RAPAPORT...Call it a slowdown or call it a recession. These days, even the most optimistic retailers acknowledge that sales are sluggish and customer confidence is low. However, with the election over and the year coming to a close, hopes are high that the coming year will be a little easier, as long as everyone survives the holidays.
Importance of HolidayAccording to Ron Leitzel, president and chief executive officer (CEO) of Mountz Jewelers, with three central Pennsylvania stores, the holiday season is the single most important time of the year. “The Christmas season always tells the tale,” he said. “This will be the sign. In the last quarter, we do 35 to 40 percent of our business. If we only do 30 percent, that’s a big hit.”
The situation is similar in the Midwest. “Holiday is a significant time of year,” said Steven Tapper, vice president of Tapper’s, with two stores in Michigan. “This is when we do a significant amount of our business. It’s critically important.”
Rick Beaulieu, president of Springer’s Jewelers, with two stores in Maine and one in New Hampshire, agreed that this season has a big impact on his bottom line. “Holiday has always been extremely important,” said Beaulieu, adding that “23 percent of our sales are done during holiday, and a lot of that comes in the last ten days. In 2007, the last three or four days made the season.”
For John Profit, partner at E.E. Robbins, which has three stores in Washington State, December is important, but not crucial for his business, which is 98 percent bridal. Profit, who is also the general manager and diamond buyer for the E.E. Robbins Seattle store, said, “December is our biggest month, but it’s not our year. It’s 14 percent of our year.”
At other stores, December is practically a nonissue. “For us, holiday is not that important,” said Bruce Yamron, owner of Yamron Jewelers, with two stores in Naples, Florida. “We have a Christmas season like everyone else, but the strong point of our season is between January and June, when our northern customers come to Naples.”
Holding Steady
While some stores anticipate less business this holiday season than in years past, most are hoping to just stay on par with 2007. “I see a slight downturn,” said Tapper. “But if we could stay even with last year, it would be great.”
Beaulieu agreed that flat would be a blessing this year. “You listen to all the hype, and they talk about retail sales being down 3 percent,” he said. “If that’s all it is, that’s fantastic. I hope we’re even with 2007. Even if we’re flat, it’s like we’re 10 percent ahead.”
Even bridal-based stores such as E.E. Robbins are seeing a slowdown. “We’re down about 8 percent from 2007, but from what I hear, that means we’re doing pretty well,” said Profit. “I mean, Blue Nile is a few blocks away from our store, and they’re not doing well, either.”
Leitzel isn’t surprised that the economy has taken this turn. “All the signs have been showing a slowdown,” he said. “The market got worse than we anticipated, but we were up until the end of September.”
Some stores have simply decided to ride out the year and see what happens. “If I’d known six months ago what I know now, I might not have committed so much to new vendors and new inventory,” Yamron said. “But we’re not changing anything for the holiday season. In a down time, you have to look at the two- or three-year picture.”
Positive ThinkingThere’s no denying that times are tough right now. However, there are some bright spots. Bridal, for example, still sells. “There will be fewer people buying jewelry,” admitted Profit. “It’s a luxury. But people will still get married. I win more than I lose.”
Despite the difficulties, retailers are trying to keep spirits high. “I think the challenge will be the negative attitude of the consumer,” said Beaulieu. “So our attitude is, let’s make sure we have a positive Christmas. We’re all going to get through this, and we’re all in this together.”
“The truth is that we’re better than last year at what we do,” said Tapper. “I believe in positive thinking. My brother [Tapper’s president Howard Tapper] and I wake up and are positive every morning.”
Ultimately, most see the slowdown as a temporary hurdle. “We’re thinking very positively,” said Leitzel. “We’re not in bad times. It may be less than what we’re used to having, but this is not bad times.”
The Marketplace• Round continues its popularity.
• 1.5-carat stones are still top sellers, though sales of stones as large as 10 carats are not unheard of.
• The best-selling clarity right now is SI1, since most customers prefer to splurge on color rather than clarity.
• The top color is G, although stores also say that D sells well when it’s available.
• Platinum is the most popular choice for settings, although customers have been trending toward palladium, too, after discovering it back when they were priced out of the platinum market.
• The average price for an engagement ring is $5,000, including stone and setting. However, sales in the low-five-figure range are not uncommon.
Article from the Rapaport Magazine - December 2008. To subscribe click here.