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| Many retailers at the JA New York Winter Show did not buy more merchandise than last year due to high metal prices. |
Retailers strolling the aisles at the JA New York Winter Show presented a mixed picture of expectations for 2008, a year overshadowed by the threat of recession and increasing gold prices.
Some were optimistic in the face of the economic downturn, while others were bracing for a rocky year—divergent viewpoints seemingly fueled by geographic location.
One common thread among retailers interviewed by National Jeweler at the March 9-11 event was that they were not buying more merchandise than they did last year, with many feeling the pinch of rising metal prices.
One buyer, Bobby Vellios of Bobby's Jewelry Ltd. in Brooklyn, N.Y., said that with holiday sales down at his store, he had to downsize his expectations for 2008, and planned to buy less than he did in 2007. Still, he was optimistic, viewing the business as a roller coaster ride that will swerve up again.
Angela Defelippi from the Farmington, Conn.-based Monarch Jewelers was also stocking less merchandise this year, with the expectation that business will not improve for at least another two years. On her to-buy list at JA were traditional items, such as diamond jewelry and bridal sets.
"Everyone will always be getting married, no matter what the economy [does]," she said.
On Defelippi's not-to-buy list: gold, because the prices were, in her words, "astronomical."
"Everything is down with everyone across the country," she said, noting this is especially true in the Northeast, where high oil and gas prices are forcing consumers to be more frugal.
A cold front in Northeast retail? Vellios and Defelippi were not the only Northeast jewelers feeling the sting of a consumer spending drop.
National Jeweler's Year-End Sales Survey, 2007 depicted a slow year nationwide, but the Northeast was hit particularly hard, with the highest percentage of retailers surveyed—60.5 percent—reporting sales were down or flat for the year.
Rick Billig of Billig Jewelers in Marlton, N.J., was buying limited amounts of merchandise and said he was hoping for an average year. Yellow gold jewelry has been selling despite the price, but the pieces moving off the shelves have been lighter fashion pieces, he said.
Like Defelippi, Wendy Billig was skittish about new products, and said she was sticking with "proven sellers" and lighter gold pieces.
"It's all about that gold price," she said.
Similarly, Carol Mitnick of The Cosmopolitan Collection in Haddonfield, N.J., was searching JA for less expensive, lighter-weight gold pieces and sterling silver.
Despite economic woes, Mitnick said her holiday sales were good, thanks to colored gemstone sales, specifically.
At William S. Rich and Son in Union, N.J., Sherry Sablosky was poised for a down year and planned to buy less.
"With the price of gold, retailers are definitely down," Sablosky said. "We're trying to sell [gold], but you can't even buy a chain to sell. People don't want to pay those prices."
Retailers from other areas of the country attending the show at the Jacob K. Javits Convention Center in New York had a more optimistic outlook for 2008.
C. Niki Hunn of Thomas Hunn Jewelers in Grand Junction, Colo., said that thanks in part to the store's "recession-proof" location, holiday sales were strong and she anticipated a good year.
Designer Sonya Ooten of the Sonya Ooten Gem Bar in Los Angeles was also upbeat.
"I'm feeling like we've made it through the worst of it," she said, adding that in the L.A. area, the writers' strike, now over, had slowed sales.
Still, Ooten hopes gold prices level out this year, noting they were as low as $212 an ounce just a few years ago.
"It's crazy," Ooten said. "I'm hoping we've reached the max and they'll be going down."
While her margins have shrunk, Ooten refuses to raise prices and risk losing customers, but she is also creating more pieces using all gemstones and no gold.
The power of positive thinking Cheryl Schneider from Romance Jewelers in Concord, N.H., has adapted a new strategy that has had sales rising every month since November. She is teaching her salespeople to approach customers with the attitude that if they are inside the store, they want to buy something. Plus, she has lowered prices on older merchandise that hasn't moved in a long time.
"I think it's a mindset," Schneider said. "Just because the economy's bad doesn't mean it has to be doom and gloom in your store."
Though she will not buy more merchandise in 2008, Schneider is changing her buying strategy, investing in colored stones and diamonds, plus "bigger looks for your money," while staying away from gold because of the price.
Gina Stout, a buyer for New York-based Platinum Plus Jewelry, also planned to buy the same amount of stock in 2008 as she did in 2007.
"I'm looking for specific pieces customers have asked for," she said.
Lourdes Zeik-Chivi of Leonardo Jewelers in Red Bank, N.J., had the same concerns as her Northeastern counterparts but said the luxury consumer will still buy.
"The haves will be buying and the have-nots will be falling by the wayside," Zeik-Chivi said of the upcoming year.
She said she planned to spend the same dollar amount on inventory at JA, but was expecting to get less product for her money.
She has a strategy, however, for a challenging year, and said retailers who want to survive should understand their customer base and offer interesting products. On her shopping list were gold and diamond pieces, although higher gold prices would limit the quantity of goods she could buy.
Zeik-Chivi, who has been focusing on yellow gold for two years, said yellow gold with colored gemstones continues to be a popular seller.
"Only the haves are buying gold," she said, referencing consumers. "It creates an aura that 'If I like it and can buy it, I will buy it.'"
Source: nationaljewelernetwork
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