Jan Brassem (jan@brassemglobalconsulting.com) is director of Brassem Global Consulting, a multichannel retailing and international product sourcing firm.

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Stop the presses. News flash. The light at the end of the tunnel may just be the New Jersey Turnpike and not necessarily the end of the jewelry recession. I’ve tried to step back and see where the jewelry industry is heading-- take a peek under the hood so to speak. It’s not that easy. It comes as no surprise that there are just as many negative changes looming as positive ones.

Inflation is supposedly around the corner. Positive cash flows are evaporating. Gold prices continue to climb. Sales are up, but only in a few sales channels.  According to the experts, online retailers--the jeweler's ferocious competitor--will continue on a double-digit growth trajectory for years.

On the positive side, sales of silver jewelry, with stronger gross margins, are significantly up. Thanks to the influx of styles from foreign manufacturers, designs have become exciting and innovative. Through marketing technology and social networking, the jeweler’s operating margins have improved somewhat. The consumer’s purchasing behavior--take a deep breath--seems to be returning to normal.

The only thing that isn’t different is the jewelers’ reluctance to change. No surprise here. Even those jewelers who successfully weathered the economic storm are reverting to business as usual. It’s always easier to do something you’ve been doing for years, for generations. As in the past, most jewelers continue to grow their companies internally-- read "slowly." Old habits trump change every time. With this strategic philosophy, the jeweler simply hangs-on and waits for a: retirement, b: bankruptcy (and deal with those wily jewelry liquidators), c: the next recession, d: financial difficulty (such as divorce or medical emergency), e: a change in the industry environment (i.e. increasing gold price), f: tougher competition, or even g: executive burnout.

Retail leaders from similar industries--the watch industry for example--have analyzed their environment and defined a strategic transformation. Many of these executives have concluded that external growth--through the acquisition of a complimentary company--nicely supplements internal growth. The watch industry has become robust thanks, at least in part, to an aggressive acquisition philosophy. We’re all familiar with jewelry companies with household names that grew into sizeable organizations--chain stores, manufacturers, even brands. Chances are, they grew into what they are today through acquisition.

Using my 25 years of jewelry acquisition experience, I’ve developed a brief sketch that may help you reconsider your company’s growth strategy. An acquisition program offers plenty of benefits. Acquisition Rationale: There are a number of positive reasons why a jeweler--or any business for that matter--should purchase another company. The purchased company, for example, could provide diversification. It could be a silver jewelry retailer, for example, or sell only watches, while the buying company sells only gold jewelry. The acquired company could have access to a separate geographic region, different retail market or distribution channel.

Once acquired, sales growth could be instantaneous. The acquired company could offer additional production capacity, be a foreign producer with significantly lower production costs or a manufacturer with a recognized brand name. The acquired company may have exceptional design capability, (we call those “rainmakers”), own copyrights, patents and know-how. The acquired company could be an industry leader, put up for sale due to the passing of an owner. The list gets longer depending only on your creativity and industry knowledge.

Management Intangibles: Not surprisingly, the acquisition of a complementary company is really a process. It takes planning, risk analysis and budgeting. To be sure, the acquiring jeweler will come to rely on a team of experts, such as lawyers, bankers and jewelry acquisition specialists, none of which are in ample supply.

Don’t forget, acquiring jewelers are expected to move away from their comfort zone. Instead of buying diamonds and considering showroom décor--things they have been doing for years--they will be required to recognize brain-numbing matrix curves and SWOP analysis, metric averages and implementation plans. They may no longer be known as a jeweler, but rather recognized as a sophisticated businessman. From my experience in working with them, the acquisition process transforms veteran jewelers into dynamic and enthusiastic strategic thinkers. Whether it's due to the new strategies or exposure to innovative ideas, he or she seems to have a new outlook on life itself.