Look back over the past 100 years and ask yourself: “In all that time, has the jewelry business changed much?” The answer has to be a contradictory “Yes and no.”

Consider some of the great industry issues of 1900: unfair competition from “outsiders,” lack of trained employees, phony advertising, sloppy credit control, criminal attacks on traveling salesmen, misrepresentation of product. Sound familiar?

But if such issues continue to preoccupy us, they do so today with greater intensity. The “outsiders” no longer are hucksters trying to sell diamonds in beer saloons; they are major corporations such as Wal-Mart, J.C. Penney, and QVC. The criminal attacks on salespeople are made with guns, not blunt instruments. The misrepresentation of product is infinitely more sophisticated – and often broadcast to consumers in a way that fosters distrust of jewelers.

Of course, there have also been real changes in the way the American jeweler does business, some of them radical. Some highlights:

• Major shifts in jewelry store inventory mix, inevitable over such a span of years. Gone are the toasters, adding machines, thimbles, Waldemars, and Tango garters from the century’s earliest years. In their place are high-end gemstone creations, designer jewelry, and diamond tennis bracelets.

• The emergence of gemstone price lists and diamond “certificates” as major new factors in pricing and sales.

• Development and acceptance of the wristwatch – a key jewelry-store product – dating from its widespread use by U.S. servicemen in World War I. The birth of the electronic watch in the 1970s brought even greater change to the time-honored profession of watch repair. Forty years ago, any jewelry store worth the name had a watchmaker (often the owner); electronics nearly drove the breed to extinction (see story on p. 100). The electronic timepiece also introduced some strange new competitors – among them Texas Instruments and National Semiconductor. Although these companies quickly abandoned their jewelry-industry ventures, they left behind new and aggressive marketing philosophies.

• Rapid growth of consumer credit. Even before 1900, dollar-down, dollar-a-week trading had made its way into the jewelry industry – but it often was tainted by fraud and fly-by-night businesses. By the 1920s, jewelers were so enamored of this type of selling that they considered their own credit jewelers’ association. When Morris Zale, who opened his first store in 1924, gave his blessing to easy credit selling, a new era began.

• Promulgation and later revision of the Federal Trade Commission’s Guides for the Jewelry Industry. The Guides, first published in 1957, provided a written ethical base for most industry transactions; the publicity given to them over the past two decades, as the Jewelers Vigilance Committee worked to bring them up to date, helped spotlight and control many unfair industry practices.

• Creation of the Gemological Institute of America in 1931, which transformed every jeweler’s gem business.

• Virtual elimination of the traditional wholesaler, an established part of the jewelry community for almost 100 years. Market forces – principally growing consumer demand for lower prices – made these middlemen dispensable. Their swift dwindling in numbers in the mid-’80s deprived many small jewelers of their “banker” and their inventory holder and manager.

• The malling of America, a development that began in the 1950s and peaked in the 1990s. At the beginning of the century, jewelers primarily were destination points, but in malls and shopping centers they were merely one temptation among scores. Malls not only demanded new selling techniques but also brought long business hours, greedy landlords, and, too often, unwanted regulations.

• New shoppers. As minorities entered middle-class prosperity, new faces entered the jewelry store. Shoppers’ needs have dictated major shifts in retailing practice. For the jeweler, nowhere is this more important than in understanding the new role of the female jewelry shopper.

• Replacement of seat-of-the-pants business operations with MBA-style management. It’s impossible to prosper, or maybe even survive, with the problems-will-take-care-of-themselves philosophy predominant in so many stores even into the early 1980s. Today’s jewelers must be savvy marketers and smart buyers; they must hold a tight grip on inventory and maintain a top-quality staff to get ahead.

• Finally in this list, there must be a word on new competition. Jewelry truly has been “democratized” as a product; everyone wants to sell it. Wal-Mart now is the industry’s No. 1 seller. It’s even more significant that QVC can sell $3,000 bracelets direct from television screens and that jewelry sales over the Internet have only just begun. The full impact of these changes belongs to the next century.

The driving force. Underlying all change in jewelry retailing, wholesaling, and manufacturing is the consumer. Without that sale, there’s nothing. Probably the biggest changes in consumer attitudes date from the 1960s.

Think of three separate but related events in that decade: The publication of Ralph Nader’s Unsafe at Any Speed, the protests against the Vietnam War, and the civil rights movement. All three challenged the established order, giving voice to the little guy. They led ordinary citizens to believe they could have things their way if they asserted themselves.

These victories bred a new consumer confidence, manifested in a challenge to traditional retail pricing. The key question became not “How much is it?” but “What’s the best price you can give me?” By the late 1980s we had entered the Decade of the Deal.

For the independent jewelry retailer, this meant a number of things. Consumers used to getting rock-bottom prices from discounters or constant price-off sales at even the “better” department stores began to look for like savings from their local jeweler. Any jeweler lacking exclusivity and high-quality merchandise is now forced to be competitively priced. Getting keystone just isn’t possible anymore on much popular and readily available merchandise.

Another major change in jewelry retailing is the products. Thanks to low Asian wages, it’s possible to import diamonds, watches, and much bread-and-butter jewelry at astonishingly low prices, and the big merchants are doing just that. They’re also using their buying clout to get extra discounts and using high volume to offset lower margins. To jewelers who compete in this market, the going is tough and probably going to get tougher.

Given this retailing climate, the final trend we’re seeing as the century winds down is a split in the traditional jewelry market. High-end, specialist stores can call their own shots. They don’t have to worry much about price, especially if they design and make much of their own jewelry. Quality and service are these stores’ hallmarks, and there are enough discerning and well-heeled customers who appreciate both. At the other end of the market are the big jewelry chains and the major “untraditional” jewelry retailers whose high volume and lower prices combine to bring a profit. Stores that don’t fall in either category face difficult challenges.

In the following sections, we look in more detail at some of these trends. In later issues this year, we’ll continue this centennial retrospective with a series of reports on various aspects of the industry, culminating in December with the selection of the one person who had the most impact on the jewelry business in this century. We welcome your suggestions. – George Holmes,

Editorial Consultant – The Changes That Women Wrought

In 1890, the “average” American was a 22-year-old male farmhand. His wife was not allowed to vote.

By 1940, the “average” American was a 29-year-old man with a ninth-grade education and a factory job. Women could now vote, but most wives didn’t work outside the home because even an assembly-line worker earned enough to support a family. In fact, some major corporations such as Bell Telephone required women to quit when they got married – because, in theory, a woman didn’t need the job if she had a husband to support her.

By 1990, the “average” American had become a 32-year-old woman, married with one child and employed in a technical, sales, or administrative job. She wore a size 10 or 12 dress and size 71/2B shoes. She wore jewelry every day – and she bought most of it herself.

That’s quite a change in 100 years. And the rate of change is faster than ever. By 1995, American Demographics magazine, which identified the composite citizens described here, declared: “No American is typical anymore. There is no average family, no ordinary worker, no everyday wage and no middle class as we knew it.”

But one thing is certain at the brink of the new millennium: the exponentially exploding economic power of American women.

American women constitute the largest single economy in the world, according to Dallas-based marketing consultant Gerry Meyers. The influx of women into the workplace and the movement of women over age 40 into executive positions have transformed both traditionally “female-oriented” industries like fashion and traditionally “male-oriented” industries like the automotive and financial services markets. Consider these numbers:

• Advertising Age magazine reports that women control 60% of all U.S. wealth and either control or influence more than 80% of the $3 trillion (yes, that’s trillion!) that consumers spend on purchases each year.

• Women handle 75% of family finances.

• 43% of Americans whose personal assets are over $500,000 are women.

• Home ownership by women has increased in the past 15 years, but it has declined for couples.

• According to Bureau of Labor statistics, a quarter of all working women earn more than their husbands, up from 17% a decade ago.

Landmark event. Development of “sportswear” revolutionized fashion and, in a way, the entire role of women in society. Early this century, women finally were liberated from the binding, constricting stays and bustles they’d worn almost since the Renaissance. A new genre of clothing had been born. It was comfortable, it did not require a servant’s assistance to put on, and it allowed women to breathe fully (no more fainting!) and walk easily. Though the term “sportswear” was initially used, implying these clothes were meant solely for recreational activity, women would quickly demand that the same principles apply to all their sartorial needs.

More than half a century later, women entering the work force spawned a need for fashionable, business-appropriate clothing. The need to accessorize and individualize business suits fueled jewelry sales. The lasting-value appeal of precious, or “real,” jewelry proved to be a boon to the industry.

By the early 1990s, American consumers had begun to reject trendy throwaway goods in favor of quality, enduring products with modern yet timeless appeal. It was a significant shift in the overall consumer mind set, this buying of fewer yet better items. Fine jewelry sales soared while costume jewelry suffered.

Women also had begun to reject arbitrary style dictates from apparel producers. Instead, they told the fashion industry what they wanted to wear, and designers learned to respond appropriately – or suffer the consequences.

Jewelry, like a fur coat, originally was an item most women waited to receive as a gift. But when women began working and gaining economic independence in significant numbers, furs became a predominantly fashion-oriented self-purchase category, says the Fur Information Council. Jewelry is following in fur’s footsteps. Today, women purchase 60% of all gold jewelry, 90% of all silver jewelry, and 30% of all platinum jewelry.

In a 1993 JCK poll, we asked retail jewelers about female jewelry self-purchase habits. They told us the three best-selling categories were earrings, neck chains, and rings. These items are still strong and are increasingly joined by more fashion-forward necklaces, bracelets, and pins.

Just because women have caught up to or surpassed men in spending clout, jewelers should not make the mistake of assuming that they also think like men. Women are less price-sensitive but more value-sensitive than men. And, even in a sales situation, women expect a relationship, whereas men expect a transaction. – Hedda T. Schupak, Senior Editor

The Jewelry Goliaths Grab Market Share

The dramatic rise of the mass merchant is one of this century’s most important developments in the jewelry industry. Some of these non-specialty jewelry retailers – department stores, discounters, mail-order firms, TV shopping, and other volume formats – came into being within the last 30 years and initially didn’t even carry jewelry. They’ve been vilified by traditional jewelers for their tendency toward lower-priced, lower-quality jewelry and inferior customer service, yet they undeniably expanded the total jewelry market. They now account for at least a quarter of the estimated $40 billion U.S. annual fine jewelry and watch sales, according to analysts’ estimates.

These mass merchants have grown quickly in the jewelry market as a result of:

• New technologies that make possible economical mass production and distribution of product.

• A move away from Main Street retailing as families left small towns and flocked to the cities and suburbs.

• A favorable economic climate that allowed unprecedented sales growth and store expansion.

• Increasingly time-pressed consumers opting for easily accessible one-stop shopping.

Department stores. Although these outlets’ roots go back to the mid-19th century, the major growth spurt for department stores occurred in the 1940s, ’50s, and ’60s, coinciding with the strong economy, suburbanization, and the building boom in enclosed shopping malls.

Competition from other sectors has eroded the department store’s once-dominant grasp on the consumer over the last 20 years, in part because of corporate mergers and acquisitions and a rash of bankruptcies. Consolidation has created a handful of powerful department store chains like Federated’s Macy’s East and West divisions; J.C. Penney; Sears, Roebuck and Co.; and Proffitt’s/Saks, all of which are among the nation’s largest sellers of fine jewelry and watches.

Mail order. Montgomery Ward sent out the first mail-order catalog in 1872, and Sears’s famous “Big Book” was first published in 1888 (and discontinued in 1993). Catalog retailing has grown steadily over this century. Mail order started as a way for retailers to reach rural shoppers; today it serves a national market and counts more than 8,000 titles doing more than $87 billion in annual business, according to the Direct Marketing Association.

Catalog retailers Fingerhut and Ross-Simons report in excess of $100 million per year in jewelry sales, while others like J.C. Penney, Bloomingdales, Spiegel, Nordstrom, Neiman Marcus, Tiffany’s, and American Express log tens of millions of dollars in catalog jewelry sales annually. Mail order in the 1980s and ’90s has been marked by rising paper and postage prices and intense competition.

Discount/off-price. Wal-Mart, Kmart, and Target are the big three national players, logging close to $3 billion in combined jewelry sales. Wal-Mart, the world’s largest retailer, is a force unto itself in the jewelry industry and is closing in on the “unattainable” mark of $2 billion in yearly jewelry sales.

Beyond the big three, however, there is only a short list of surviving major regional discount chains, including Ames, T.J. Maxx, and Value City. In the last few years, numerous regionals, such as Bradlees and Caldor, have struggled through bankruptcy protection. Others, like Jamesway and Brendle’s, have gone out of business.

TV shopping. Twenty years ago, this electronic retailing medium didn’t even exist. Home Shopping Network, the acknowledged pioneer, began broadcasting to a limited audience in 1982; QVC was launched in 1986. Today, these two powerhouses account for roughly $1.2 billion a year in combined jewelry sales.

TV retailers can sell thousands of items within seconds thanks to broadcasting power that allows them to reach millions of homes and the ease of ordering by phone. They’ve taken the non-store approach developed by catalogs and created a new electronic selling era (although analysts suggest that the TV selling format has cooled off somewhat in recent years because of the non-interactive nature of the medium).

Online retailing. The newest forum for jewelry retailers, selling on the Internet, has been available only for about the last five years. Early major players selling jewelry and fashion online include QVC, J.C. Penney, Macy’s, and Wal-Mart.

The format now represents less than 1% of total retail sales but is expected to grow exponentially each year well into the next millennium as the technology becomes more available, more affordable, and easier to use. Retailing on the ‘Net is expected to rival TV shopping and mail-order sales. – Glen A. Beres, Contributing Editor

The Malling of America’s Jewelers

The advent of the shopping center changed the setting where jewelers did business, contributed to the growth of jewelry chains, and put jewelers into price-competitive environments that tested their business and marketing skills. The seeds were planted in the century’s early years as American industry built more plants on city fringes rather than in city centers. Streetcar lines were extended to them. Suburban housing followed, and downtown stores began to open suburban branches to cater to the new homeowners.

In 1923, the first shopping center opened in Kansas City, Mo. The Great Depression and World War II pretty much halted the building of new centers, though, and by the late 1940s, there were still only 75 in the United States.

The postwar boom of affordable new housing and rising affluence changed that. Housing tracts went up quickly around the country. Attracted by low taxes and cheap land, downtown developers followed, building neighborhood shopping centers by the hundreds. By the late 1950s, there were 2,400 shopping centers in the United States, with sales topping $30 billion.

Jewelers were in shopping centers almost from the beginning. Though Main Street and downtown had long been their prime business sites, jewelers, too, responded to changing demographics. A few already were in shopping centers in the late 1940s. Their number increased greatly during the 1950s as centers multiplied.

Many were independents, but regional and national jewelry chains were close behind. By the late 1950s, for example, one 46-store firm in New York State already was in five centers. By 1965, the Zale Corp. – already the largest U.S. jewelry chain operator – had half its stores in large shopping centers.

Independent and chain jewelers were attracted by shopping centers built in or near higher-income areas. They attracted lots of shoppers because of their convenience and free parking and produced more sales ($45 billion in 1965) than did the old downtowns.

Fast growth. The ’60s and ’70s were the golden era of shopping centers. They grew so quickly in number (22,000), sales ($475 billion by 1980), and size that they spawned four types – neighborhood, community, regional, and super-regional (the last two are usually called “malls”). Most were small (100,000 sq. ft. or less), but malls were usually 1 million sq. ft. or more.

By the early ’70s, these were the new “downtowns” – the place to hang out, socialize, browse, and shop. They were retail cities, with pleasant, enclosed environments; department stores as “anchors” to bring in customers; up to 100 specialty stores, including a number of jewelers; service shops; restaurants and movies; their own security and maintenance staffs; and acres of parking.

Throughout the ’70s, jewelers increased their presence in shopping malls and centers. (In one instance, 35 different jewelers vied for six retail spaces in one Northwest mall.) By 1980, jewelers were among the top 10 categories of tenants and had some of the highest sales per square foot.

But being in malls grew expensive. Rent and maintenance costs, reasonable in the 1950s and ’60s, rose sharply as malls grew in size and cost of operations. By 1980, jewelers were paying some of the highest charges per square foot of any tenant.

Meanwhile, national and regional jewelry chains were expanding rapidly, in part thanks to malls, which seemed to go up anywhere there was a vacant field. Developers and landlords began to favor chains, which could guarantee a certain number of new store openings per year and paid any rent asked. By 1980, chains regularly got first choice for the best locations (central, heavy traffic corners, or courtyards). Smaller jewelers were being closed out of malls and even smaller shopping centers.

Loss of appeal. In the early ’80s, the frantic malling of America began to slow. There were fewer new markets. Real estate, development, financing, and operational costs were rising. There were zoning and ecological restrictions on new centers, as well as community opposition.

At the same time, overextended jewelry chains began to merge, downsize, or even close. They went into fewer new malls and pulled out of many. Profitability took precedence over volume. That opened up opportunities for smaller jewelers, who were offered space at malls that chains wouldn’t or couldn’t go into. Costs, though, remained high.

Meanwhile, city centers and downtowns were being renovated and made attractive again to consumers. Developers even began building “urban malls” on now-cheaper center-city land. By the end of the century, many jewelers were enjoying the business advantages of alternatives to the mega-malls – revitalized downtowns, outlet and “power” shopping strips, freestanding stores located near malls, and busy local shopping centers.– William George Shuster, Senior Editor

Professionalizing the Industry

What’s the difference between a piece of blue glass and a sapphire? If you were a small-town jeweler in early-20th-century America, you probably didn’t know. Nor could you explain to customers why one diamond was more valuable than another of the same weight. And – believe it or not – you probably didn’t know exactly what you had in stock or even what your average daily sales were!

Gemological ignorance was widespread, and inventory management was often guesswork. What most jewelers knew came from their on-the-job experience or from their suppliers’ salesmen, themselves often ill-informed. Formal gem instruction came from the few available books and a couple of short university courses designed for mineralogists. Gem training specifically for jewelers was so limited that the industry’s leading educator was a high school chemistry teacher who had written a basic gem book.

A failed Kansas jeweler and later a Paris museum lecturer named Robert M. Shipley Sr. came to the rescue. While living in Europe in the late 1920s, Shipley had visited gem centers and studied gemology with the Gemmological Association of Great Britain. In 1930, a series of talks on basic gem knowledge for jewelers he gave at the University of Southern California’s evening school generated excitement throughout the state. Within weeks, some jewelers were paying to have his lectures mailed to them and the first study groups were set up. That response inspired Shipley and his wife, Beatrice, to found the Gemological Institute of America in Los Angeles the following year. The American Gem Society was born three years later with the goal of professionalizing jewelers through its annual Conclaves and by establishing ethical business standards.

The Shipleys and their supporters (including gem experts, industry leaders, and trade magazines) brought an evangelical zeal to promoting gemology. Bob drove tens of thousands of miles annually, crisscrossing the United States and Canada to sign up members for GIA and AGS, while Beatrice and her tiny staff managed GIA’s operations and finances.

There was strong opposition in the beginning from the New York gem trade and decades of skepticism from gem dealers and jewelers alike. But by the 1960s, GIA was seen as the industry’s gemological teacher.

Seeking professional standing. Other events helped lift jewelry retailing from a trade to a profession. An important one occurred in 1906 in Rochester, N.Y., where the first truly national trade group for jewelers was formed by two rival groups. One was the two-year-old American Retail Jewelers Association. The other was what remained of the National Retail Jewelers Association, started – and soon disbanded in dissent – by a few state groups in the late 1890s. Unity evaded the Rochester delegates for days while they squabbled over a new name. They finally agreed on the American National Retail Jewelers Association.

ANRJA continued until 1957, when it merged with the National Association of Credit Jewelers (formed in the 1930s). That union showed that the distinction between “cash-only” and “credit” jewelers – so strong in the middle third of this century – was fast disappearing. The new group was the Retail Jewelers of America, now known as Jewelers of America, the largest and best-known trade organization promoting the interests and professionalism of retail jewelers.

The Jewelers Vigilance Committee, founded in 1912, also worked to enhance the jeweler’s professional standing. Its goal: to preserve the integrity of the jeweler in the eyes of customers and to maintain fair competition.

Business smarts. A combination of better-informed consumers and greatly increased competition from newcomers to the market forced the independent jeweler to become a better businessperson. It wasn’t a matter of choice but of survival. Seat-of-the-pants management was no longer enough to stay in business, especially by the 1990s when many small jewelers closed and national ones consolidated. Jewelers had to learn how to manage their money and inventory better, advertise effectively, operate efficiently, and provide ongoing gemological and sales training for themselves and their staff.

That has led to a shift in professional training to include a mix of gemology, business, and marketing. Buying groups like the Independent Jewelers Organization, which began in the 1970s, grew rapidly by giving small jewelers the same buying advantages as large ones and by teaching them the latest marketing and management techniques. GIA offered an expanding curriculum of courses, workshops, and seminars. Organizations like the World Gold Council, De Beers, and the Cultured Pearl Information Center set up speakers’ bureaus. Scores of schools now offer courses designed for jewelers, while trade associations like JA developed certified training programs to enhance members’ skills. Jewelry trade shows added or expanded business education programs to enable jewelers and their staffs not only to buy but also to continue learning.