Bracing for Winter

RAPAPORT...  Although the holiday season has traditionally been a time when retailers see increased sales, this year is stacking up to be a little leaner. Stores that focus on bridal are feeling less of a pinch, but with the looming elections and gloomy economic forecasts on everyone’s mind, few are expecting the coming months to be easy.

Challenging Times

Tyler Nogai, vice president of sales and marketing at Arthur’s Jewelers in St. Paul, Minnesota, said, “I think everyone is facing challenges this year. But economically, the bridal and diamond business will be higher. Our store will be taking business from the lower-end stores, which have been closing. Their clients have been affected the most.”

In California, Jim Jessop, owner of Jessop Jeweler, with two stores in San Diego, said, “I think we’re heading for a relatively lean year, and we’re going to have to work harder to achieve the sales we get. I was pessimistic last year, too. But this year, we’re going to see more pessimistic clients. And larger-ticket sales will be more difficult.”

Celia Feder, co-owner of Jay Feder Jewelers in Denver, Colorado, expects this year’s holiday to show some improvement over 2007, but is cautious nonetheless. “I hope holiday this year is no worse than last year,” she said. “Last year, we were down 40 percent. I think this year will be better, but it depends on whether people feel good with what happens in the election.”

The election is a factor for a lot of retailers. Steve Samaras, owner of Zachary’s Jewelers in Annapolis, Maryland, said, “Obviously, the election is going to be one of the most important factors” impacting this year’s holiday retail season. “We’ve been aggressive, so I expect this year to stack up better for us than last year. But from an industry perspective, I don’t expect it to stack up as well.”

Bridal Trumps Holiday

Retailers who do most of their business in bridal and engagement jewelry are optimistic that they will fare well in the approaching holiday season. Mindi Robuck, co-owner of Michael’s Jewelers in Anchorage, Alaska, said, “Bridal is consistent all year round, so we plan for every month to be like Christmas. You turn on the news and you hear negative things, but no matter how the economy does, people still get married. So we make sure we’re always prepared, and there’s nothing we do differently for holiday.”

Feder agreed that Christmas wasn’t the main focus of her business. “Holiday is the cherry on top, but it’s not what we live for,” she said. “Our business is much more engagement, anniversary, event and that sort of thing. Holiday is only about 15 to 20 percent of our business, and last year was much less than that.”

In St. Paul, Nogai sees roughly the same volume as Feder. “Between November and December, we do 20 percent of our business,” he said. “We’re a bridal house. We’ve never had a bad holiday.”

Jessop agreed. “In actual volume, I’m fortunate, in that the holiday selling season isn’t as tremendous a part of my volume as it is in the rest of the jewelry industry,” he said. “But the holiday season is the end of the year, and it’s our biggest single month and it pulls our year to a close. So it sets a tone.”

While Samaras does a slightly higher volume during holiday than some other retailers, he also sees holiday as part of the bigger retail picture. “December is 30 percent of our volume,” he said. “Fortunately, we’re profitable during the rest of the year and Christmas gives us the bankroll to fund our marketing for the rest of the year.”

Selling Optimism

Even if the coming months are demanding, retailers are doggedly hopeful about their industry. Said Robuck, “Even with all the different things that are happening, our business is continuing to grow. You know, people come in here to feel good, and we haven’t heard any of the negative. I know you normally hear doom and gloom, but I have nothing bad to say.”

Jessop is also feeling better about his business. “In June 2008, I was feeling pessimistic about holiday 2008. I’m more optimistic now. The dollar is getting stronger and the cost of gas is softening. I don’t think those things affect my clients’ ability to spend money, but it affects their willingness to spend money.”
Perhaps the most important thing retailers can do in tough times is stay optimistic. “Feeling is huge in this industry,” said Feder. “Anything you do in this industry is to create the aura of feeling good. If people feel like there’s a positive tomorrow, then today can be good, too.”

The above report does not reflect U. S. market turbulence ongoing at press time.

The Marketplace
• Round brilliant tops diamond engagement sales, with square and rectangular cuts coming in a distant second.
• 1-carat stones are currently the most
popular choice, although it’s not
uncommon to find customers requesting 4-carat+ stones.
• Most engagement purchases are VS2,
followed by SI1.
• The top colors are G, then H, then F.
• There is a trend back to platinum, though many customers are still choosing 18- and 14-karat white gold because of the price. Palladium is getting increased play, both on its own and mixed with white gold.
• The average price for an engagement
ring is $7,500, including stone and setting, though many stores are reporting a spike in engagement rings in the $10,000 range.

Article from the Rapaport Magazine - October 2008. To subscribe click here.