It’s a depressing state of affairs. Most of the bankers responsible for the worst recession in 70 years have maintained their lucrative gigs, the banking industry defeated most legislative attempts to curb its monstrous appetite for risk, and there are really no safeguards in place to prevent another catastrophic meltdown.
Over in the jewelry universe, while the majors were in no way responsible for the turmoil of 2008, they have bounced back from the crisis nicely, probably better than Main Street jewelers.
According to Commerce Department figures, U.S. jewelry store sales rose 9 percent year-on-year in July, continuing the strong growth seen over the last few years (2011 and 2012 were record years for jewelry and watch sales, rising above $70 billion for the first time). But it would seem the chains are accounting for more and more of this growth.
Among the majors, Zales Jewelers reported an 8.1 percent increase in sales for its 2013 fiscal year while Tiffany & Co.'s most recent quarterly earnings were up 16 percent, although sales were up by a more modest level. In contrast, independents have seen their sales stagnate this year. The latest data from the Edge Retail Academy, which collects sales information directly from the POS systems of about 250 brick-and-mortar stores, shows the average store’s rolling 12-month sales peaking at about $1.4 million in April. Data we collected from our recent Big Survey also indicate profit growth at independents has been outpaced by their corporate cousins.
The strong performances being posted by the big jewelry companies likely have much to do with the restructuring forced on them by the recession. Back in 2008, many of the chains were struggling. Their service levels had deteriorated, they were over-represented in many markets but most importantly their product just wasn’t attracting customers. Zale CEO Theo Killion’s recent explanation of Zale’s turnaround story could apply to most of the majors: “I firmly believe that when the product is wrong, nothing else matters, and when the product is right, everything else matters.”
The challenge from these leaner and meaner corporate giants doesn’t stop at inventory. They also seemed to have decided they are leaving “value-added dollars” on the table, including revenue for for services such as repairs and custom design (Jared’s push in this area is a good example.)
The future for mom and pop jewelers promises to be challenging. But then it nearly always does.
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