The contraction of the jewelry industry doesn’t tell the whole story. The jewelry industry is, understandably, viscerally responding to the appearance that independent retailers are shuttering faster than they are opening.
The statistics are sobering and fear-inducing: Roughly 1,000 to 1,700 jewelers close per year. In years past, that number was always offset by about 1,000 jewelers jumping into the fray. Now, a number of new factors are at play. First, younger generation would-be successors are breaking with the family-business tradition and deciding to enter other careers. Second, it’s harder to secure bank loans, preventing store managers or other potential buyers from taking over a business.
“There’s no new blood,” offers Josh Hayes, a business analyst at Stuttgart, Ark.–based Wilkerson.
Wilkerson, a national jewelry liquidator, retailer, and manufacturer for more than 48 years, maintains that shuttered businesses tell only part of the story. Businesses aren’t just closing, store owners are simply getting older. Consider some statistics Wilkerson recently uncovered from the Jewelers Board of Trade: 57.7% percent of independent retail jewelry store owners are 60 years or older, just the age when they would consider cutting back hours or entering into full retirement.
Rick Hayes, president of Wilkerson, says it’s never too early to start thinking about retirement and succession plans. And there are a number of land mines store owners should avoid as they approach retirement age. A middle-aged store owner might be tempted to renew a lease, for example, believing that he or she can always sell the business and transfer the lease. “Odds are that’s not going to happen,” Rick Hayes says. “We’re trying to put out the message that you have to take a hard look at your exit strategy. I can make a lot more money for people if they think ahead.”
Josh Hayes says he also sees a number of jewelers counting on inventory as retirement income. Thinking that a buyer will come along and purchase that inventory can be a mistake. “That’s just doesn’t happen as much anymore,” he says. “It’s not a good long-term plan anymore.”
Wilkerson works hand in hand with jewelers to determine how much the sale of the business will yield, what changes could be made to increase the potential yield—which will help them determine at what age they will retire, what their monthly income will be, etc. “If they start that discussion with us early, their return is going to be much more dramatic than it would be otherwise,” he says.
Wilkerson has seen retirement-age jewelers get caught in situations that force them to keep working way past the time they would have liked to stop. “That’s horrible,” says Rick Hayes. “That’s why we’re trying to be proactive and talk to people ahead of time.”
The landscaping is definitely changing and, while it is true, there isn’t as much fresh blood, a large chunk of it is simply due to retirement. “We see all sides of the fence,” Rick adds. “As a company liquidator, retailer, wholesaler, and manufacturer, we’re constantly asking ourselves how we can help jewelers maximize their retirement.”