Business discontinuances continue to drop
October 25, 2013
Warwick, R.I.--After numbering as high as 900 a year during the recession, the number of businesses in the industry that are shutting down or consolidating keeps going down, the latest data from the Jewelers Board of Trade (JBT) shows.
According to the agency’s third quarter statistics, the number of business discontinuances among retailers, wholesalers and manufacturers in the United States dropped from 256 in the third quarter 2012 to 144 in the third quarter 2013.
It is down 22 percent year-to-date, from 692 to 537.
“I remember the years of 2009 and 2010 where those numbers were going in a completely different direction,” said JBT President Dione Kenyon, commenting on the agency’s third quarter statistics.
Another positive indicator for the industry, which Kenyon said is recovering slowly just like the overall economy, is that the number of new companies entering the jewelry business has stabilized after dropping for years.
In the third quarter, a total of 66 new businesses, a count that includes retailers, wholesalers and manufacturers, registered with the JBT in the U.S., as compared with 65 in the third quarter 2012. Year-to-date, the JBT has registered 222 new businesses, off only one from 223 at this point last year.
In addition, the total number of listings with the JBT in the U.S. is down only 1 percent year-over-year, from 29,158 year-to-date in 2012 to 28,836 in 2013.
The numbers aren’t staggering, but they are no longer in continual decline either.
“You’re in an environment still where people are risk-averse, whether they own a business, are thinking about starting one or are thinking about expanding one,” she said.
The only negatives Kenyon noted were the increase in members with negative credit ratings because they’re dragging out payments and the big question mark in retail, which, for the first time in years, isn’t a major jeweler. But it is a retailer that sells a lot of fine jewelry: J.C. Penney.
J.C. Penney, which is in the midst of trying to reverse the damage done to customer loyalty by its previous CEO, faces a challenge in securing enough cash to make it through this transition, Kenyon said. Late last month, the Plano, Texas-based retailer issued a public offering of its stock in a bid to raise hundreds of millions of dollars.
“That’s the one place to watch, I think,” she said.
Heading into the holiday season, Kenyon said the predictions of 3 to 4 percent retail sales growth seem reasonable as long as there are no natural disasters or tragedies between now and the holidays. She adds that the lower prices for silver, gold and diamonds could give jewelry sales a boost this Christmas.
As for how the federal government’s recent problems will impact the holidays, she expects consumers to “move on,” she said.
“How much more frustrated, unhappy or disappointed could we be in our government?” Kenyon asked. “I think people want to move forward and do business and enjoy their holiday.”