The sandwich men are back. They’ve been a frequent sight for two years, standing along the highway, rain or shine, wearing giant signboards enticing the public to pick the bones of another bankrupt retailer.
The names on the sandwich boards this time strike closer to home, at least in the Philadelphia area. With the liquidation of Finlay Enterprises, both J.E. Caldwell and Bailey, Banks & Biddle are closing. Both stores long ago ceased to be locally owned, and in the process lost a lot of their local flavor, but their roots are here and it’s sad to see them go.
At the same time, it creates opportunity for other local jewelers, not only in Philadelphia but anywhere a Finlay-owned store is closing. The remaining upscale stores in an area will face some short-term angst competing with the GOB sales at the Finlay stores, but in the long term,local jewelers have an opportunity to pick up talented staffers as well as some brands they might have been territorially locked out of before. And they have a chance to capture former Finlay customers whose jewelry and watches still need to be serviced.
What about customers who have begun to doubt the viability of any fine jeweler? Finlay’s demise isn’t an indictment of fine jewelry as a retail category. It’s the result of overall management strategies that didn’t work. Indeed, according to an article in Stores magazine, Finlay’s specialty stores—including Bailey, Banks & Biddle, Carlyle and Co. (which encompasses J.E. Caldwell, as well as Carlyle and Co. and Park Promenade Jewellers), and L. Congress (Congress Jewelers), showed a year-over-year sales increase of 38.4 percent in 2008. But when the firm’s leased departments are added, the year-over-year increase grew only 3 percent in 2008.
While the causes for trouble are different, an analogy for discussing management strategy and assuaging consumers’ concerns about your longevity might be Coldstone Creamery or Krispy Kreme Doughnuts. Both companies, seizing on the popularity of their products—as well as a seemingly endless supply of money and credit—went on rapid expansion binges and quickly outgrew the market’s need, only to implode shortly thereafter.
It’s not that consumers don’t like ice cream or doughnuts, but they don’t necessarily eat them every day, nor do they need an outpost on every corner. Slow and steady might have won the race if the companies’ managers had recognized that consumers see these items as occasional treats and planned their branch openings accordingly. Instead, they relentlessly pursued an unsustainable strategy. While Finlay wasn’t opening stores on every street corner, the rapidly changing retail landscape, along with significant credit issues and consumer pullback, proved to be too many hurdles at once.
Both Coldstone and Krispy Kreme survived, but the number of outposts now more accurately reflects what the market will bear. Likewise, many jewelers have complained for years that there are too many other jewelers, not to mention ever-increasing opportunities to buy jewelry from other sources.
It’s always a jolt to see a competitor go under. You can’t help but wonder if you’re next. But it’s also a good time to re-evaluate management strategies, markets, and the opportunities this presents. Look at the competitor’s customer base, both geographically and demographically. Does it pay to extend your marketing reach to cover areas with few or no jewelers? Can you bring in new customers if you pick up some of the brands that are losing their dealer in the territory? Could the addition of a bridge or lower-cost line encourage customers from a lower-end store to trade up? Will you step up your efforts to be visible in the community now that there are fewer jewelers in your space? Are you managing your finances in such a way that the additional expenditures won’t put you in a precarious position?
As we head into the holiday season, try to see the silver linings, not just the clouds. And try especially to remember what’s most important: health, family, and peace. Best of luck for a happy, healthy, and prosperous holiday season, and we’ll see you again in January!