Summertime and the title question above go hand-in-hand. Usually the question comes from road-weary children begging their parents for a rest stop. This year it’s being asked by our recession-weary nation, most of whose citizens have heard various reports pointing to recovery.
Gratifyingly, the recent jewelry shows in Las Vegas point to signs of life in an industry that’s taken this recession on the chin. While traffic at the shows was lighter than in recent years, those who attended the shows were there to do business.
We have, it seems, reached a point where we’ve either sold down whatever inventory will sell, or we’ve realized that we can’t keep offering the same old tired thing.
Exhibitors at The JCK Show, Luxury by JCK, the Continental Buying Groupshow, and Couture generally reported better-than-expected business. True, expectations were fairly low, but exceeding them is cause for some hope.
There’s a general sense of optimism in the air. It’s cautious optimism, to be sure, but recent economic data suggest we are nearing the end of the recession, and also that people are feeling a little better about shopping. Let’s emphasize “a little.” Retail sales rose slightly in January and February, fell again in March and April, but rose slightly again in May. Since it seems most likely that the recovery will move in fits and starts, the stock market is reacting likewise with some fancy swinging of its own, but it shows some improvement from its recent worst.
Consumers still aren’t inclined to dive into big-ticket purchases, though, and unemployment statistics—generally the biggest driver of consumer spending attitudes—haven’t turned around enough to change their minds. While these marginally positive signs may be a case of splitting hairs and talking about varying degrees of terrible, I think we as a population will accept any signs that point to something less worse than we feared.
At press time, for example, the number of new unemployment claims for the week ending June 12 declined slightly. But the number of continuing claims continues to rise, indicating that while perhaps fewer people are being laid off, people who lost jobs earlier aren’t finding new ones easily.
One way to combat consumer reluctance to spend for big-ticket items is to make sure you have enough little-ticket items to keep them coming in. The busiest booths at the shows were those with either very special items that justified a higher price or those that had well-designed, good-quality price-point merchandise. In years past, much of that might have been dismissed as costume or bridge jewelry, but jewelers who once turned up their noses at bridge jewelry are now realizing that—to borrow a line from Simon and Garfunkel—it can be a bridge over troubled waters.
In better times, the $1,500–$2,000 handbag was serious competition for jewelers, while $750 became the new $400 in designer shoes. The status bag may be over for now, but the attractive, moderately priced bag (and the scarf and the sunglasses and the shoes) still are doing well at retail, as are snazzy cell phones. Accessories aren’t dead; they’ve just come down out of the stratosphere. So, if your customer is willing to treat herself to a new bag or shawl (around $400), but the lowest-price item you have is $2,500, where is she going to go? Or if $2,500 is the budget for Mom’s birthday, and the choice is something for Mom or a TV and Wii for the family, guess what wins? But if there’s something a little smaller in the store that can still make Mom feel special, and the family can still get the TV, then everyone wins, including the jeweler.
As more sectors of economic data show stabilization, consumer sentiment should continue to improve. Oil and gas prices, which creep up during the sum-mer, may keep more Americans closer to home, which could mean more money available for spending on other goods.
The Wachovia Economics Group, by the way, predicts the recession will officially end later this summer.