RAPAPORT... In December, closing out a year of economic and political twists and turns, retailers breathed a collective sigh of relief and got down to the business of the holidays. The general consensus seemed to be that things were improving, though not dramatically, and that 2011 would bring slow, steady improvement.
Holiday Hopes
The big news is that customers are shopping for luxury gifts again. “Those who have stabilized and realized they’re going to have a job are starting to buy again,” said Brant Kane, diamond buyer at E.E. Robbins, with three stores in Washington State. “Credit is loosening up. And jewelry is a feel-good item; buying it is making a statement.”
The temperature is the same in California, figuratively, both for storeowners and their customers. “I think people are feeling more positive in 2010 than they did in 2009,” said Georgie Gleim, president of Gleim the Jeweler in Palo Alto, California. “They have adjusted somewhat to the financial reality of the day. I sense that people want to spend money on something that has meaning and is lasting.”
Some stores have seen marked improvement in their numbers already. “I think 2010 will be a better holiday season than 2009,” said John Hayes, owner of Goodman’s Jewelers in Madison, Wisconsin. “So far, since Thanksgiving Day, we’ve been trending ahead of 2009 by about 8 percent. We have noticed a slight increase in personal purchases. I think there is a sense of pent-up demand. People are feeling more justified in buying something for themselves.”
One explanation for the cheerful mood industrywide is simply that everyone feels more relaxed. “So far so good,” said Scot Congress, owner of Congress Jewelers, with two stores in Florida. “This season feels better, because the clientele feels better.”
Even as good as the news is, almost everyone will have to wait until January to know if 2010’s holiday season was truly a success.
Black is Out
While Black Friday garners its fair share of media attention, it doesn’t make much of a mark in fine jewelry. “We do Black Friday, but it doesn’t affect our business,” said Kane. “We’re an engagement store, so we never feel like we have to make 40 percent of our year the week before Christmas.”
Many stores see a rush just before Christmas. “As has been the trend lately, I do expect the real business of the holiday shopping will start around December 15, putting a lot of pressure on the last ten days,” said Hayes. “Busy schedules, and Christmas falling on a Saturday, give the feeling of having all week to shop, which will maybe push customers into delaying their shopping even more.”
Budgets and timing aren’t the only issues that affect holiday shoppers. “Historically, our Christmas season begins a week before Black Friday,” said W. Mark Michaels, co-owner of Michaels Jewelers, with ten stores in Connecticut. “But I can tell you that customer buying patterns are still about the weather. When there’s snow on the ground, it gets the customers’ mind-sets thinking about Christmas buying. I can also tell you that the last week, inclusive of Christmas, is approximately 10 percent of our annual volume. We find that when Christmas comes, if customers have any discretionary money left over, they think about getting an important gift, but it’s about holding off until the very end. I fall in that category myself.”
2011 Forecast
Perhaps it was the holiday spirit, or perhaps it was simply seeing a little black on the books. Either way, retailers had a sense of hope, albeit one that was grounded in practical realism. Some also felt the worst was, simply, over. “I am cautiously optimistic that we will see a 3 percent to 5 percent growth if we work hard,” said Hayes.
Michaels is looking ahead to the light at the end of the tunnel. “We lost a lot of competitors in our area, especially in the mall area,” he said. “But we believe we’ve bottomed out, and we think people have put their purchases off, and now they’re coming back. We’re expecting a minimum of a 4 percent to 6 percent increase over 2009 numbers.”
In Florida, Congress also hoped for increases. “We are projecting double-digit increases in 2011,” he said. “The mood is good so far, and since the midterm elections, the political climate and news have been more positive, and that has made the biggest difference in everyone’s mood. As long as we continue to hear positive news, we will be fine.”
Kane agreed. “I’m very upbeat about 2011,” he said. “My definition of upbeat is different than it was five years ago, but I’m looking at comfortable, small, steady growth. I’m very optimistic.”
The Marketplace
• Rounds sell best, with cushion and princess shapes following.
• Stones between 1 carat and 2 carats are moving particularly well right now.
• SI1 is the most popular clarity, though I1 sales are growing.
• H-I is the top color range.
• 14-karat and 18-karat white gold leads in settings.
• The average price for an engagement ring, including stone and setting, is $4,350, though ring sales of $10,000 and above are increasing.
Article from the Rapaport Magazine - January 2011. To subscribe click here.