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July 7, 2009
In a Downturn, Jewelers Aren’t So Precious
By STEPHANIE ROSENBLOOM
In a different economy, Billy Mitchell and Nicole Drucker of San Francisco might have splurged on a $10,000 engagement ring. But Ms. Drucker is out of work and they need to save for a house. So in April, Mr. Mitchell got down on one knee on the Golden Gate Bridge and proposed with a $4,000 diamond ring he had bought on the Internet.
“We had to decide, where do we want the money?” Mr. Mitchell said. “On her finger?”
In this economy, many consumers would rather keep their money in their wallets than on their fingers, necks or ears. As people re-examine their budgets, jewelry is turning out to be one of the easiest places to cut back — or trade down.
“The half-carat is the new three-carat,” explained Hayley Corwick, who writes under the pseudonym Lila Delilah for Madison Avenue Spy, a blog about designer sales.
Yet the understandable penny-pinching by consumers is putting a painful squeeze on the jewelry industry.
The new frugality has forced diamond mines to curtail production, led to deep discounting at jewelry chains, spurred hundreds of store closings and resulted in job cuts at boutiques and department stores. Because jewelry is expensive inventory that moves slowly even in better economic times, many stores are laden with debt — even though wholesale global prices of polished diamonds were down 15.4 percent in June compared with a year earlier.
Experts say that when the shakeout is over, far fewer jewelers will be left standing. About 20 percent more American jewelers will go out of business this year than did last year, according to Kenneth Gassman, president of the Jewelry Industry Research Institute, an independent research practice.
The jewelry chains that have filed for bankruptcy in the last year or so include Fortunoff, Whitehall Jewelers, Friedman’s, Christian Bernard and Ultra Stores (which operated jewelry departments inside Filene’s Basement and other chains).
Still in business but posting losses, meanwhile, are big jewelry chains, both high end and low — from Harry Winston and Bulgari to Zales and Claire’s Stores.
And while the venerable Tiffany & Company is still making money, sales have dropped 34 percent at its stores in this country that have been open at least a year.
Major mass-market retailers including Wal-Mart, J. C. Penney, BJ’s Wholesale Club and Costco have cited jewelry as one of their worst-performing categories this year. Even online jewelry and watch sales are down, declining 7 percent in the first quarter, according to the Web analysis firm comScore.
“You’re seeing the traffic fall off a cliff at all price points,” said Stacey Widlitz, a retailing analyst with Pali Research.
http://www.nytimes.com/2009/07/07/bu...l?ref=business
“We had to decide, where do we want the money?” Mr. Mitchell said. “On her finger?”
In this economy, many consumers would rather keep their money in their wallets than on their fingers, necks or ears. As people re-examine their budgets, jewelry is turning out to be one of the easiest places to cut back — or trade down.
“The half-carat is the new three-carat,” explained Hayley Corwick, who writes under the pseudonym Lila Delilah for Madison Avenue Spy, a blog about designer sales.
Yet the understandable penny-pinching by consumers is putting a painful squeeze on the jewelry industry.
The new frugality has forced diamond mines to curtail production, led to deep discounting at jewelry chains, spurred hundreds of store closings and resulted in job cuts at boutiques and department stores. Because jewelry is expensive inventory that moves slowly even in better economic times, many stores are laden with debt — even though wholesale global prices of polished diamonds were down 15.4 percent in June compared with a year earlier.
Experts say that when the shakeout is over, far fewer jewelers will be left standing. About 20 percent more American jewelers will go out of business this year than did last year, according to Kenneth Gassman, president of the Jewelry Industry Research Institute, an independent research practice.
The jewelry chains that have filed for bankruptcy in the last year or so include Fortunoff, Whitehall Jewelers, Friedman’s, Christian Bernard and Ultra Stores (which operated jewelry departments inside Filene’s Basement and other chains).
Still in business but posting losses, meanwhile, are big jewelry chains, both high end and low — from Harry Winston and Bulgari to Zales and Claire’s Stores.
And while the venerable Tiffany & Company is still making money, sales have dropped 34 percent at its stores in this country that have been open at least a year.
Major mass-market retailers including Wal-Mart, J. C. Penney, BJ’s Wholesale Club and Costco have cited jewelry as one of their worst-performing categories this year. Even online jewelry and watch sales are down, declining 7 percent in the first quarter, according to the Web analysis firm comScore.
“You’re seeing the traffic fall off a cliff at all price points,” said Stacey Widlitz, a retailing analyst with Pali Research.
http://www.nytimes.com/2009/07/07/bu...l?ref=business
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