Still working on your shopping list? Here’s how jewelers across the country are planning to fill their cases while they’re in Vegas.
Finding new resources and scouting trends are top objectives for jewelers headed to JCK Las Vegas this month, but one issue is overshadowing the rest: the skyrocketing prices of gold, silver, and diamonds. At press time, gold had broken the $1,500-per-ounce mark as the weak dollar and concerns about debt and inflation spurred demand for alternative investments. Silver also reached a 31-year high. And rough diamond prices could go up 15 to 20 percent in the next two to three years as supply fails to meet surging demand, according to industry sources. The pressure of rising mining, energy, and labor costs isn’t helping matters.
Supply constraints due to increasing global demand are a top concern. In China, for example, Chow Tai Fook plans to at least double its 1,000-store count by the year 2020. “If a chain of jewelry stores opens in China,” says Lawrence Bock, president of Bachendorf’s in Dallas, “do you know what that does to the supply? American jewelers are fighting for our lives.”
Competition for supplies isn’t the only thing U.S. jewelers are fighting. They’re also wrestling with whether it is better to absorb the cost increases in materials to appeal to a frugal consumer or to pass those higher costs on to customers already saddled with rising gas and grocery prices. Shoppers likely won’t feel the sticker shock until the critical holiday season—that’s when the products retailers buy in Las Vegas will hit the sales floor. With that in mind, retailers headed to the JCK show are scrutinizing their open-to-buy budgets and implementing creative ways to transcend the cost issues.
Platinum pavé three-stone ring, starting at $29,750, Roberto Coin, New York City, 800-853-5958, robertocoin.com
Despite the warning bells, jewelers that spoke to JCK predicted flat to high single-digit growth in 2011 compared with last year. There are a few reasons for this: First, Reuters analysts predict the price of gold will reach $1,700 by 2015, a much slower rate of increase compared with what the industry has weathered over the past few years (a 30 percent uptick in 2010 and 25 percent in 2009). And, second, jewelers are reporting increased spending compared with the last two recessionary years.
Don Lemp, president, M. Lemp Jewelers
Still, many are hedging their bets. Don Lemp, president of M. Lemp Jewelers in Syracuse, N.Y., plans to continue supporting brands such as Lagos, Roberto Coin, and Sylvie in the bridal category. But to offer customers a lower price point, he intends to stock up on generic brands that turn out classics like diamond earrings and pendants. “Things are looking up,” Lemp says, noting he expects a 15 percent increase in sales for fiscal 2011. “Two years ago was challenging, but we are definitely seeing better activity. And there’s a return to bigger purchases—$20,000 and up.”
Harry French, president and owner of Henry C. Reid & Son Jewelers in New Canaan, Conn., is also on the hunt for something that won’t go out of style soon. He’ll be looking for classics with a fashion flair, but nothing outlandish. “I’m always optimistic,” he says, noting he expects business to increase between 5 percent and 10 percent this year. “But I also have to be a realist because the buck stops with me. I want to live within my means. That’s a more prudent way to be.”
|18k gold earrings with rose-cut brown diamonds and 0.74 ct. t.w. white diamonds, $14,000, Natalie K, Los Angeles, 800-688-6101, nataliek.com; Luna Collection double strand freshwater cultured pearl necklace, $1,195, Lagos, Philadelphia, 877-588-2401, lagos.com|
Bock, on the other hand, will be searching for exotic pieces from India, Asia, and Italy—anything but the classics. “People with money have all the basic stuff,” he says. “They’re not buying sets of rubies and emeralds. Our world has gotten a lot more casual. But people are staying away from those classic things we used to sell. They’re reaching for something different. They want things like black or brown diamonds.”
18k white gold bangles with 7.91 cts. t.w. black diamonds, $9,000, with 16.26 cts. t.w. black diamonds, $14,000, with 18.14 cts. t.w. colorless diamonds, $60,000 (all sold separately); Norman Silverman Diamonds, Los Angeles, 877-687-3985; normansilvermandiamonds.com
Another way to battle costs is to limit the quantities of buys. Lowell Kronowitz, owner of Levy Jewelers in Savannah, Ga., says that his greatest concern in Las Vegas will be how to get enough gross profit dollars out of what he puts in his case. “I’m not going to mark up my merchandise,” he says. “We’re going to eat it now. But I’m very focused on maintaining our dollars. We’re working twice as hard to maintain the status.” He may carry only three or four ring sizes of a certain type of metal, for instance, and leave the rest for special order.
Chasing after trends remains a key objective for jewelers, including the sudden demand for colored gems put in motion by the hoopla over the British crown’s royal wedding. “We’ve seen that precious jewelry has really slowed down, but now all of a sudden there’s a trend for sapphires, and we said, ‘Let’s go after it,’” says Aida Alvarez, senior vice president of merchandising at Birks & Mayors, with 30 stores in Florida and Georgia. In addition to precious gems, Alvarez’s team will have an eye out for new resources from Hong Kong and Brazil as well as men’s jewelry. The price of commodities is also top of mind—“it’s killing us,” she says. “Diamonds are ridiculously high and with the increases in metal, it’s much more difficult to find that item in the $5,000 average price point. There’s no way you can absorb that.”
Cathy Tivol, chief executive officer of Tivol in Kansas City, Mo., has also noticed a growing interest in colored stones, including rubies, sapphires, and emeralds. She is planning to offset expensive precious jewelry buys with vendors who are lightening metal weights to make pieces more affordable. “The other thing we are doing is mounting more diamonds,” she says, noting a reversal of the custom-made bridal trend of years past. “In the last few years, we have found that the customer finds it easier to see the diamonds mounted up.”
Alternative metals are a primary objective for Rod Miyata, owner of Ace of Diamonds in Culver City, Calif. Even though his average sale is $7,000–$8,000 and he expects business to increase between 10 and 15 percent, he plans to pick up metals such as tungsten carbide and titanium for his bridal rings category. Still smarting from the last two holidays, this will be the first time he will attend the show in two years—cost cutting forced him to restock inventory via manufacturers’ websites.
Karen Goracke, director of merchandising at Borsheims in Omaha, Neb., expects sterling silver and pearls to remain strong categories as commodity prices rise. “Vendors with those product categories will be a ‘must’ to visit at JCK,” she says. Her team will be looking out for fashion jewelry that fits a range of price points: $100 and under, the $500–$2,500 range, and inventory that tops $10,000.
As for the JCK show’s move from the Sands Expo Center to Mandalay Bay, the travel time between JCK and the Couture show at Wynn Las Vegas remains a concern. But most retailers are sanguine about the change. For Marc Green, co-owner of Lux Bond & Green with stores in Connecticut and Massachusetts, the point is moot. “If you’re in the jewelry business and this is the largest domestic trade show in your industry, you should go, no matter where it is,” he says, noting he’ll be searching for less expensive gemstones and a mix of gold with other metals. “You might pick up an idea, or meet a vendor or a principal of a firm. I’m going to see what’s new out there. But networking is almost as important.”