FALL SEASON CALLED ‘SPECTACULAR’ FOR MAJOR JEWELRY AUCTIONS
More than $203 million worth of jewelry changed hands at the major auction houses last fall in one of the most spectacular seasons ever.
Christie’s sale in Geneva, Switzerland, in November set an all-time record of $71 million for a single sale; Sotheby’s sale in New York City followed closely at $53.5 million. Both houses reported full-year jewelry sales increases of more than 30%.
Other auction houses also saw an upturn in jewelry sales. William Doyle Galleries in New York City, Skinner Galleries in Boston and Butterfield & Butterfield in San Francisco all reported a rising interest in jewelry, especially among private buyers.
John Block, who heads Sotheby’s jewelry department in New York, says two important factors came together for this banner fall:
A better selection of distinctive pieces.
A deepening demand worldwide.
“There were very interesting goods in all of these sales: signed pieces, colored diamonds, top colored stones and big diamonds that were fresh to the market,” he explains. “There’s also been a shortage of these things within the trade, particularly large diamonds.”
Auction officials also say that in contrast to other auctions of the past few years, private buyers joined major dealers in the bidding.
In the spotlight: The highlight of the fall season was the Jewels of Princess Salimah Aga Khan sale, conducted Nov. 13 at Christie’s in Geneva. The collection drew more than $27.8 million in one of history’s biggest divorce sales.
The princess was born Sarah Crocker Poole, daughter of a British Cavalry officer. During the 1960s, she was one of the world’s top fashion models. She married Karim Aga Khan in 1969 and divorced him in March 1995, promptly placing for auction all the jewelry she had collected during their marriage. The sale was nearly canceled when the prince filed a suit in Swiss court claiming the jewelry belonged to his family. One week before the sale, however, the court ruled all but 23 smaller pieces had been gifts to the princess and she was entitled to sell them.
The centerpiece was a necklace featuring the Begum Blue, a 13.78-ct. fancy deep blue diamond, with a 16.02-ct. D flawless heart-shaped diamond just below it and 41 smaller heart-shaped diamonds. Franois Curiel, Christie’s jewelry director, says there was “intense interest from all parts of the world” in the necklace. London jeweler Laurence Graff was the successful bidder at nearly $7.8 million.
The collection of more than 250 pieces included jewelry the princess inherited from her grandmother and gifts designed for her by such leading jewelry houses as Winston, Van Cleef & Arpels, Cartier and Boucheron.
Among other highlights of the collection was a 4.37-ct. blue diamond ring by Boucheron. Siba Rare Jewels of Hong Kong paid $2.5 million for the ring, setting a world record per-carat price for a blue diamond. Another highlight was a Van Cleef diamond ring for which a U.S. buyer paid $1.75 million, more than four times the presale estimate.
The princess plans to donate an unstated portion of the sale’s proceeds to charity, says Curiel.
In the pink: Sotheby’s Geneva sale didn’t have a princess’s name attached to it, but did manage to set a record for the highest per-carat price ever paid for a pink diamond at auction. Siba Rare Jewels paid $5.99 million for the 7.37-ct. rectangular purple-pink stone. The company also paid $3.5 million for the second highest lot, a 12.77-ct. purple pink diamond ring.
Elsewhere, Butterfield & Butterfield’s fall jewelry auction brought $1.7 million, with top prices paid for several Burmese rubies, greatly exceeding their presale estimates, says Taryn Miller, jewelry department director.
At Skinner Galleries, jewelry director Gloria Leiberman was looking for more than $1 million in her Dec. 5 sale of original artist-designed jewelry (totals were not yet available at press time). The sale was to feature a collection of pieces designed by Pablo Picasso, Max Ernst and several Americans, including craftsman Frank Gardner Hale.
The market for distinctive, original jewelry is much stronger now because many more private buyers are coming to auctions, she says. “People want quality and distinctiveness and are willing to pay for it,” she says. “That’s why presale estimates no longer mean much when you’re offering original pieces.”
GOLD LEASING CRUNCH MAY CAUSE HIGHER PRICES
An end-of-year logjam in gold movements worldwide sent gold leasing costs to all-time highs in December. If the situation persists, gold jewelry prices could rise 10% or more because lending institutions and jewelry manufacturers have to pay more to acquire the metal.
The rate for gold leasing passed 6% in early December, nearly double the mid-November rate and four times the first quarter average. Virtually every major supplier and user of gold in the developed world finances its gold use through leasing arrangements. These arrangements lock in a purchase and pay-back cost, protecting against sudden price movements.
Precious metals suppliers say large users of gold could incur hundreds of thousands of dollars in additional financing charges and higher carrying costs for unsold gold inventory. For example, a jewelry manufacturer that uses $2 million worth of gold would typically pay about $100,000 in leasing costs from a secondary gold supplier. If the lease rate doubles, that cost rises to $200,000.
“Of course, jewelry manufacturers will have to pass these costs along,” says Dion Kenyon, who manages Fleet Bank’s precious metals lending division, a leading gold supplier to the U.S. jewelry industry. “Industry margins have not been that great, so there’s no room to absorb them.”
Ted Leach, president of Leach & Garner, North Attleboro, Mass., says higher rates will certainly mean higher prices for gold jewelry. But he points out that no one will be able to get around the higher costs to gain a competitive advantage. “Gold leasing is the backbone of all gold jewelry financing whether it’s in the U.S., Italy, India or anywhere else,” he says.
Persistent higher lease rates also would force manufacturers to restructure their production cycles to keep inventory low, resulting in a longer lead time, say manufacturers. “Up to now, gold financing was so cheap we didn’t really factor it into our prices,” says Allan Corn, chief financial officer of Michael Anthony Jewelers, Mt. Vernon, N.Y. “But if it stays like this, carrying big inventories will become very expensive.
Corn offers this example: “Typically, we have an inventory of about 150,000 ounces of gold. At $400 gold, this equals $60 million. If carrying costs double to 6%, that extra cost will be $1.8 million, or about 12% of our yearly sales. There’s no way that could be absorbed.”
The causes: Gold goes from producers to central banks, which lease it to secondary providers such as Fleet, which in turn lease to jewelry and other industries. The logjam occurred when South African producers made much larger than usual lease demands at the same time the banks would normally curtail lending to balance their year-end books.
“Add to this the air of caution surrounding the central banks since the collapse of Barings and the problems with Daiwa [Barings of England and Daiwa of Japan lost billions of dollars in trading irregularities],” says Kenyon.
Like most gold dealers, Kenyon believes the problem is more in the timing than in long-term gold supply shortages. “Fundamentally, gold supplies are sufficient to meet demand, so I hope it won’t be a long problem,” says Kenyon.
Leach, however, believes supply crunches could recur periodically. He says the whole system of cheap gold financing has been built on instantly available supplies outbalancing demand. Today, he says, the balance is closer so there will be times when demand outstrips supply.
The large mines exacerbated the situation last year by selling forward huge quantities of gold not yet out of the ground, hence unavailable to the market. “For that reason, we won’t see this go away anytime soon,” says Leach.
Bankers agree there was upward pressure on lease rates all year. However, most say they held the line until the situation really broke in November.
“The banks did try to keep their rates low because they’ve tried to keep their promise to the industry,” says Leach. “But the banks will have to charge more in the future.”
The lease crunch did bring a small increase in the market price for gold. But analysts disagree whether it will have any long-term effect. The gold price has remained steady for 18 months.
Some believe the situation represents a long-term increase in gold commodity trading, which has languished in recent years. This interest coupled with strong demand for physical gold for industrial and jewelry use may push up the price to near $400 per ounce.
Others argue the situation is temporary and will have little effect on the gold price once the logjam clears. – by Russell Shor
U.S. SCRAPS GOLD TARIFF PROPOSAL
A proposed 100% tariff on imported gold jewelry and other items was scrapped in early December after a meeting of U.S. and European trade representatives.
The Office of the U.S. Trade Representative proposed the tariff to make up for an $800 million loss suffered last year because of uniform rates established for the European Union, including new member countries Sweden, Finland and Austria.
After attempts to gain reimbursement through other channels failed, U.S. negotiators presented a “laundry list” of products that are important to European exporters and created the new tariff proposal. Among the products were “articles of precious metal, whether or not plated or clad with precious metal É(and) necklaces and neck chains of gold: mixed link.”
Matthew Runci, executive director of Jewelers of America, denounced the proposal in a letter to the USTR on Nov. 22. “Inclusion of these items would severely impact the retail gold jewelry industry in this country, and would result in a much greater retaliation than the original provocation would appear to justify,” he said in the letter. At least one jewelry company, Clover Corp., which includes M. Fabrikant & Sons Inc., New York City, also delivered written comments to the USTR.
Runci said negotiators often use trade salvos such as this to force various issues. “But we cannot stand back and let this go unnoticed because I have seen cases where these have reached the books.” Terms of the settlement were unavailable at press time.
LYNN DIAMOND TO SUCCEED WALTER IFE AS DPS CHIEF
There’ll soon be a new diamond at the Diamond Promotion Service. Lynn Diamond, editor in chief of National Jeweler magazine, will leave that post to become executive director of DPS on Jan. 12.
Diamond says her long-range goals are to “continue and strengthen the programs DPS offers the trade, go forward with new programs and establish even closer relations between DPS and the trade.”
She succeeds Walter Ife, who has been with DPS for eight years. Ife has been acting as a transition consultant since October, when De Beers announced it would switch its U.S. advertising and promotion account (which includes the DPS and the Diamond Information Center) from N.W. Ayer to J. Walter Thompson. He will stay with DPS as a consultant until early April, then become an industry consultant.
Ife’s work for DPS was praised in New York and London. “His enthusiasm and thorough knowledge of the jewelry trade will be missed by all of us on the De Beers account,” said Jim Haag, managing director of that account for JWT. Derek Palmer, De Beers’ regional director for the Americas, cited Ife’s “great job in developing the trade activity in the U.S. We’ll miss his contribution.”
Diamond has been with National Jeweler for 16 years and also served as associate publisher and group editorial director for owner Miller Freeman’s international jewelry publications. She says her decision to leave “was probably the most difficult decision I ever made.” But the post at DPS offers “new challenges and the opportunity to use my skills and knowledge in new ways.”
A revised structure for DPS comprises four divisions:
Operations/Contact, headed by Preston Foy. This division includes eight account directors who oversee regions and large chains, plus the field force, database management and telemarketing.
Marketing support, headed by Sheryl Silberg. This division handles program development, trade communication, trade shows and conventions, DPS production, research, Canadian operations and information and merchandising programs.
Market liaison, headed by Rachel Treitelman. This division works with dealers and sightholders, manufacturers, carat clubs and the trade press.
Education, whose manager hadn’t been chosen at press time. This division handles program and material development and training of independent and chain store staffs.
DPS officials say there will be “enhanced educational resources” and technologies to make regular contacts and sharing information easier.
In a related move, Whitney Sielaff, formerly editor of New York Diamonds, a quarterly publication of International Diamonds Inc., was named the new editor in chief of National Jeweler effective Jan. 1.
DIAMOND PRICES BY PHONE: CAN THEY FIGHT FRAUD?
A California appraiser has developed a telephone diamond appraisal system designed to cut through deceptive retail pricing.
David R. Boggess of Irvine calls his system the Consumer Diamond Value Report. “Many stores set inflated prices from which they offer deep discounts, leading consumers to believe they are getting the diamond at a bargain price when in fact it’s the going rate,” he says. “This report will help them cut through this.”
Using a touch tone phone, the consumer calls into an automated system. He punches in the carat weight, shape, color and clarity grades and measurements (if known) of any diamond from a quarter carat to 6 carats. A report with the retail price is faxed back. Total cost is $10 per diamond valued.
JCK tried the system with a hypothetical 1.06-ct. marquise diamond of H color, SI1 clarity and average commercial make. The Consumer Diamond Value Report gave it an average retail replacement value of $5,551.
A survey of retail jewelers found this value to be close to average, though prices vary widely between jewelers in intensely competitive areas and those located many miles from a discounter. The lowest price we got ($4,200-$4,500) was from a jeweler who says competition prevents him from getting more than 30% over cost. The highest price ($6,500-$6,800) came from a jeweler who gets keystone on diamonds. Boggess says prices on his reports can be tailored to market conditions in a caller’s area.
Most jewelers who do appraisal work say they’re skeptical about giving accurate values by telephone – an automated system at that. They feel that you must see the diamond because values can differ greatly even among stones with the same color and clarity grades, particularly between those of excellent and fair make.
One jeweler did add, however, “If it can really help end these phony discounts, then his reports could be a good thing.”
Boggess admits that diamonds cannot be graded over the phone, but says they can be priced if they’ve been graded already. “The trade does this all the time.”
Boggess determines prices using Rapaport and Gemworld International price lists for wholesale diamonds, then applies a markup. (His average markup for the JCK diamond was 59% above the prevailing trade price of about $3,500.)
He says the major benefit of his report is that it is impartial. “Many jewelers issue appraisals that are twice the actual sale price, leading consumers to believe they’re getting big discounts,” he says. “My reports can alert them to this.”
Boggess acknowledges his reports are only as accurate as the information provided and that overgrading diamonds is a persistent problem. “That’s why we state right on the report that a certificate is recommended to ensure our report is accurate.”
The Consumer Diamond Value Report phone number is (800) 754-0787.
QVC LAUNCHES ON-LINE SHOPPING SERVICE
QVC planned to unveil a new electronic shopping service at midnight Dec. 8. The new service, called iQVC, is “the only integrated electronic retailing environment offering shopping 24 hours a day via television, computer and telephone,” says QVC President Douglas Briggs.
The new service is available nationwide on MSN (the Microsoft Network), Microsoft Corp.’s new on-line computer service. Consumers can use MSN to access a range of iQVC services, including television programming on the computer screen.
The service initially offers products in three categories: “Jewelry,” “Home Office” and “Kitchen.” Officials say it will offer access to thousands of brand-name products and offer such services as “Feature Dictionary” and “Product Advisor” to guide users through the graphically rich shopping environment.
QVC, headquartered in West Chester, Pa., reaches some 52 million homes in the U.S.
DEADLINE NEARS FOR JCK DESIGN CONTEST
Entries are due Feb. 1 for the 1996 JCK Retail Jewelry Design Contest. Jewelry designed by any full- or part-time employee of a retail jewelry store located in the United States, Canada or Mexico is eligible. Pieces must be original and designed since July 1, 1994. For details and a copy of the entry form, see page 171 of this issue.
JEWELERS MUTUAL DECLARES $3.6 MILLION DIVIDEND
The directors of Jewelers Mutual Insurance Co. declared a 1995 dividend of about $3.6 million. Policyholders will receive a share of the dividend when their policies expire this year. Those who have been insured by Jewelers Mutual for more than a year will receive a check for about 10% of their 1995 premium. New policyholders will get about 5%. Payment of the dividend is subject to regulatory approval in all 50 states.
JMI also announced that its newest videotape, Robbery: Anytime, Anywhere, will premiere Jan. 13 at the annual luncheon of the Jewelers’ Security Alliance in the Waldorf-Astoria, New York City.
HSN NAMES BARRY DILLER AS ITS NEW CHAIRMAN
A team led by Barry Diller, a founder of the Fox TV network and formerly president of the QVC shopping channel, took over the Home Shopping Network in late 1995. Published reports suggested that Diller wants to use HSN as a base on which to create a new entertainment network.
HSN, the seventh-largest jewelry retailer in the U.S., pioneered at-home TV shopping. It now is the largest U.S. television shopping service, reaching more than 65 million households. However, sales (about $1 billion annually) and earnings have been flat for several years. And despite a recent makeover (see JCK, August 1995, page 20), HSN lost money for much of 1995.
The HSN board named Diller chairman on Nov. 27, replacing Robert Bennett, who remains a member of the board. Diller had joined the board in August, along with John Malone, president of Tele-Communications Inc., and Peter Barton, president of Liberty Media Corp. The latter owns 80% of HSN stock and is a wholly owned subsidiary of TCI. As part of the changes, Liberty Media reportedly will swap its HSN stock for securities of Silver King Communications, which Diller heads and which owns 12 TV stations that broadcast HSN programs.
In other changes, James G. Held was named president and chief executive officer of HSN. He replaces David F. Dyer, who had served as president of HSN since August. Held was formerly president and CEO of apparel maker Adrienne Vittadini Inc. and served as executive vice president of QVC under Diller. Two other top officials resigned from HSN: Brian Kaminer, senior vice president of product integrity, and Theo Killion, senior vice president of human resources.
NEW WATCH ASSOCIATION TO DISCUSS U.S. BRANCH
Representatives of Cartier and Baume & Mercier will meet in the U.S. this month to consider their role in the Interprofessional Association of Fine Watchmaking, a two-year-old group based in Europe. Other watch companies will likely join the discussion, says Ben Kaiser, chairman of David G. Steven Inc., New York City, U.S. distributor of Baume & Mercier.
The association was created by the Vendome Group – which includes Cartier, Baume & Mercier and Piaget – and has more than 100 retailer members in Europe. It plans to advance the industry’s battles against counterfeiters, gray-market activity, warranty abuses, unauthorized uses of brand names, deceptive use of advertising, the use of non-genuine parts and promotional misrepresentations, says Kaiser.
“We hope to redefine the mission of the association here in the U.S. to meet the needs of retailers who sell fine watches,” he says. The meeting was planned after Kaiser joined Simon Critchell, president of Cartier USA, and Coleman Adler of Coleman E. Adler & Sons, New Orleans, as observers at the September 1995 meeting of the organization in Japan. The U.S. contingent is not yet confirmed as a member of the association, but a vote to include the U.S. will occur at an international meeting this fall.
FRIEDMAN’S POSTS RECORD SALES, PLANS FOR GROWTH
Friedman’s Inc., the third-largest retail jeweler in the U.S., reported record earnings for the fiscal year ended Sept. 30. The Savannah, Ga., company also announced it plans to more than double its number of stores to 500 by the end of the decade.
For the fiscal year, Friedman’s net merchandise sales rose 62% to $122.3 million. Total revenue grew 61% to $137.6 million. Net income (after special items) rocketed 78% to a record $10.4 million. Earnings per share grew 54% to 97¢.
For the fourth quarter alone, net merchandise sales grew 64% to $26.2 million. Total revenue rose 63% to $30.2 million. Comparable store sales rose 12%. Net income for the quarter grew 141% to $837,000. Earnings per share rose 75% to 7¢.
Three special items affected net income for the quarter:
A $558,000 after-tax expense related to the company’s long-term incentive compensation program.
An income tax benefit of $2.1 million related to a deferred tax asset.
An after-tax provision of $2 million for anticipated costs related to trademark litigation. (Friedman’s Inc. and A.A. Friedman of Augusta, Ga., are fighting over which has priority right to use the Friedman name [see JCK, May 1995, p. 24]. At a November press conference, Bradley J. Stinn, president of Friedman’s Inc., said his company is pursuing its case “as vigorously as possible” and that its goal is “registration of the Friedman’s name in the entire country.”)
More growth: Friedman’s Inc. had about 230 stores at the end of 1995, double its size in 1994. Two-thirds of the stores are in power strips and the rest are in regional malls. The company plans to add 60 to 80 more stores this year and hopes to have 500 in three to four years.
The stores are now located only in the Southeast. “But we’re not limited to the Southeast,” said Stinn. Potential new markets include Arkansas and Texas.
In related news, Friedman’s executives said a proposal to invest money in Crescent Jewelers, a chain based in Monrovia, Cal., was terminated in September. The deal couldn’t be structured in a way that satisfied Friedman’s, so Crescent sold back the 629,000 shares it owned in Friedman’s for $14.3 million. (Friedman’s Inc. and Crescent Jewelers are owned by the same company. Stinn is chairman of Crescent and president and chief executive officer of Friedman’s.)
|*Before special items relating to an incentive program, legal costs and income tax benefit in fiscal 1995.
**Number grew to 250 by the end of the calendar year.
ZALE TO BUY KARTEN’S, POSTS FIRST QUARTER GAINS
Zale Corp. got three early Christmas presents: a chance to buy a leading New England jeweler, a first-quarter report that pleased Wall Street and a respectable sales report for November, the first month of its important second quarter.
Zale reportedly signed a letter of intent to buy Karten’s Jewelers Inc. of New Bedford, Mass., a 50-year-old family-owned company that operates 20 stores in Massachusetts, Connecticut, Rhode Island and New Hampshire.
Officials of the two companies couldn’t be reached at press time, but reliable sources said they signed the letter in November.
Larry Pollock, president and chief operating officer of Zale, was president and chief executive of Karten’s from 1990 to 1994. A source said the purchase would be “a great strategic fit” in the far Northeast for Zale Corp., which has 11 Zales Jewelers, three Gordon’s Jewelers and one Bailey Banks & Biddle store in New England.
If the deal goes through as expected, Karten’s would become part of the Zales Jewelers division, which now has about 540 stores. Zale probably would keep the Karten’s name, at least for the next couple of years.
Meanwhile, Zale reported sales of $214 million in the first quarter of fiscal 1996, which ended Oct. 31, up 4% over the same period of fiscal 1995. Net earnings of $91,000 compared with a loss of $3.2 million a year earlier. Per-share earnings were 5¢.
Two unusual items affected the first quarter’s results, said Zale:
An extraordinary expense of $1.1 million related to the early redemption of $60 million in 11% senior notes. (This reduced earnings of almost $1.2 million to $91,000.)
$4.5 million in cash set aside, but not needed, in Zale’s reorganization two years ago. Without this item, Zale would have suffered a loss for the quarter.
Because Zale traditionally shows a loss in the first quarter, Wall Street analysts were buoyed by the report. Many had expected a loss of $2.5 million to $3 million.
In November, the first month of the second quarter, Zale reported sales of $106.4 million, up 5% over November 1994. Comparable-store sales were up 6.9%.
EUROPA TIME HALTS VUARNET DISTRIBUTION
Europa Time Inc., Boca Raton, Fla., has halted its distribution of Swiss Vuarnet watches.
Ralph Jacobsohn, owner of Europa Time, cited a deteriorated working relationship with Vuarnet’s Swiss office. Delays in shipments from Europe precipitated the fallout. “They did not have the product ready in September, so retailers said forget about it,” says Jacobsohn.
Europa Time will continue to distribute and service Swiss Silvana watches, though Jacobsohn says he is working to find a new distributor.
PRECIOUS REPLICA MARKS RUBIK’S CUBE BIRTHDAY
Rubik’s Cube, the world’s most successful puzzle, celebrated its 15th anniversary in 1995. To mark the occasion, Diamond Cutters International of Houston, Tex., was selected to manufacture a $1 million version.
The Masterpiece Cube is an actual size, fully functional Rubik’s Cube featuring 1,350 diamonds, sapphires, amethysts, rubies and emeralds invisibly set in 18k gold. The cube toured the United States through Christmas ’95 and was to visit major European capitals this year.
DCI also created 2,500 functional, actual-size limited-edition cubes in sterling silver and enamel for worldwide distribution. Each is numbered, includes a letter of authenticity signed by Cube creator Erno Rubik and retails for $2,000.
DATELINE REPORT ‘TIPS,’ GETS POOR REVIEWS
Industry leaders gave Michael Anthony Jewelers Inc. higher marks than NBC last month after the network aired another installment of its Dateline series about underkarated gold and deceptive pricing.
Billed as “Consumer Alert: The Golden Rules,” the report repeated portions of a September segment (see JCK October, page 24), added several tips for consumers to follow when shopping for jewelry and presented a segment during which Michael Paolercio and Anthony Paolercio, cofounders of Michael Anthony Jewelers, explained how their company continually conducts fire assay tests to be sure all its jewelry is karated properly.
“If Dateline’s purpose was to provide consumers with useful information, as they said, then they did an extremely poor job,” said Matthew Runci, executive director of Jewelers of America. “However, Michael Anthony’s segment was more accurate in its depiction of the manufacturing industry and came across well.”
The repeated September portion was based on an investigation in which Dateline bought 48 gold items from 21 retailers in four cities. Sixteen of the pieces were found to be underkarated, five of them by more than one karat. Most bore no trademarks, though most pieces that were trademarked were karated properly. The underkarated jewelry was largely of the mass-produced variety, including 10k and 14k gold rings, earrings, chains and bracelets. The stores appeared to be primarily “discount” jewelers.
The report also offered evidence showing how six large department store chains held jewelry “sales” more often than not. Cited were Lord & Taylor, Emporium, Macy’s, Kmart, Bullock’s and Mervyn’s.
Dateline concluded with five gold-jewelry-buying “Golden Rules” that Runci called “token gestures to consumers.” The tips were “no trademark – no sale,” “scratch the scratch test,” “know karat marks,” “know price per gram” and “check the receipt.” It added that buyers should ask for recommendations or should compare prices at several stores.
Runci and Lynn Ramsey, president and chief executive officer of the Jewelry Information Center in New York City, say the suggestion that consumers learn to buy gold jewelry by the gram was confusing and not applicable to the way most fine gold jewelry is bought.
“It is inevitably going to be misunderstood by most consumers, to the detriment of the trade,” said Runci. “It left consumers with the impression they should weigh everything, but that advice may be applied only in limited situations.”
Runci said the timing of the segment, about two weeks before Christmas, was clearly meant to attract viewers with buying on their minds. But he said he saw nothing that would cause consumers not to buy gold, though it may make some more careful.
Reed Brown, vice president of Jay B. Rudolph Inc., which operates the jewelry department at Bloomingdale’s, expected little if any consumer response to the program. “But any time any kind of negative press comes out,” he said, “it tarnishes our business just a little bit more.”
The segment also briefly repeated the assertion that nothing is being done to halt underkarating, but did not refer verbally to the Jewelers Vigilance Committee as the first installment did. Instead it flashed the JVC and Federal Trade Commission logos on the screen. Runci, Ramsey and JVC Executive Director Joel Windman disputed Dateline’s assertion that no steps are being taken to combat underkarating.
But Windman warned, “The Dateline program is a wake-up call to the industry. It should not be complacent and should become active or there is not going to be any trust in the industry.” Windman said JVC has received more than 5,000 consumer complaints this year, partly as a result of the Dateline series.
RECALLING CUSTOMERS FROM HEAVEN AND HELL
Before the days of Siskel & Ebert, theater audiences provided their own reviews. No highbrow discussions were needed: viewers who liked a play threw flowers at the cast; those who didn’t hurled rotten tomatoes.
Like a theater troupe trying to satisfy an audience, jewelers strive to please their customers. When they do, they can suddenly be a hero. When they don’t, they may be on the receiving end of a verbal rotten tomato.
JCK recently asked members of its Retail Jewelers Panel to describe any particularly memorable Customer from Heaven or Hell. In coming months, we’ll share their stories with you – either here in the Upfront section or in a separate column elsewhere in the issue.
Most of the “Customer from Hell” stories involved repairs, remounts or custom work and customers who accused the jeweler of switching or damaging their stones. Many jewelers lost substantial time and/or money in their efforts to satisfy these customers.
The happy stories often involved new customers who appeared out of the blue and plunked down big bucks. Others wrote of the “big one” finally caught after a long courting process.
The jewelers all learned (or relearned) things in the process: sometimes the customer isn’t always right, and you can’t judge a book by its cover – or a customer by his shabby clothes.
If the switch fits: Steve Williams of Williams Jewelry in Englewood, Colo., remembers it clearly. “We had a customer who, after purchasing a diamond dinner remount and having us mount her old mine-cut diamond in the new ring, accused us of switching her diamond and made a big scene when we had a store full of customers.”
Luckily, Williams had the customer’s old mounting: a miracle head burred to fit her squarish stone exactly. He put the diamond back into the old mounting, where it fit like a piece of a puzzle.
An ounce of prevention: The store has a policy of pulling all remount diamonds from their old mountings and weighing them while the customer watches.
Spirited discussion: When Dale Perelman of King’s Inc., New Castle, Pa., faced a drunk and argumentative customer, he handled it the old fashioned way. He fed the customer lots of coffee and listened while he blew off steam. Eventually, the customer calmed down, apologized for his behavior and has since come back to King’s to buy jewelry.
An ounce of prevention: listen more than talk, be empathetic and agree wherever possible. But listen, listen, listen!
Long-distance love: B.M. Siegel of Siegel Jewelry Co. in Grand Rapids, Mich., has made a long-term customer out of a visitor who was just passing through.
“Three years ago, a customer from another state was visiting our town. We took care of her in what we consider our normal fashion, steering her away from wrong decisions and helping her make good choices,” says Siegel. “This happened to be during our annual estate sale. She was so impressed she flew in last year and this year for the event, and spent over $10,000 each time.” – by Hedda T. Schupak