Top of the News

JCK Show Posts Record Attendance

A record number of retail buyers attended the eighth annual JCK International Jewelry Show at the Sands Expo Center in Las Vegas June 2-9. The 19,124 buyers represented a 9% gain over 1998’s attendance. They came from 10,653 stores—30% more than last year—and from all 50 states and 75 countries.

Also smashing records was the two-day, 49-seminar pre-show education program, which drew more than 700 attendees. New this year was an American Gem Society “education track” focusing on business and marketing issues.

Show traffic was strong, especially during the first three days. Most exhibitors reported strong sales, retailer optimism, and satisfaction with the number of new contacts. Some—such as the Hong Kong delegation, which reported a 25% gain in new business—said it was their best JCK Show yet. However, many retailers and vendors complained about the enclosed Plumb Club exhibitors’ area at the show’s entrance, which they said deterred traffic from the “Time Square” watch section behind it.

Retailers chose from a cornucopia of new products (some millennium-related) and services provided by some 2,300 jewelry and watch exhibitors. The fair was actually a show of shows with several specially designated areas for platinum, design, watches, international exhibitors, and—new this year—a “Prestige Promenade” featuring 46 upscale designers and manufacturers.

Among product eye-catchers were the 1990 “Argyle Egg”—a gold, enameled, and jeweled objet d’art with 435 cts. of rare pink diamonds—a venture of Argyle Diamonds and London’s Kutschinsky design house, and a new jewelry collection of rare white pearls by Henry Dunay, marking his 50th year as a jewelry designer.

Security was tight. Inside the show, two-man police SWAT teams and plainclothes officers patrolled the aisles. Outside, no major show-related thefts were reported—a first for the JCK fair and a rarity for any jewelry show.

Still, there were the inevitable problems, the worst being exhibitor registration mishaps causing lines up to three hours long on opening day and the day before. Show officials blamed new computer, printing, and photo equipment (used for ID badges) and poor planning, and sent a letter of apology to all exhibitors. A task force representing exhibitors, retailers, associations, and management will study ways to improve registration for next year’s show.

Among the celebrities were astronaut Buzz Aldrin, the second man to walk on the moon (appearing for Kathrine Baumann, who created two minaudières honoring the 30th anniversary of the first manned moon landing and America’s soldiers) and nine-time Olympic track-and-field gold medalist Carl Lewis, launching his platinum and 18k diamond jewelry, by Alpha Inc.

Glittering special events included Raymond Weil’s 20th-anniversary black-tie gala; the Diamond Promotion Service’s “New Year’s Eve 1999” party; the Women’s Jewelry Association bash (and Diva Awards); the Platinum Guild’s standing-room-only “Prime Time Platinum” breakfast; and the Jewelers’ Charity Fund for Children gala.

At a press conference, the show management announced a donation of $56,557 (from the 1998 and 1999 silent and live auctions) to the Jewelers Vigilance Committee, Jewelers’ Security Alliance, Jewelers Information Council, Jewelers Education Foundation, American Jewelry Design Council, and Future of Design Education Fund.

Show officials denied rumors that the JCK Show would expand or move to a different location in Las Vegas next year. The 2000 show will be held May 31 through June 5, again at the Sands Expo and Convention Center.

A full report on what was new in jewelry, watches, and other products displayed in Las Vegas will appear in JCK’s August issue.—William George Shuster

Security

Spurt in Crime Has Industry Worried

Some 60 leaders of the retail, manufacturing, trunk show, and gem segments of the jewelry trade, plus members of the insurance industry, met in Las Vegas during The JCK Show in June to discuss ways to convince political and law-enforcement leaders that protection against jewelry crimes deserves a higher priority. A sharp rise in jewelry crime this year prompted the meeting.

“The situation has deteriorated dramatically since the first of this year,” says John Kennedy, president of the Jewelers’ Security Alliance, which is leading the effort. In the first six months of 1999, there were 127 losses on the road, totaling $33 million, a 50% leap over losses in the same period of 1998. Most of the losses were sustained in armed robberies. At least two people—one an armed guard for a trunk show and the other a policeman in a separate incident—were killed in the robberies. Five hostages were taken in another.

Crimes against traveling salespeople, especially trunk show and remount personnel, “have reached epidemic proportions,” adds Bob Bridge of Ben Bridge Jewelers, who helped organize the effort. Indeed, noted officials at the meeting, the continued existence of trunk shows is threatened because of rising security and insurance costs and the refusal of some insurance firms to insure them at any price.

Those at the meeting agreed on two strategies. First, the industry should publicize serious jewelry losses (now averaging $200,000 per crime, vs. about $6,000 for average bank robberies) to the consumer press to “grab the attention of political and enforcement officials,” says Kennedy. In the past, the industry preferred to keep such losses quiet.

Second, there must be an organized, ongoing, intensive lobbying effort to convince politicians at state and federal levels that crimes against the industry deserve a higher priority. At least one firm pledged $25,000 to support such an effect. In addition, JSA will make lobbying a major priority.

JSA officials and a committee of representatives of the Las Vegas show were scheduled to meet Aug. 2 in New York to discuss ways to implement the strategies. —William George Shuster

Litigation

Zettl Sues Retailers for Selling Knockoffs

Friedrich Zettl continues to crack down aggressively on what it considers knockoffs of its patented hinged hoop earrings. The German manufacturer filed a U.S. patent lawsuit in Chicago in late May, naming Bloomingdale’s, T.J. Maxx, J.C. Penney, Sears, Saks & Co., and QVC as defendants. A second suit filed in Miami against warehouse club retailer Fedco and Fedco Discount Drugs alleges patent infringement, unfair competition, and false advertising.

At press time, none of the defendants had formally responded to the complaints.

The actions follow two years of cease-and-desist warnings issued by the company to dozens of suspected retail and wholesale infringers. “We can no longer tolerate infringements of our intellectual property,” says Wayne St. James, sales director of Zettl’s North American office in Hollywood, Calif.

The suits seek to recoup “cumulative losses” the company says it has suffered—the result of illegal copies of the popular design being sold at U.S. retail outlets; unauthorized importers/distributors bringing knockoffs into America from countries where Zettl doesn’t have a patent; and inferior, low-cost imitations that quickly break and have “turned customers off the hinged hoop category, thereby shrinking the market for this otherwise desirable product.”

Zettl, which acquired the patent for the hinged hoop design in 1995 and began selling the style stateside shortly thereafter, says it sold more than 400,000 pairs of the earrings in 1997 alone. The manufacturer estimates its cumulative losses due to infringement exceed $50 million.

According to G. Peter Albert Jr., an attorney with the Chicago-based law firm Laff, Whitesel & Saret, which is representing Zettl in the matter, five of the six retailers named in the Chicago suit received cease-and-desist letters two years ago. “These letters were largely ignored,” he says. “As a result, these defendants may be liable for treble damages under the patent statute.”

Additional charges were filed against Fedco, according to Albert, because of alleged “unfair competition issues” in its advertising and packaging. These issues include the claim that its earrings are nickel-free (Zettl says it tested them and found the presence of nickel) and that they are made in Germany (which Zettl disputes).

Albert added that Zettl expects to name additional parties as defendants. The company’s strategy primarily has been to target retailers, he says, to eliminate the market for the knockoffs, and because “we’re not sure who their suppliers are.” But Albert says that at the June JCK Las Vegas Show he saw numerous suppliers exhibiting products that appeared to be direct knockoffs of the Zettl patent. “Zettl hires designers and sells original designs,” Albert notes. “We don’t knock people off. That’s one of the reasons why these infringements so outrage us.”—Glen A. Beres

Management

Why It’s Smart to Hire Minorities

Looking for an easy, no-cost way to market your store to new customers? Then hire a work force that reflects the racial and ethnic diversity of the community you’re in. That’s the recommendation of jewelry marketing specialist Elizabeth Chatelain, president of MVI Marketing Ltd. in Beverly Hills, Calif.

“Stop hiring people like yourself and shoppers will start being attracted to your store,” said Chatelain, who serves the jewelry, gem, and watch industries. “We all like having people similar to us around us. But you will find and inherit a new customer base just by diversifying, by pushing the envelope, and giving minorities a chance. You’ve just saved yourself a really large advertising budget because that [diverse community] is your customer base.”

Speaking at The JCK Show in Las Vegas, Chatelain said most successful retailers in California are “diversifying like mad. They have Hispanics, African Americans, Chinese—everybody working behind the counter. Diversity is a difficult issue in the jewelry industry. Many jewelers still just hire middle-aged white women like me.”—Jessica Stein Diamond

Growing Minority Affluence (median household income)

Asians and Pacific Islanders $45,249
White (not Hispanic) $40,577
Hispanic-origin $26,628
Black $25,050
Source: U.S. Census Bureau, 1997 data

Crescent Jewelers’ Woes Deepen

Crescent Jewelers, the financially troubled affiliate of Friedman’s Inc., was considering bankruptcy protection from creditors at press time. Based in Oakland, Calif., Crescent operates 149 stores in seven Western states.

Friedman’s, headquartered in Savannah, Ga., is one of the country’s largest and fastest-growing specialty retailers of fine jewelry. It operates 495 stores itself and has $25 million invested in Crescent. Friedman’s president and chief executive officer, Brad J. Stain, has been CEO of Crescent for several years. (Both Crescent and Friedman’s have the same parent firm, Morgan Schiff Group of New York, and some of the same management.)

Crescent has been underperforming for several years, and analysts believe it needs a court-supervised restructuring to alleviate its debt and cash flow problems. Last May, the chain failed to reach an out-of-court settlement with shareholders to restructure its balance sheet and restore operating liquidity.—William George Shuster

Suspect Underkarating? Now You Can Find Out

With a $94,000 grant from JCK, the Jewelers Vigilance Committee has bought a state-of-the-art X-ray machine to determine the karat content of precious metals for jewelers anywhere in the country.

The SEA 2010 provides quick, nondestructive analysis of the metal content of a piece of jewelry with a reported accuracy of 95% to 98%. Each screening costs $15, plus shipping and handling, but JVC members get five free screenings a year.

The new machine will help JVC monitor underkarating and give small jewelers an economical way to check their vendors and maintain quality control. “It’s something we’d been doing in a sporadic way,” says Cecilia Gardner, JVC’s executive director. “Now, thanks to the JCK Industry Fund grant, we’re able to have our own machine and offer the service on a regular basis.”

Jewelers should submit items for testing via Federal Express, UPS, or registered mail, or present them in person at JVC’s office in New York. For more information, contact JVC at 25 W. 45th St., New York, NY 10036; (212) 997-2002. —Larry Frederick

Zale Names President of Peoples

The Zale Corp., the largest U.S. jewelry retailer, completed purchase of Peoples Jewellers of Canada on June 3. Peoples, which operates 177 stores in Canada, owned Zale for several years in the late 1980s and early ’90s.

The purchase price was about $75 million, funded entirely from existing cash. Zale Corp. chairman and chief executive officer Robert J. DiNicola said the transaction “should not have any impact on current earnings.”

Zale executive David Holmberg, 40, is the new president of Peoples, replacing Clare Copeland, who left after the deal was completed. He will oversee daily operations and report directly to Beryl Raff, president and CEO of Zale Corp. —William George Shuster

For late-breaking news, go to www.jckgroup.com. You’ll find 40-50 new stories from around the world every day.