Retail Rap

RAPAPORT… The last stop for diamonds is the retail store. Here is a behind-the-scenes look at what is happening at retail in the U.S.

Sky Not Falling For 2007 Holidays

Good news has come from the National Retail Federation (NRF). NRF spokespersons predict that retail sales will grow just 4 percent during the Christmas shopping season in the fourth quarter of the year, while overall sales will climb by only $478 billion. But the slowest holiday spending increase since 2002 is not a disaster. Scott Silverman, executive director of the NRF’s shop.org website, stated that even though consumers will be more conservative in their shopping, they will still be out there spending money.The NRF predicted that the items most in demand by women during the holiday season will be diamond jewelry, fashion jewelry and evening wear.

A survey conducted by the NPD Group, Inc., found that many consumers are planning to avoid the impulse buying that often characterizes the year’s biggest retail season. They will also shop later than in past years, the survey found. A total of 41 percent of respondents – 10 percent more than in 2006 – reported that they don’t plan to start their holiday shopping until after Thanksgiving.

Zale Chairman Steps Down

Zale Corporation board member and chairman Richard Marcus has resigned after a 14-year tenure with the jewelry chain. Marcus, who became chairman in 2004, joined Zale as it was emerging from Chapter 11 bankruptcy in 1993. Jack R. Lowe, a board member, will succeed Marcus as chairman.

In 2006, Zale’s board discussed a possible merger with its largest competitor, U.K.-based Signet Group, which operates the Kay and Jared chain in the United States, but the idea was dismissed. Both the outgoing and incoming chairman stated in separate interviews that they believe Zale should remain an independent company. They also each stated that the company needs to focus on its biggest division, Zales Jewelers.

Marcus’ career with Zale encompassed some of the chain’s most successful periods, including its high-profile turnaround in the 1990s. However, recent years have been characterized by declining market share and profit and near-constant turnover in the top executive ranks.

Additional reporting © Dialog NewsEdge.

Asia-Pacific Region to Surpass United States in Luxury Spending

Worldwide spending on luxury retail items, bolstered by the growth of the jewelry and watch market, will grow 70 percent to $450 billion by 2012, according to the Global Luxury Retailing 2007 report published by Verdict Research. The research company’s report stated that growth in luxury spending represents a doubling of the growth rate observed in the luxury goods industry over the past five years.

The report attributed this growth to the increasing spending power of emerging global markets. It predicted that by 2012, the Asia-Pacific region would take the United States’ current place as the second largest market after Europe. The region, with Japan included, will account for 36.2 percent of sales in this market, compared with Europe’s share of 36.4 percent.

Survey Finds Rise In Median Store Net Profit

The annual Cost of Doing Business Survey conducted by Jewelers of America (JA) found that all categories of retail jewelry reported growth in 2006. In analyzing member stores’ financial data for the previous calendar year, JA found that median growth was 4.1 percent, up from 3.5 percent in 2005. High-end independents performed best, with sales climbing 7.4 percent. Designer and custom retailers experienced a 6.5 percent growth rate and sales at chain stores rose 4.3 percent. The smallest growth noted in the survey was that of mid-range retailers, at 2.4 percent.

Store profitability for JA retailers rose 32 percent from 2005. The net profit as a percentage of net sales rose from 4 percent to a median 5.3 percent. Despite a drop in gross margins, JA reported that the overall gross margin went up from 48.4 percent to 49.1 percent.

From year to year, the distribution of sales stayed more or less even. Diamonds – loose and set – accounted for half of all retail sales, colored stone jewelry for 10 percent and gold for 8 percent.

The above is only a sampling of the data contained in the 75-page survey, which can be ordered by going to www.jewelers.org.

Sterling Jewelers Adopts RedPrairie System

Sterling Jewelers Inc. has implemented the RedPrairie Corp.’s on-demand execution management application. This is a web-based program designed to assist retailers’ efforts to design and monitor programs and processes carried out in their stores. Thanks to this application, Sterling can take advantage of a single, chain-wide window on all aspects of what transpires in its 1,300 U.S. stores.

JA Offers New Online Courses

JA is offering three new online courses at the website of its J-Biz Education Center. The courses are aimed at providing information and fostering skills that will be particularly useful on the sales floor during the coming holiday season in the United States. Because members of a sales staff often have busy and demanding schedules, the courses are broken up into brief sections.

“Counter Intelligence” is a self-study course focusing on topics such as ethics, professionalism and legal compliance. It also aims to make sales associates more proficient at communicating information about appraisals, laboratory reports, synthetic stones and treatments. “Communicating Color: Selling Colored Gemstones” is aimed at educating testers on colored stone value factors, popular faceted gems and gemstone sources, gemstone enhancements and disclosure. “Treatment Talk: Discussing Gemstone Enhancements” deals with different types of treated gemstones found in stores, cleaning issues and techniques, and means of communicating such matters to customers.

Registration information for the J-Biz Education Center is available at www.jewelers.org.

Tiffany to Add Stores Using New Format

Tiffany & Co. has developed a plan to increase by 12 the number of new stores that the company opens annually in the United States, starting in 2008. The new stores will be based on the same template – a new, smaller model, occupying roughly 12,000 gross square feet and offering many types of jewelry designs, but not engagement jewelry. Michael J. Kowalski, chairman and chief executive officer (CEO) of the corporation, remarked that the new format had made it possible for Tiffany, which currently has 68 outlets in the United States, to operate, ultimately, 170 stores throughout the country.

Stuller Studio Launches New Program

Jewelry supplier Stuller Studio seeks to meet the needs of last-minute holiday shoppers via its new “Have It Your Way Program,” which offers jewelers customized products on demand. The program is meant to provide jewelry retailers with a marketing tool to boost sales and customer satisfaction at the holiday crunch, when consumers may be in a frenzy to find the right piece of jewelry at an affordable price.

More information on the custom jewelry program is available at www.stuller.com.

Signet Opens Sourcing Unit in India

Signet Group has established a new rough diamond manufacturing center in India, the Signet Sourcing Manufacturing Unit. Located in the World Diamond Manufacturers (WDM) facility in Visakhapatnam, where Signet’s Sterling Jewelers Inc. has operated for two years, the new unit will function as a subcontracting division. Mark Light, president and chief executive officer of Sterling Jewelers, said that he and his colleagues, operating within what he called a “challenging background in the rough diamond arena,” had successfully secured additional sources of diamonds for their customers. Further rough sourcing opportunities are currently under consideration.