||High-End Jewelers Performed the Best in 2010
Overall, 2010 was a solid year for jewelry sales across the board, and the nation's largest jewelry retailers were no exception.
Of the 37 companies on National Jeweler's 2011 List of $100 Million Supersellers, 25 reported that their jewelry sales increased year-over-year, while only 12 experienced a decline. Five companies -- Bulgari Corp. of America, Van Cleef & Arpels, Harry Winston, De Beers Diamond Jewellers and Robbins Brothers -- crossed the $100 million sales threshold in 2010 to make the list this year, expanding the number of U.S. fine jewelry retailers that sell that volume of product annually from 32 to 37, a significant addition.
Industry analyst Ken Gassman acknowledges that while the 2010 numbers are up against some very weak sales figures from 2009, it still emerged as a surprisingly strong year for jewelry sales. "The industry as a whole enjoyed a strong rebound and it came back faster than we expected. We thought 2011 would be the recovery year," he said.
However, not every sector of the industry witnessed the same level of resurgence in jewelry sales. Jewelry-specific chains, as a cumulative group, lost market share during the recession and have yet to find it.
Of the 12 companies that reported sliding sales in 2010, seven were jewelry-specific chains: Zale Corp., Fred Meyer Jewelers, Birks & Mayors, Ben Bridge Jeweler, Ultra Stores, Samuels Jewelers and Goldenwest Diamond Corp., operator of The Jewelry Exchange, The Jewelry Source and The Jewelry Factory.
The year's best performances came from the high-end chains. Sales rose 12 percent for Tiffany & Co., 20 percent for Cartier and Van Cleef & Arpels, 10 percent for Bulgari, 22 percent for De Beers Diamond Jewellers and 53 percent at Harry Winston. (Gassman notes that sales at Harry Winston often vary greatly from year-to-year based on whether or not the jeweler connects with a few key, high net-worth customers.)
Though it doesn't necessarily cater to the same high-end consumers, recession stalwart Sterling Jewelers, operator of Kay Jewelers and Jared the Galleria of Jewelry, also turned in a solid 2010 performance, with year-end sales up 8 percent.
It's an atmosphere that mirrors that which existed in 2007 before the recession, when the high-end of the market was sailing along while the mid- to low end struggled. "We saw some of those high-end jewelers get hit very hard during the recession but, by and large, high-end jewelers do very well because those high-end consumers spend so much more on jewelry," Gassman said. "The new normal looks an awful lot like the old normal."
So, where did those customers who abandoned large chains go to buy their jewelry in 2010? The answer is: Not one specific place. Shoppers scattered to a Costco, Walmart, J.C. Penney, the Internet and even their local independent jeweler in search of the best deal.
"It all has to do with the perception of value in a recession," Gassman said, noting that consumers shopped wherever they felt they could get the most for their money. "(Specialty chain jewelers) never regained that market share when the economy came back."
In the department store sector, jewelry sales increased only 1 or 2 percent for many chains. Notable performances included Saks Fifth Avenue, where jewelry sales were up 6 percent, and Macy's, which posted a 7 percent rise in jewelry sales but fell from No. 4 to No. 5 on the $100 Million Supersellers list.
Sales gains for the discount chains, stores such as Walmart, Kohl's and T.J. Maxx, hovered in the 2 to 5 percent range while pure-play Internet retailers saw double-digit sales increases.
Blue Nile ended the year with a 10 percent increase in sales while jewelry sales grew 20 percent for Amazon.com. Gassman, however, notes that e-tailers still did not make great gains in picking up market share. "There's no question that online jewelry sales grew more rapidly than specialty jewelers' sales and grew more rapidly than the industry. But it wasn't dramatic growth," he said.
Multi-media retailers, meanwhile, experienced mixed success on the year. Sales were up 14 percent for Jewelry Television and 1 percent at ShopNBC but fell 14 percent at QVC and 1 percent at HSN.
While the majority of companies that made National Jeweler's $100 Million Supersellers List reported rising jewelry sales, no companies were in rapid expansion mode in 2010, a trend that has pervaded for a number of years.
On National Jeweler's 2011 List of Top 50 North American Retail Jewelry Chains by store count, there were only two chains in the top 10 that added stores -- Tiffany & Co., which went from 79 U.S. stores to 84, and Na Hoku, operator of Na Hoku and the Pearl Factory, which opened three stores.
Spence Diamonds, which exited the U.S. market completely, and Dunkin's Diamonds, which ranked No. 46 last year with eight units, dropped off the Top 50 list because they failed to make the eight-store minimum. Dunkin's now has seven stores, five in Ohio and two in Florida. R.J. Financial/Romano's Jewelers, No. 44 last year with nine stores, also consolidated and is under eight stores.
Gassman said the vast majority of chains reduced the size of their store base by closing underperforming stores and, post-recession, have become more selective about where they open new stores. Another trend that may be factoring into fewer physical jewelry stores is the Internet, as companies shift more operations into the mobile space.
"It was probably a good move to close a lot of those under-performing stores. There's nothing like a recession to cause you to house clean," he said.
(Source: National Jeweler, 06/01/11)
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