Why jewelry sales are like the weather
August 12, 2014
Warwick, R.I.--Retail today is comparable to the weather: the forecast depends largely on where the store is located and, just like weathermen and their wildly varying predictions, whom one asks for the outlook.
This was one perspective on the industry the Jewelers Board of Trade shared during its recent mid-year conference call, which took place July 24, a few days before the JBT released its statistics for the second quarter 2014.
The latest statistics show much of the same: the industry continues to shrink in size, slowly. There isn’t a landslide of new businesses rushing in and business discontinuances, particularly consolidations, are up year-over-year.
Through the first half of the year JBT statistics show that there were a total of 156 new jewelry business in the United States, the same as there were through the first six months of 2013. Including Canada, there were 159 new jewelry business year-to-date.
Meanwhile, business discontinuances for the U.S. and Canada have totaled 485 year-to-date, up from 411 at this point last year.
This includes a 60 percent increase in consolidations (sales or mergers) year-over-year, from 63 to 101, but a decline in bankruptcies, from 26 to 20.
All told, the JBT’s total listings for the U.S. and Canada are down slightly year-over-year, from 30,237 last year to 30,038 this year, a 0.7 percent decline.
The gradually shrinking state of the jewelry industry, which has witnessed a number of key mergers and acquisitions this year, not the least of which was the joining of giants Signet Jewelers and Zale Corp., coincides with another languid process: the recovery of the U.S. economy.
During the JBT’s mid-year conference call, President and CEO Dione Kenyon observed that, “slow growth is the story again for 2014.”
The International Monetary Fund recently cut its 2014 growth forecast for the U.S. economy from 2 to 1.7 percent. The National Retail Federation also lowered its expectations in light of the harsh winter that impacted first half sales, but said it expects sales growth to pick up in the remaining six months of the year.
Question marks surround some key factors contributing to economic growth, including the unemployment rate--jobless claims are going down, but how much of this is due to people who simply have stopped looking for work or are only employed part-time?--and the housing market, which is improving, but only in some parts of the country.
Kenyon said holiday season retail sales rose 4 percent last year, making for an “OK” holiday season that favored the high end of the market.
It was not a holiday that “floated all boats,” she says, and much of the same is expected this year--retailers are going to have to work very hard for sales.
Still, the economy has come through the conditions experienced in 2008 and 2009 and the outlook, in general, seems to be positive among members of the jewelry industry, or at least those who participated in the JBT conference call.
When polled during the call about their sales results for the first six months of the year, 69 percent said they were the same (41 percent) or better (28 percent), and 91 percent said they expect to finish the year with sales on par (33 percent) or better than (58 percent ) last year’s figures.
This optimism did come with one caveat, shared by a JBT member and relayed by Kenyon: “Sales today are like the weather--it depends on where you are.”