2014 Mid Year Report. Is The Best Yet To Come?
The numbers are in and it’s not been a great year so far for US fine jewelry sales. According to our good friend and numbers guru Ken Gassman both sales and demand has been dropping from last year’s highs. “Total jewelry demand (green bar) – jewelry sales at ALL retailers who sell jewelry including Wal-Mart, Costco, etc. as well as specialty jewelers – has also been relatively weak this year. In January and February, specialty jewelers ( red bar) took market share from other retailers who sell jewelry, but they gave it back in March. April was up 3.1%. May preliminary sales — including Mother’s Day — showed a strong gain of +6.0% for specialty jewelers. During May, specialty jewelers took market share from other retailers who also sell jewelry. This often happens during the three key selling periods of the year: Valentine’s, Mother’s Day, and Christmas. People think of jewelry for those occasions, and they go to their local specialty jeweler. At other times of the year, they buy jewelry — on impulse — at discounters such as Costco and Wal-Mart.”
Ken’s findings mirror what we have been hearing all year. After last year’s mild optimism, higher housing costs and living expenses, combined with the very little middle class income growth…income insecurity… are reducing jewelry spending. I see several factors at play here:
1. Boomers Aging: Aging baby boomers are cutting back on jewelry accumulation as most are now over 60 years old. Boomers are driving the larger ticket sales however and these sales are carrying the day and the month for many. They still have the money.
2. Self Purchasing Soft: Female self purchasing is still being satisfied by sterling designers, keeping average tickets low. We even see Pandora sales softening. Women manage the household checkbook and they are being conservative so far this year. One can not ignore possibility as well that impulse buying has shifted away from specialty jewelers to discount retailers like Costco, Outlet Malls and even to online retailers.
3. Bridal Bright Spot: Bridal is driving most stores sales and is growing as a percentage of overall sales. Stores who are driving bridal with strong marketing are doing the best.
4. Mid Price Squeeze : Mid priced non bridal jewelry and even diamond basics from $1000-$5000 are very quiet. This is not a new trend but reflects the growing stress felt by consumers. People are simply not “splurging” on jewelry right now.
5. Soft Recovery: With all the promises by the politicians, the economy is still just crawling along and many believe it is actually stalling. If your business is growing this year you’re doing it on your own folks! We can’t wait on them. It’s up to us!
Regionally the bright spots are New England, West Coast and growth stories like Denver and Texas where the job market is stronger. The mid west and and even deep south, areas that boomed in 2013 are flat in 2014. Maintaining last year’s numbers is real victory for many.
Our Jewelers Outperform
As for our Jewelers I am actually quite pleased with what I’m hearing from Freshley Media stores, especially this spring. Michelson Jewelers in Paducah, KY has posted steady increases with only one soft month so far this year. This following a very strong 4th quarter! McCaskill & Company in Destin FL posted the strongest June ever with much higher traffic and many more actual transactions. No question affluent families on vacation on the “Emerald Coast” are spending money. April and May were also up big time at Davis Jewelers in Louisville. Springers ( Maine, NH) Williams Jewelers ( Denver) American Jewelry Company ( Bakersfield, CA) all saw a solid first half , but as Carl Saenger from The American Jewelry Company explained, “ There’s just something different about the mood. People are more nervous and you can feel it. There’s an uneasiness you can’t put your finger on”
There it is again…the mood. The fact is margins are tight and monthly sales often swing on a few large diamond sales. That is what leads to that up and down uneasy feeling. I don’t see that changing through the summer or early fall. You must stay lean with your buying, market dominant with your advertising and a “bulldog on a bone” when it comes to closing sales. You must make EVERY prospect count at the diamond counter. Drive your business or it will drive you!
Plan Store Events Now!
Want to get folks in your store? Give them reasons! Start planning fall and holiday events now. Ofer Mizrahi’s Direct Diamond Events have and will continue to be traffic and sales generators. Butterfield Jewelers did a “Meet the Designer Weekend” with Mark Schneider in June and had the best event in years according to Bernie and Mike Butterfield. “ We had great traffic and made more than half a dozen sales we simply would not have made if Mark had not been in the store with us. This we will definitely do again!” So get your planner out now and start booking the events for the rest of your year! Meaningful events drive traffic, sales and the market. Get out and lead!
Believe me, we are not going to get any help from the economy or stock market. It’s going to be sideways at best. It’s all up to us and that’s just fine. We know what we have to do. Is the best yet to come? You bet it is.