RAPAPORT...Although the forecast has been grim for a while, early fall saw the Dow drop so steeply and so often that many consumers and retailers were practically whiplashed from the free fall. While most small business owners are confident that things will pick up eventually, almost everyone is preparing for a slow, if not grim, holiday season, and hoping that the new year will see a brightening forecast.
Slow Traffic and Sales DropsFor Joseph R. Villarreal, president of WhiteFire Diamonds and Fine Jewelry in Austin, Texas, change came suddenly. “Up until a few days before October 7 — when the Dow dropped 800 points in one day — we were very busy,” he said. Now, although his engagement sales are still strong, business isn’t what it used to be. “We do not intend to stock heavily for Christmas,” he said.
In downtown Washington, D.C., Scott Engle, owner of Lynn Jewelers, also took a hit. “It’s hard when you see the news and the Dow has fallen another 700 points,” he said. “We’ve had some of the worst days we’ve ever seen here at the store. There are fewer of the big days, too. There’s no consistency. September was 50 percent off. Nobody feels like they want to spend money. They feel guilty.”
According to Lula Halfacre, president, chief executive officer (CEO) and co-owner of Traditional Jewelers, with two stores in Southern California, no one has escaped the impact of the recent economic turmoil. “Whether you own stocks or you’re the plumber, we’re all being affected,” she said. “Traffic is down, and the best thing we can do is to try and run our business smarter.”
Evans P. Siskel, co-owner of DVVS in New York City, has also seen fewer sales.
“I’d be lying if I said the economic crisis hasn’t affected us,” he said. “Business has dropped noticeably, maybe 20 or 25 percent. We’re seeing less traffic in the store, and we’ve had to tempt people and quell their fears. We’ve also tried to trim our budget. In print advertising, we do smaller ads, rather than fewer ads.”
It’s not just the stock market, either. Gas prices and local road closings have made business difficult for Curt Parker, president of Curt Parker Jewelers in St. Louis, Missouri. “Traffic remains slow, but the average dollar amounts of sales are up,” he said. “Sales below $1,000 are nonexistent. I think this is caused by a major highway closing in our area and the high price of gas.”
Predictions for the FutureMost retailers are waiting to see what the end of the year brings, in terms of the election results and whatever economic changes follow. Parker sees a weeding-out process occurring, due to the stresses of the market downturn. “I think the weaker retailer will disappear,” he said.
In Texas, Villarreal feels that the election outcome will be a major factor in helping consumer confidence. “I believe that if a Democrat is elected, the consumer will feel more comfortable about spending money again,” he said. Until things have stabilized, though, he plans to keep his store lean. “Retailers will be scrambling to move existing inventory and trying not to buy any more than necessary.”
Halfacre also thinks that “just having the election over will be good.” Then, she added, “we’ll know what we’re up against. Like, if we’re paying extra taxes, will we have to cut our sales staff? Because extra taxes will mean fewer jobs.” Despite this, Halfacre is optimistic about the future, noting that the retail industry “is going to come out on top. It’s going to be fine. You just have to make sure you’re in a good solid position and that you partner with great vendors. I feel very positive about the future.”
“In Washington, D.C., we always say, no matter who wins, some people will be out of a job,” said Engle. “So, there’s the uncertainty. And one of the financial experts was talking about these economic difficulties lasting for eight years. But once the people with money don’t feel like they’re rubbing it in people’s faces, they’ll go back to spending.”
Siskel agreed that “There are always going to be people out there with cash, and it’s important to find those people. Find the customer who would rather come to a smaller mom-and-pop-type store than go to Tiffany’s. The big guys — the Wal-Marts and the Kmarts — are going to end up stronger at the end of this, because more and more of the mom-and-pop places are not going to survive this. But no small business that comes out of this should be worried, as long as they’re honest and not greedy.”
The Marketplace• Round cuts are leading engagement sales, followed by princess and cushion cuts.
• Customers are buying 1.5-carat stones most often, although 2- and 3-carat stones are also selling well.
• Today’s price-conscious shoppers are trending toward SI1 clarities, although more well-heeled customers prefer VS2.
• Price is a factor in color selections as well. Customers most often choose G over the more expensive F.
• Now that platinum costs only a little more than gold, it has again become the top choice for bridal settings.
Article from the Rapaport Magazine - November 2008. To subscribe click here.