Jewelers across the country that participated in National Jeweler’s exclusive 2011 year-end survey, such as Samuel Gordon Jewelers in Oklahoma City, reported solid same-store gains for both the holiday season and full year.

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New York--For the second year in a row, National Jeweler’s exclusive year-end survey showed that sales continue to rebound for retail jewelers, with 72 percent of respondents reporting gains in same-store sales in 2011.

Of those nearly three-quarters of survey respondents who reported sales increases, 24 percent said their sales were up by more than 10 percent, while 20 percent reported sales climbed more than 20 percent year-over-year (see chart here).

This year’s strong results built on sales momentum generated last year, when 65 percent of jewelers reported same-store sales growth. And it is a vast improvement from 2009, when revenues were down for more than half of those surveyed.

Sales growth was positive overall during the months of November and December, a key time of the year for jewelers, though the holidays didn't see as much growth as they did a year ago. While the majority of survey-takers, 59 percent, reported year-over-year same-store sales growth for the holiday season, that figure was down from 68 percent last year (see chart here).

At Ralph Miller Jewelers & Gallery in Erie, Pa., Vice President Daniel Niebauer said his store was up double-digits for both the year and the holiday season, with a surprisingly robust demand for high-end diamond fashion pieces over Christmas. He attributes the increase to pent-up demand. Customers who held onto their money through the worst of the downturn wanted to treat their loved ones this holiday season.

“I really think that people were tired of all the bad news, all the bad publicity. They have been very cautious with their pocketbooks over the last two years,” he said. “That’s our take on it anyway.”

Cautious consumers on the hunt for the lowest possible price have defined, and in some cases even transformed, retail since the start of the recession. The 2011 year-end survey, though, indicates that consumers perhaps are becoming less price-conscious as the downturn eases.

The highest percentage of survey-takers, 37 percent, said their average discount was the same as compared to the holiday season 2010. But that’s down from 2010, when 43 percent of those surveyed said they had to offer the same level of discounts as seen in 2009. Twenty-nine percent of retailers surveyed said that they were actually able to offer lower discounts, up from 20 percent last year (see chart here).

Given the decrease in discounting, it’s not surprising the survey showed that margins improved (42 percent) or stayed the same (35 percent) for 77 percent of retailers (see chart here).

“We didn’t feel as much pressure to discount more,” said Dan Gordon, of Samuel Gordon Jewelers in Oklahoma City, Okla. “There was a little bit more of a pre-recessionary mindset of shoppers.”

The dwindling number of discount-seeking consumers in stores is partly due to the maturation of e-commerce, he said. Most consumers now are able to separate what they want to buy online from what they prefer to buy in a store and don’t do as much comparing between the two.

If it’s something they don’t mind buying sight-unseen, and they know the best price is available online, they’ll purchase it there. If they are looking to touch and feel an item and want the physical experience of shopping, they go into a store.

“I think they’ve done their research, and they either want to buy it in-store or they want to buy it on their own,” Gordon said.

Silver streak
When asked about their holiday sales on a product category basis, jewelers credited silver with the biggest year-over-year growth. A total of 75 percent of survey-takers said their silver sales increased, with 44 percent reporting a significant increase. In addition, the number of retailers reporting that they don’t sell silver jewelry declined, from 11 percent last year to 7 percent this year (see chart here).

Silver also was a popular write-in choice for jewelers when asked an open-ended question about holiday season standouts, with many specifically citing jewelry from Pandora (below) as a top performer in their store.

By contrast, gold sales are continuing to lose ground, as the metal’s per-ounce price remains high. Gold sales were flat or down for 78 percent of jewelers surveyed, up from 72 percent last year (see chart here).

Gary Youngberg, who co-owns Ames Silversmithing in Ames, Iowa, with his wife, Karen, and two sons, Kyle and Kirk, said retailers who refuse to carry silver are missing out on part of the market. He said the high price of gold is depressing sales of fashion jewelry in that category while their silver business continues to grow. And he doesn’t see that changing anytime soon.

“There will be fluctuations,” in the price of gold, Youngberg said. “But are we going to see $800 [an ounce gold] anytime soon? I don’t think there’s a chance.”

He predicts the price of gold will stay in the $1,500 to $1,800 range for the foreseeable future due to economic instability worldwide.

While National Jeweler did not include a question about gold-plated, -filled or vermeil jewelry--which are becoming more prevalent at trade shows and, in turn, in jewelry stores nationwide--a few survey-takers said bridge, costume and gold-plated pieces were among their best-sellers this holiday season.

The use of these techniques to produce the look of gold at a lower cost sparks debate among jewelers, not unlike the chatter generated by the growing presence of bead jewelry in recent years. Does it belong in a store that sells fine jewelry, alongside diamonds and other precious gemstones?

“We have found a few lines that do it and do it well,” Youngberg said. “I wouldn’t call it a trend. I think more people will be going that way.”

He said the problem with many retailers is that they are unwilling to change when it’s necessary for their store to shift into stocking pieces in sterling silver or vermeil when the higher-priced product simply isn’t selling.

“The reality is if you are not willing to shift gears when it’s required you’ll become a dinosaur. A lot of the stores that are struggling. They’ve still got semi-mounts in their case that are yellow gold and baguettes,” Youngberg said.

Other retailers disagree. Armando Gonzalez, of Blue Marlin Jewelry in Islamorada, Fla., said he has expanded his silver offering in recent years--he now carries Pandora--but not exponentially. And he is not selling any gold-filled, -plated or vermeil jewelry.

“I would never do that,” he said. “Your clients when they come into your store, they expect a certain product. I would just as soon go out of business as to carry that merchandise.” 

Gonzalez said he doesn’t buy into the idea that jewelers need to start stocking these items in order to stay relevant. “That’s what they’ve said, and I’m probably one of the smallest stores in the country and we’ve excelled. We’ve made it,” he said.

Sparkling holiday
Other strong categories include custom jewelry, with 37 percent of retailer reporting their sales were up slightly in this category in November and December and 25 percent reporting custom sales were up significantly, for a total of 62 percent (see chart here).

Loose diamonds and diamond jewelry sales were up for a total of 48 percent of retailers, with 36 percent saying diamond sales rose slightly and 12 percent reporting that they rose significantly (see chart here).

Niebauer, of Ralph Miller in Erie, said the increase in demand for diamond jewelry at his store had employees rushing to secure the large diamond earrings and tennis bracelets that customers wanted. Bridal sales also were up year-over-year.

Another hot-seller during the holiday season cited by jewelers who took the survey was bridal jewelry, such as this ring from Tacori.

“It was a little bit of a scramble,” he said. “We didn’t expect the larger stuff to be going out the door.”

Diamond fashion jewelry also enjoyed a good holiday season at Long Jewelers in Virginia Beach, Va., as did bridal, said Jon Walp, the store’s general manager.

He said the store had a “very good” holiday with engagement sales, noting that its primary focus is bridal, with 35 different lines in this category. Tacori, Verragio, Simon G. and Hearts on Fire are among the store’s most popular lines.

“We have the reputation now that this is the place to come,” he said.

The year ahead
Given the positive sales gains of 2011, nearly 20 percent of jewelers said they feel “very optimistic” about the year ahead. Additionally, more than half of those surveyed said they are "somewhat optimistic" (55 percent), while only (18 percent) said they're "uncertain" about the coming 12 months (see chart here).
 
Niebauer counts himself among the somewhat optimistic crowd. While his store had a strong year and holiday, high oil and gold prices coupled with Europe’s economic problems dampen what would otherwise be a completely positive outlook.

“When the dominoes start tumbling, we’re going to be part of it,” he said, referring to the potential economic collapses of European countries such as Greece, Italy, Spain, France and Ireland.

Retailers interviewed at the JA New York Winter Show last month expressed a similar sentiment. They have a positive outlook but can’t claim to possess unbridled enthusiasm, especially with a presidential election looming.

“I don’t think, I am hoping,” said Aldy Concepcion when asked if 2012 will be a good year for her Miami jewelry store, A Dazzling Butterfly. “I’m not sure.”

“I think it’s going to be a good year,” said Karen Stewart Alliata, of Coin of the Realm in Nassau, The Bahamas. “It’s tough though. I think you have to have quality product.”

She said she expects 2012 to be better than 2011 for her store but adds that one wild card is the elections looming in both the United States and her native Bahamas. “Elections always affect the economy,” she said.

Gonzales, the Florida retailer, said he is among the slim 17 percent who checked that they are very optimistic about the year ahead, and with good reason. He sold 10 Rolex watches in a month to start the year and doesn’t have to look beyond his own tiny slice of the Florida Keys for a sign the economy is improving.

Gonzales said million-dollar houses down there are selling as quickly as they are listed.

“When I see that happening, that’s all new clientele moving into my area that I didn’t have before,” he said. “That’s what makes me excited.”

To see a complete slideshow of charts from National Jeweler’s year-end survey, click here.