RAPAPORT…
The overarching trend so far this year has been to expect
the unexpected. Across the country, weather conditions and political battles
have turned even stable economic forecasts on their ears. That said, many store
owners believe the worst is over, and that the rest of 2011 will see smooth,
even sales, and possibly even an increase over 2010’s respectable, if bland,
holiday sales figures. In a year that’s been so jarring, with its unexpected
twists and turns, a boring holiday would be rather welcome.
Economic Indicators
The year so far has provided a lot of economic ups and downs
for independent jewelers. “The first six months of 2011, we were rocking and
rolling, but the past few months, it’s quieted down,” said H Bredemeier, owner
of H & H Jewels in Coconut Grove, Florida. He attributed some of the
slowdown to the usual summertime drop-off, but also blamed the media’s coverage
of the recession for scaring away customers.
It’s also been a changeable year in Pennsylvania. “The
economy didn’t adversely affect our business the first six months of 2011, but
in the last quarter, traffic has been slow,” said Abraham Frost, president of
Frost & Co. Diamonds in Pittsburgh, Pennsylvania. “The gift business has
really taken a big hit. We’re not in an era right now of ‘wants.’ We’re more in
an era of ‘needs,’ and it doesn’t feel right to buy now unless it adds to your
basic needs. But we’re in the business of excess, and there are people not even
buying carpet for their house, let alone a diamond ring.”
Out West, the economy is similarly challenging, though
customers have been less concerned with the news. “I think the public as a
whole is pretty tired of the press out there, and has just decided to move on,”
said Curtis Bennett, vice president of retail operations at O.C. Tanner, with
two stores in Utah. “I went into August thinking it would be typical, and then
there was a downtick in the stock market, so I trimmed back our outstanding
orders. Then August was double what we’d projected.”
Changing market conditions were also a factor in the
Midwest. “2010 was an up year for us,” said Mike Lordo, president of Lordo’s
Diamonds in Ladue, Missouri. “Then the first quarter of 2011 was 30 percent
down, year on year. So we were on target with 2009, which was not where we
wanted to be. Then we overcame that, and now we’re just about caught up.”
Stores also have found that even when customers come in,
sales are getting smaller. “The average ticket price is a little smaller than
in 2010, and consumer expectations are going down a little bit,” said Lance
Buttars, owner of Molinelli’s Jewelers in Pocatello, Idaho. “They’re either
compromising a little on size or on quality to meet their budgets. But the pie
here is a little smaller, too. A lot of chain stores have closed in the past
year. We’re celebrating 108 years this year, and it’s good to be the oldest guy
on the block.”
Stock Prices
With all the market changes, retailers have had a hard time
gauging inventory levels. “Our biggest challenge is trying to figure out which
way the economy is going to go,” said Lordo. “I’m not scared, but we’re
cautious. I think the biggest obstacle we’ve run into is trying to buy right.”
Bennett agreed. “In 2008, we ordered big and took all those
orders, and then our sales were down and we were left with a lot of jewelry,”
he said. “So we’ve been trying to negotiate our inventory, and also make sure
we don’t have a tired look. That’s been our biggest challenge.”
Looking Ahead
In Florida, Bredemeier was hoping for a positive end to the
year. “I’m expecting a good holiday,” he said. “We’re selling more large-ticket
items, and I think the clients in the upper echelon are still spending, and
will keep spending. The average guy is hurting, though, and I think there are a
lot of people who are still feeling the recession.”
If the year stabilizes, most jewelers expect Christmas to be
bright. “I think holiday 2011 will be better than holiday 2010,” said Buttars.
“Last year was better than the year before for us. We’ve had double-digit
increases since 2005.”
For many retailers, including Lordo, just a little calm
would be a nice way to end the year. “I’m not looking for a great Christmas,
but I’m not looking for a bad Christmas,” he said. “If this Christmas is as
good as it was last year, which was decent, I’ll be happy.”
The Marketplace
- Round sells best, as always. Cushion sales are increasing,
and princess sales are slowing. - 1.25-carat and 1.50-carat stones are moving quickly.
- SI1 and SI2 are tied for most popular clarity, though
higher-end customers go for VS2. - H-I is the top-selling color range.
- Due to increasing gold prices, platinum is beginning to
catch up to 14-karat gold as a choice for settings, though 14-karat and
18-karat gold still reign. - The average price for an engagement ring, including stone
and setting, is $5,680.
