There is good news to celebrate. By most measures, the Great Recession is over, although the National Bureau of Economic Research—the official arbiter of economic cycles—hasn’t posted an end date yet. NBER’s definition of a recession is complex, but the commonly accepted definition is two consecutive quarters of negative GDP growth.
In the third quarter of 2009—after four quarters of contraction—the economy expanded 2.8 percent, thereby ending the Great Recession by common definition. That means we’ve likely hit bottom.
According to the U.S. Department of Commerce, jewelry sales rose 3.1 per-cent year-over-year in October. Prior to this recession, 3.1 percent growth would have been dismissed as anemic, and it’s not terribly difficult to post an improvement over 2008’s appalling results. Still, in an industry that’s been battered harder than almost any other retail category, it’s good news. Many jewelers added a lot more price point merchandise this year, focusing on better design executed in less costly materials, and the numbers seem to validate that strategy.
After all, if the customer is shopping in her own closet—or her own jewelry box—the only way to get her to spring for something new is if it really is new, not just another iteration of something she already owns. It must have a good price-to-value equation, and it must be in a price range that won’t make her squirm with guilt.
General retail sales rose 1.3 percent in November, better than expected. Consumers remain frugal, but they’re buying. When the only good news for 18 months was that the rate of decline slowed, an actual increase is cause for celebration.
Even prior to the official numbers, some unofficial signs were encouraging. My own unscientific, but directionally accurate, measure, “Schupak’s Famous King of Prussia Parking Lot Barometer” was up. Three weeks before Christmas, in the middle of the day, the parking lots at the nation’s largest shopping mall (in terms of actual retail space) were full. Even six weeks before Christmas, while the parking lots were far from full, almost every shopper in the mall was carrying at least one bag—and many carried several. Friends across the country reported gridlock around their local shopping centers as well.
We also haven’t seen the floor-to-ceiling discounts of 2008. While I’ve observed that some retailers (apparel, mainly) are heavily promotional, I see many more that have adjusted buying patterns and price points to the times, to sell through as much as possible at full price. According to a variety of reports, the strategy is working—indeed, a few select designer luxury items have again sold out within hours of hitting the floor, something we haven’t seen for two or more years.
While some economists fear the dreaded “W” recovery, or double-dip recession, more are leaning away from that scenario, though they all caution that we’re far from economic equilibrium and things will remain challenging through 2010. Many of the necessary indicators, including employment and home values, haven’t turned around and may not until 2011.
That isn’t necessarily bad for a store owner or buyer. It makes one’s job more difficult but also forces one to return to his or her roots as a merchant in the selection of goods and the ability to match product to customer. It makes one look for products that are interesting and novel, things that are unique and special, and ways to reinvigorate the shopping experience for customers and employees. Everything—hemlines, economics, politics, and consumption—runs in cycles. It’s the proverbial pendulum, if you will. When it swings too far in one direction people say, “Whoa, that’s enough.” The pendulum, stuck on rampant consumption, has swung to austerity. For some, it’s driven by economic necessity, but for others it’s just a sense that the balance was too far out of whack and we all had grown too greedy. But we’re hard-wired to want to acquire stuff, so at some point the pendulum will begin swinging back, and pent-up demand will spill forth. Maybe not as far as we’ve gotten used to—my guess is that we’ll remain much more selective about what we buy for awhile yet—but it will hit a nice balance we can live with.