Working Harder for Sales

RAPAPORT… Deep summer is often a tough time for retailers, with a lack of holidays and many customers choosing to spend money on vacations instead of luxury accessories. Still, for the first time in two years, retailers are beginning to feel the economy stabilize, and while no one is breathing a sigh of relief just yet, most of the stores that survived the worst part of the recession are starting to see customers come back, if slowly. And while almost everyone is still looking warily at online competition, hopes are high that at least by Christmas 2010, the worst will be over.

Ups and Downs

Jewelers are finding themselves working harder for each sale, and with mixed results. “We’re down 10 percent from 2009, and in 2009, we were down from 2008,” said Judith Arnell, owner of Judith Arnell Jewelers, with stores in Portland, Oregon, and Chicago, Illinois. “What we’ve found out is that with our diamond sales, we’re working much harder for each sale, and our customers are buying much smaller stones.”

In Albuquerque, New Mexico, Ernest Butterfield, owner of Butterfield Jewelers, said he is seeing slow stabilization, and even a little growth. “The past three years have been up and down, but this year has been steadier,” he said. “We’re maybe a little up from 2009. People are loosening their purses a bit.”

In some cases, sales have improved enough that retailers almost seem optimistic. “Sales have been much better in 2010 than in 2009,” said Debbie Berkowitz, co-owner of Glitters Fine Jewelry in Leawood, Kansas. “When I say better, though, I don’t mean great. Everyone is still a little cautious, but it’s better.”

Hy Goldberg, owner of Safian & Rudolph Jewelers in Philadelphia, Pennsylvania, is also seeing some improvement. “Compared to last year, the first quarter of 2010 was slightly off, but year on year, we’re up,” he said.

Up in Alaska, Mindi Robuck, co-owner of Michael’s Jewelers in Anchorage, is seeing dramatic upswings. “Our year so far has been awesome,” she said. “I’m so thankful. Business has been steady, and our numbers have been increasing each month. Last year, our numbers were great, and this year, they’re better. But we’re working really, really hard.”

Online Concerns

One of the biggest struggles facing brick-and-mortar independent retailers is competition from online stores. “When you’re competing with online companies, you can compete somewhat with price, but you can’t compete with taxes,” said Berkowitz. “Our industry and other independent industries are hurting. Retail taxes are part of that, though the Main Street Fairness Act could level the playing field.”

The Main Street Fairness Act legislation, introduced in Congress July 1, would close the internet sales tax loophole by requiring out-of-state sellers, particularly online retailers, to collect sales tax from all customers. Similar legislation was proposed, but not passed, last year. Internet and remote sellers are not currently required to collect state sales tax from customers in states where they do not have a physical presence, giving them an advantage over brick-and-mortar stores.

Showing customers the value of customer service and product knowledge is the only way many stores can compete with online and discount sellers. “I’m really concerned with the internet sales that we’re not getting a shot at,” said Goldberg. “The 30-year-old professional abhors the thought of having to face a salesperson. So we have to show them that there’s more to buying a diamond than what you can learn in 30 minutes of reading online. But I’m also concerned about discounters telling younger people only what they want to hear: ‘Nothing down for 60 days with no charge for interest.’ Anything that sounds really good, the young people go for. So we’re not seeing engagement sales the way we used to.”

Holiday Plans

Looking ahead, many stores are stocking cautiously for holiday 2010. “This is the first year in my career that I didn’t go to Vegas,” said Arnell. “I have so much inventory that I still need to move, and I wasn’t ready to buy in June. I’ll probably buy for Christmas at the very last minute, probably in October.”

Goldberg also put off his Christmas buying. “I’m placing my first big order for Christmas at the end of July, and I’ll be buying more moderately,” he said. “We’re focusing on items that turn faster, and we reorder only what we need.”

However, even when sales are slow, they are stabilizing, and store owners are finally beginning to see a glittering light ahead. “I’ve seen our customers completely pull back from buying jewelry, but they’re coming back, though it’s a long way from all the way back,” said Butterfield. “But I think the rest of the year is going to get better.”

Berkowitz also sees customers slowly trickling back. “They’re coming in,” she said. “Not enough, but they’re coming in. I think a lot of my customers are done with their break. When you love jewelry and you wear jewelry, you think, maybe I won’t take a trip this year, because I want those earrings. I want to treat myself. It may not be as big of an item as it used to be. It may be 1.5 carats instead of 2 carats, but it’s still special.”

The Marketplace

• Round sells best, with cushion cuts coming in a distant second in most markets.
• 3/4 carats is the top-selling weight.
• SI1 is by far the most-purchased clarity.
• G-H is most-purchased color range.
• In settings, 14-karat and 18-karat white gold outsells platinum in all but the highest-end stores.
• The average price for an engagement ring, including stone and setting, is $5,700.