Buxbaum Jewelry Advisors has learned important lessons in recent months about how consumers of jewelry have changed their habits. Those who bought jewelry two years ago are buying now too -- but instead of taking home a $5,000 diamond, they might buy a $500 piece instead. The emphasis is on chic design, or on alternative metals.
Prior to the Great Recession, Colorado designer and store owner John Atencio thrived by serving a relatively small group of affluent and intensely loyal jewelry customers. “My stores carried only my designs for more than 30 years,” he said. “I understood my customers’ tastes, and they understood mine. It was a perfect match.”
But as the industry knows all too well, the sour economy overturned spending habits of even the most ardent and refined jewelry collectors. As the slowdown progressed, Atencio, who sets the strategic direction for his five-store company in addition to overseeing all aspects of its approach to design, saw the need to adapt to the rapidly changing market.
By Stevan Buxbaum
RAPAPORT... Back in 2008, when the Wall Street meltdown was in full swing and the inevitability of a nasty and protracted recession became undeniable, reporters flocked to retail analysts for predictions. Typically, those analysts paused for about a millisecond before saying something like, “Value and necessity will rule the day. The big winners will be Walmart and Costco. Luxury retailers, jewelers — anybody who sells anything that is both expensive and unrelated to actual survival — will be sunk.”
It was hard to argue with that logic. Fear was in the air and it didn’t matter whether you were rich or poor. According to a W magazine survey, for example, 91 percent of affluent shoppers — those with household incomes of more than $100,000 — recoiled from discretionary spending during the 2008 holiday season. Surely, jewelry was about to get clobbered, right? The high-profile failures of venerable chains like Friedman’s and Whitehall Jewelers seemed an ominous sign that it would. Even the Jewelers Board of Trade (JBT) — an industry cheerleader, after all — predicted that 20 percent or more of independent jewelers would vanish.
Fast forward a couple of years into the so-called Great Recession and the conventional wisdom about winners and losers seems to have held up pretty well — with the notable exception of jewelry. Yes, jewelers are struggling, but who isn’t? In other words, the predicted decimation of the retail jewelry business just hasn’t happened. Operational tweaks, such as inventory adjustments, rent relief and payroll cutbacks, are part of the story, but one of the biggest reasons can be summed up in three words: “We buy gold.”
