German saying: “Hope for the best. Plan for the worst. And take what comes.” We’ve had it too good for too long. Times like this will toughen us and make us smarter if we learn from our experience.