Jewelers adjust inventory, focus to survive recession

Many jewelers have been hit hard by the economic downturn. They have slashed prices and cut staff.
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Sondra’s Fine Jewelry has been in its current location, a comfortable and friendly shop on upper Union Street, for nine years.

But if you look closely, you’ll notice a few changes.

There’s a new line of relatively inexpensive jewelry made out of sterling silver, tastefully displayed near the front window.

Freshwater pearls, which are cheaper than Japanese-cultured Akoya pearls but can be made to look almost as round and lustrous, are now available.

And last year the store started a scrapping business that buys coins, jewelry and silverware from customers and sells directly to refiners.

Sondra Stephens, the store’s owner, said the recession has forced her to make changes.

“We’ve readjusted our inventory to what people want to pay,” Stephens said.

“A customer who might have come in in 1999 and bought $4,000 worth of jewelry might have lost money. He might have $500 now.”

She pointed to a necklace, a small heart made out of Murano glass and covered in 14 carat gold. Because the piece isn’t solid gold, it’s fairly inexpensive.

“That piece is gorgeous,” she said. “Someone is going to want it.”

Stephens credits the changes she’s made with helping keep her business strong — so strong, she was able to bring in her son, Anthony Kaczmarek, full time. “We’ve got severe growing pains right now,” she said.

Many jewelers have been hit hard by the economic downturn.

They have slashed prices and cut staff. Stores have closed, and diamond mines have cut production. In a New York Times story last year, Kenneth Gassman, president of the Jewelry Industry Research Institute, predicted that 20 percent more jewelers would go out of business in 2009 than 2008. Big chains, such as Bulgari and Zales, have posted losses, and mass-market retailers such as J.C. Penney have said jewelry was one of their worst-performing categories.

Two things have helped jewelers get through an unusually lean period: the price of gold, which has been at an all-time high, and the popularity of bead jewelry made by companies such as Pandora and Chamilia.

retooling inventory

Some jewelers , such as Stephens, have weathered the storm without too much trouble.

Harvey Fox, owner of n.Fox Jewelers in Saratoga Springs, said that the recession has had an impact but that as an independent businessman who only owns one store, it’s been easier for him than to retool than the bigger chains. One of his changes has been to expand the selection of items in the $25 to $250 range.

“Now we have a few hundred,” he said. “Before, there were not so many.”

Fox said he treats customers buying a $25 piece of jewelry the same as those buying a more expensive piece. “They still get the unique wrapping, the box,” he said. The hope, he said, is that these people will return to make more purchases.

The expansion of lower-cost inventory has been successful, Fox said, and he’ll continue to offer those items when the economy rebounds.

The store’s traffic count has held steady, even as the total dollar value of sales has declined. “We’re making so many smaller sales,” he said.

Fox said there are signs shoppers are ready to spend again. Transactions and total dollar value were up at Christmas, although the total dollar value has not returned to where it was before the recession.

“One thing I’ve seen is that at Christmas in 2008, customers were frowning,” he said.

“They weren’t happy. But in 2009, they were back to smiling and happy.” He predicated that “2010 will be flat with little growth, but we’re going in the right direction.”

Fox, who has operated n.Fox Jewelers since 1977, said this is the worst economic downturn he’s ever experienced.

“We’ve never experienced anything like this,” he said. “We’re not recession proof.”

But he expects to emerge from the recession as strong as ever. “Financially, we’re a very strong company,” he said.

steady demand

Jewelers believe that there’s always going to be a demand for jewelry.

“Three point two million men are going to get engaged in 2010,” Stephens said. “There are still going to be birthdays, bar mitzvahs and anniversaries. . . . A big part of our business is engagement rings. If we can cultivate that customer, he’s going to return to the store. He’s going to buy his wedding ring here and gifts for his groomsmen. He’s going to come here on his anniversary.”

Stephens is aware that customers might not have as much money to spend on a ring or a necklace or a pendant, so she makes it a goal to sell jewelry at a wide range of prices.

“We don’t want a customer to walk out of a store,” she said. “We need to have something for the college graduate who just wants to spend $100.”

Stephens’ philosophy has long been that if you treat every customer well, the customer who only has $50 to spend today may return when he or she is doing better financially, and spend more money on pricier pieces. “It doesn’t matter if you’re coming here for a watch battery or a diamond necklace,” Stephens said. “If you only go after the high-end customer, you’re not going to make it.” She said the goal is to sell high-quality pieces at all prices.

Stephens opened her store in 1997. Her motto: “A Woman Owned Jewelry Store For Women . . . And the Men Who Love to Buy Women Fine Jewelry.”

In the beginning, being a woman in a field dominated by men had its disadvantages. “I’d go to New York with a gentleman jeweler friend and dealers would start talking to him,” Stephens said.

But for the most part, Stephens sees being a woman as an advantage; she said her customers appreciate the “softer, kinder way” that she brings to her business. There are cookies and coffee for customers, and toys for children. Charity is a big focus, and this year the store purchased 10,000 toys for the Toys for Tots program. “We try to focus on helping women and children,” Stephens said.

Between 85 and 90 percent of jewelry is purchased for women, either by men or by women who are simply shopping for something nice for themselves. Kaczmarek said women enjoy jewelry and that they continue to buy it during a down economy because it makes them happy.

scrapping business

Kaczmarek runs the scrapping business at Sondra’s Fine Jewelry, and he sees approximately 20 to 30 people a day, most of whom come bearing coins, jewelry or silverware. He said he enjoys researching the pieces, testing them with magnets, acids and files, and determining whether an item is worth saving.

If a piece is particularly nice, he’ll suggest the customer allow Sondra’s to try to sell it for them on consignment.

The scrapping business started last year. Customers, Stephens noted, were asking for it.

“I thought the scrapping business might cheapen our business,” Stephens said. But she said it’s actually helped build a new base of customers. Sometimes people take the money they receive and use it to buy jewelry, she said. “You might walk out with $50,” she said. “But there are people who walk out with $4,000.”

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