Changing times, and the growing wealth gap
July 07, 2014
Jim Alperin owns James Alperin Jewelers in Pepper Pike, Ohio. He can be reached at firstname.lastname@example.org.
Our country, like the rest of the world, is in a time of great flux. The economy has pulled people in two directions--rich and poor--as historically seen only prior to revolutions. Russians were starving on the streets in 1917 as the tsar indulged himself and the nobles with fineries from the jewelry house of Fabergé. And remember the phrase “Let them eat cake,” uttered about the masses at the time of the French Revolution?
Statistics prove the point that wealthy Americans’ salaries are many multiples larger than their worker counterparts. A larger gap than ever has been seen has developed and the gap keeps growing. What this has done to our society is to divide the haves from the have nots and the middle class, which made America strong and supported many jewelry businesses.
The days of making a jewelry sale between $1,000 and $5,000 has pretty much given way to sales in the $50 to $500 price range, due in part to the divide of rich and poor. The middle class has been squeezed with college tuition costs having skyrocketed and the desire for what we now consider necessities, like smartphones and big flat-screen TVs. Then add the cost of the monthly bills that go along with cell phones and cable and you’re left with a class of people who no longer can afford the luxuries that their parents took for granted as part of a successful life, in a successful country.
Jewelers today are faced with a dilemma. We need to sell our products in order to keep our businesses open and we need to be able to sell that product at a margin that will allow us to pay ourselves a salary commensurate to the amount we have invested in our businesses in terms of dollars and time. We need to sell to a middle class, but that group of people is rapidly shrinking.
The costs of our businesses are somewhat fixed. The insurance, rent and utilities are fairly constant. Staff, perhaps our most important asset, in hard times, like it or not, can be reduced. The fact is that the cost of running a business remains somewhat the same from year to year and yet we are being forced to sell a product whose value is perhaps a tenth of what it used to be. It would take ten times the number of customers coming through your door to sell as much product as jewelers used to sell in the glory days of the industry, shortly after World War II and beyond.
The Internet has given the public free information and it has become expected that today’s brick-and-mortar merchants will disseminate information for free as well. So, when a customer comes into a store they want to know all the details of where something has been made, what the materials used are and does it come longer, shorter, wider or thinner? The amount of time that it takes to sell a piece of costume jewelry or silver jewelry is often longer than it is to sell a piece of fine jewelry. It just doesn’t pay. We now spend thirty minutes or more selling a $50 item, assuming the sale is made, in an industry with expenses that require us to sell much more expensive items to survive.
Would your attorney sit with you in his expensive office for 30 minutes and then say, “You owe me $50?” It would be more like $300. Yes, of course there is the possibility that the customer will come back because you gave them good service and they may make a purchase from you in the future, but how often has that happened? How many times have you shortened a watchband on a new watch purchased on the Internet only to have that customer come back two weeks later with another watch from the Internet asking you to shorten that one as well? After all, you did such a good job on the first one and you didn’t charge too much.
Jewelers need to sell fine jewelry to survive and I’m afraid those days are waning. We went into this industry because those before us made a good living selling a product unlike any other, one that we love. The feel, the look, the finish, the color, the luxury of real jewelry is like no other.
Are you looking for the answer on this page? I wish I had it. Art work and exceptional jewels are selling at record prices at auction to the wealthy but most of us don’t have the financial ability to stock 20 diamonds at $1 million each. That’s why we lean on our suppliers but, even if we could afford that inventory, there are few stores outside of major world cities that have the clientele for those kinds of goods. So there we remain caught between the rich and the poor and inventorying more fashion jewelry and silver.
Stay tuned, let’s see where this ride is taking us.