US Retail: Performance Down for the Holidays

February 8, 2023  |  Lara Ewen
jewelry store display credit Shutterstock

Is inflation hitting the industry, or is the market experiencing a correction following a blockbuster 2021?

For many jewelers, pandemic sales were extraordinarily good. However, that seems to be slowing, and holiday sales during December 2022 were down across the board from 2021, albeit only slightly. Some store owners speculated that increased interest rates, a fragile stock market, and volatile real-estate trends might have played a part in softening sales figures. Others suggested this was simply a market correction after unusually high numbers over the previous three years.

An Underwhelming season

Matt O’Desky says his 2022 holiday business fell approximately 15% to 20%. “[We’re] still working on the final December numbers, but it was average,” says the owner of The Diamond Room, which has locations in Austin and Dallas, Texas. “I know everybody was down.”

He didn’t see as many six-figure sales as he usually does, and he was preoccupied with relocating one showroom, opening another, and relaunching his website.

Even businesses with fewer distractions had challenging seasons.

“[The holidays] finished off good, but it was scary,” says Marc Feder, owner of Jay Feder Jewelers. “We didn’t have that top-tier category of $300,000 to $400,000-plus sales, but we did have the $50,000 to $100,000 sales, and a couple of $100,000 to $200,000 people, and a lot of $1,000 to $5,000, and $5,000 to $20,000, which is our bread and butter.”

His company — which has retail stores in Colorado and Florida, plus a wholesale operation in New York — saw overall business slip about 10% from 2021. “But [2021] was a phenomenal, gangbuster year,” he adds.

In California, many luxury businesses struggled to meet 2021 numbers, according to Russ Varon, co-owner of Morgan’s Jewelers in Torrance.

“November was horrible,” he reports “Most people in business said that. I was talking to the Bentley dealer in Beverly Hills, who said November was way off.”

Varon’s December sales bounced back with strong large-diamond and Rolex sales, but his overall numbers were still down. “We were off maybe 10% from 2021,” he says. “But 2021 was the best year ever, so I have no complaints.”

Prime movers

The biggest holiday sellers for O’Desky were studs, tennis bracelets, solitaire necklaces, engagement rings, and lab-grown diamonds. “We also had a lot of married clients who wanted something extra nice for Christmas,” he says. “There were a lot more people doing custom pieces than we normally see.” He saw increased sales of colored gemstones as well, such as topaz, Colombian emeralds, and sapphires.

Fashion pieces and pearls did well for Feder, as did upgrades. “People were celebrating and upgrading their diamonds for Christmas and anniversaries,” he says. “We sold a couple of eternity bands and pieces that we’d had in inventory for years that were very unique.” He also did well with large diamond halo studs.

In terms of marketing, social media and referrals were the only successful strategies, he reveals. “Almost none of my actual print ads or anything that I’ve done with radio or anything else worked. But social media always works, because they’re your people, and they’re interested in what you’re doing.”

Self-purchasing women will be a prime target for Varon in the coming year. “Men are always in here buying for birthdays and anniversaries,” he says. “But we’re trying to light up the self-purchasing woman, who has disposable income and can buy for herself.”

He’s also attempting to focus less on Rolex sales. “We’re a jewelry store,” he says. “The last couple of years it’s been all Rolex, Rolex, Rolex, so we’re trying to push more fashion.”

The struggles to come

That said, Varon expects 2023 to be slower. “The stock market is low, and interest rates are high. I think we’re going to see more people unemployed.”

Feder is also wary about the coming year. “The small designer category is struggling, and you have lab diamonds, which are taking a chunk of business away from the natural business,” he comments. “I don’t know what’s going to happen this year, but I’m pretty nervous about it. There’s so much turmoil everywhere.”

He worries that many jewelry stores won’t survive. “Stronger players will stay,” he says. “But there’s too much inventory in the market, and prices will go down if there’s too many diamonds available. Harder times shake out a lot of the people that got into the business that were weak, or did not have strong financial backing or strong business plans. I think you’ll see a lot of those people go away.”

By the numbers

• Total online sales for November-December 2022 rose 3.5% year on year to $211.7 billion. The apparel and accessories division, which includes jewelry, was up 94%, and watches gained 108%.

• Global luxury sales jumped some 21% to $1.5 trillion in 2022, and sales of personal luxury goods rose 22% to $378 billion.

• US jewelry retail revenues fell 5.4% between November 1 and December 24. The drop reflected a comparison with 2021’s unusually strong season, when sales were up 32% from 2020 and 26% from 2019.

• The US Consumer Confidence Index bounced back in December to 108.3 from November’s 101.4, after consecutive monthly declines.

• Super Saturday retail traffic saw only modest growth in 2022. The number of people visiting physical stores the Saturday before Christmas rose 0.2% year on year, versus 19% in 2021.

Sources: Adobe Analytics, Bain & Company, Mastercard SpendingPulse, The Conference Board, Sensormatic Solutions

Image: A jewelry store display. (Shutterstock)


jewelry store display credit Shutterstock US Retail: Performance Down for the Holidays

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