A Giddy Finish to 20th-Century Jewelry Sales

Euphoria was the mood at many independent jewelers as they tallied Christmas sales. Results glittered in comparison with those recorded by chain jewelers.

That’s not to say that mall-based jewelers did poorly. Their sales shot up 11.4% for the period Nov. 26-Dec. 24, according to the International Council of Shopping Centers. Only music, video, and home entertainment stores posted higher gains. Other mall-based vendors averaged gains of 7.7%.

Blue-chip jewelry chains fared significantly better. At Tiffany & Co., November and December sales leaped 27% at stores that had been open more than a year. Sales at Zale Corp. were up 16%.

Among independents, the bells were really ringing. Gains averaging 24.9% in same-store sales were reported by the 183 clients of Scull and Co., the North Bergen, N.J., management-consulting firm serving the jewelry industry. And Scull had 20 clients enjoying gains of 40% or more. “There was an unbelievable sense of euphoria,” says Joe Romano, Scull’s president. “This was the Christmas that was, that everybody was waiting for. There was a lot of money to be made in 1999, a general prosperity and sense of good times.”

For the 1999 Christmas season, about half the members of the American Gem Society posted gains of more than 20% over 1998’s Christmas figures, based on preliminary data and anecdotal evidence reported by AGS. Executive director Robert Bridel notes that among firms reporting gains of more than 20%, nearly one in 10 had sales 40% or higher than their ’98 figures. “A very large percentage of members said that it was, in fact, an incredible Christmas season, with the largest sales increases people had experienced in 10 to 15 years,” Bridel says.

Similarly, Dick Swetz, owner of the Independent Jewelers Organization, Norwalk, Conn., says that among jewelers who participate in the organization’s Internet discussion site, “everyone said they had a sensational year, with 15% to 25% increases. And for the Christmas season, the gains described were astronomical amounts, closer to 30% to 35%. With so many people in their 20s who are millionaires because of the stock market, consumers are just living high.”

Overall sales at independents were so strong that jewelers who didn’t see at least 20% gains should evaluate why and determine how to turn their business around, says Romano. “If gains were 12% or 5%, you’ve got some serious issues. And if you posted losses in ’99, something really did go wrong.”

Romano refers to ’99 as the “Cinderella” year of unsustainable glory. “It’s not that the business will turn into a ‘pumpkin,’ but the basics of business will need to be applied much more this year than in ’99. I’m not convinced 2000 will be as strong as ’99.” Among the reasons Romano cites for a possible downturn: a negative mood associated with the presidential election year (he believes that past election years resulted in decreased sales), the Internet’s impact in reducing retail jewelers’ profit margins, and the low probability of repeating the outsized ’99 gains.

“Many jewelers understand that 2000 won’t be what 1999 was,” Romano notes. “But I don’t think they understand how hard they’ll need to work in 2000. There was a lot of money to be made in 1999, a general euphoric prosperity, and I really think that mood is going to change.”

—Jessica Stein Diamond

Online Merchants Are Happy, Too

While traditional jewelry stores were having their best Christmas season ever, the new electronic stores weren’t doing badly, either. Precise numbers were hard to come by, since most jewelry-selling sites are private, but most told JCK they were pleased with the holiday.

One of the few statistical reports came from Bluenile.com, formerly Internetdiamonds.com. The site announced fourth-quarter sales of $10 million, a 1,250% jump over the preceding year’s figures. CEO Mark Vadon says the private company announced the figures because he didn’t think competitors could match them. “We feel we did twice the number of any of the others,” Vadon asserts.

Ashford.com, a luxury site that just began selling diamonds and jewelry, also disclosed its sales figures. It sold goods worth $1.5 million in December. “We exceeded our expectations,” says chief financial officer David Gow.

In addition to Blue Nile and Ashford, which were organized in 1998, a string of new, well-funded jewelry-selling sites debuted in the fourth quarter of last year. Just about every one reported promising results, though none would disclose figures. “We had a strong Christmas, but of course there’s no history to compare to it to. By next year, we should have a better sense of where this is going,” says Joan Bergholt of Firstjewelry.com, a site owned by USA Networks, which is also the parent company of Home Shopping Network.

Marion Davis of Adornis.com, a recent entry, says that in its first four weeks of operation, the company achieved its business plan goals and, in addition, sold a $20,000 piece. The site recently was cited in Time magazine as “bauble central for luxury items.”

This was also the first holiday season that Tiffany sold online, but the company would say only that results matched expectations. Mark Aaron, vice president, investor relations, says the retailer doesn’t plan a big Internet push just yet. “We expect the Internet site to evolve. We view it in the similar way we do our catalog business, as a marketing vehicle complementing our existing retail business.”

Another noteworthy development: Sites are ringing up bigger individual sales. Ashford recently reported a sale of a $100,000 diamond, while Mondera.com made a sale for $96,000.

—Rob Bates

E-COMMERCE

Technology Brings Suppliers To Jewelers’ Internet Sites For jewelers who fear losing sales to their suppliers’ Web sites and suppliers who fear they must sell on the Internet to survive, Polygon Networks says it’s found a solution. The Dillon, Colo., Internet service company has developed a way suppliers can post their goods on jewelers’ sites, under the control of both the retailer and the supplier.

Bulova is the first manufacturer to sign on to the “Site-in-Site” program. At the JCK Orlando Show in January, Polygon demonstrated how the program works. A click onto the independent jeweler’s site brings up a Bulova icon on the store’s home page. Clicking on the icon then pulls up Bulova’s Web site, but with the name, address, and phone number of the jewelry store displayed at the top. Further clicks take the user deeper into the Bulova site, but on every page, the store’s identification remains fixed. Customers make purchases at the store or through the store’s site, not directly from Bulova.

Polygon says it can hook up a supplier to a store’s existing Web site, at no cost to the retailer, if the store is in the Polygon network. If it isn’t, the store itself can install the program within a matter of minutes, again at no cost. If a retailer doesn’t have a Web site, Bulova will provide one free of charge.

The retailer retains control in several ways. He determines how his store is identified on each Web page. He can decide whether or not to sell suppliers’ goods electronically, and he can control the number of sites a supplier posts. Bulova, for example, offers five sites, each for a major watch collection. The supplier retains control over the images and descriptions of its products and is responsible for their updates.

“Manufacturers no longer need to choose between tapping the marketing power of the Internet or supporting their bricks-and-mortar retail stores. Site-in-Site enables them to do both,” says Polygon president Jacques Voorhees. He says he expects 10 to 20 suppliers—mainly watch companies—to sign on within a year.—Larry Frederick

JCK Announces An Electronic Newsletter

Starting March 27, JCK will forward a weekly newsletter to anyone in the jewelry industry who wants to receive it. Called JCK eMonday, the electronic publication is free of charge and will carry a wide variety of interesting material and useful statistics, including the following:

• Summaries of important stories in recent and current issues of JCK magazine, with links to the full versions archived on our Web site, www.jckgroup.com.

• Supplementary material to current JCK articles.

• Opinion polls you can respond to, which will cover a variety of industry topics. Results will be provided in a follow-up newsletter.

• “Guest Speaker,” which will feature commentaries from leading figures and consultants in the industry.

• Diamond, colored gem, and precious metal prices.

• Up-to-date stock charts for the largest publicly traded companies in the jewelry industry.

• Links to archived news stories that have appeared on our Web site.

• “Did You Know?,” a feature that will present statistical snapshots of the industry.

• Occasional surprises, and much more!

To receive JCK e-Monday, visit www.jckgroup.com and sign up on the home page. Your name and e-mail address will not be sold to any listing house or other type of business, and you can cancel your subscription any time.

SECURITY

Teaching Sales Associates Better Security Habits

Jewelers Mutual Insurance Co. has prepared a 23-minute video to teach sales associates how to prevent theft and robbery. It’s the seventh video in the company’s security series and is available to its policyholders free of charge until May 31. Other jewelers can order it for $50.

Actual crimes reported by policyholders—such as a sneak theft, a grab-and-run, and a ring switch—are re-enacted on the video, followed by instruction on how the incidents could have been avoided. Three “security habits” are emphasized: greeting each customer and making immediate eye contact, waiting on one customer at a time and showing one item at a time, and keeping showcases locked when unattended.

Sales associates can test the skills they learned by completing a quiz that accompanies the video. The video package also contains more in-depth security information for store owners. To obtain a copy, call (800) 558-6411.

E-COMMERCE

Online Sellers Still Failing To Comply with FTC Guides

The Federal Trade Commission gave poor grades to the 90 online jewelry sites it randomly checked about a year ago, finding that in most cases customers got inadequate or misleading information. Last December, it repeated the test. Results show little improvement.

Only six of 50 sites selling colored gemstones disclosed that most gems are treated and that some treatments require special care. That’s up from three the year before but still amounts to a rate of compliance with the FTC Guides of only 12%.

Pearl and diamond information was somewhat better. Twenty-two of 48 sites, or 44%, identified their pearls as natural, cultured, or imitation, and 75% of the 56 sites selling diamonds included information about carat weight ranges. Both findings represent marginal improvements over 1998’s results.

“These results show that jewelry retailers still need to review their online ads more carefully,” says Elaine Kolish, an FTC associate director.

The FTC review did not include large new e-sellers such as Mondera, Miadora, and Ashford, since they weren’t in business when the first check was done.—Larry Frederick