Highlights
New Growth in Jewelry Sales
June 24, 2004
After three years of declines, high-end retailers proclaim that luxury spending is on a roll, on the back of a steadily rising stock market and a rosier job picture. Few seem more confident about the comeback than the fine jewelry sector.

Perhaps the hardest hit in the past few years, jewelry makers and retailers shopping the Couture Jewellery Collection & Conference in Phoenix and the JCK and JCK Luxury shows here earlier this month claimed it has been a strong year for fine jewelry sales so far, and they expect business ?X particularly with high-ticket precious pieces ?X to positively roar in the fourth quarter and beyond, if the upward economic trend continues.

And it??s not just diamonds. While traditional diamond jewelry still accounts for the lion??s share of many retailers?? businesses, fashionable designs mixing precious and semiprecious stones are increasingly popular, particularly with the self-purchase customer. Pearls, long considered conservative and dowdy, are also making a fashion statement and are often coupled with gold and diamonds.

??It is a time for jewelry,?? said Melissa Geiser, fine jewelry buyer at Stanley Korshak in Dallas. ??You are seeing it on the runway now. We had such a minimal time [in the Nineties], but now it??s come full circle. I have talked so many people into small earrings in the early Nineties ?X now I am going to be talking them into big ones.??

Despite ongoing turmoil in the Middle East and the upcoming presidential election, both of which could impact the economy, many retailers project over 20 percent growth in fourth-quarter sales, and they??re planning the season accordingly.

Total jewelry and watch sales in the U.S. are estimated to have been $43.56 billion in 2003, according to 2 Degrees Freedom Ltd., a London-based marketing and research consultancy that began tracking jewelry sales last year. According to the Commerce Department, 2002 jewelry and watch sales were $42.3 billion in the U.S., and the department predicts 2004 sales of $48.3 billion.

??The jewelry business is very strong and healthy, and definitely driven by the high end,?? said Thomas Blumenthal, president and chief executive officer of West Coast jeweler Gearys Beverly Hills. ??It??s been the major purchases that have been the incremental business this year.??

Nidhi Handa, director of stores at Boston jeweler Alpha Omega, said, ??In general, our business is on the upswing. Diamonds are a huge part of our business?Kas far as engagement rings and wedding bands, but also self-purchases. We are really seeing traditional pieces still accounting for a major part of the sales; however, our fashion jewelry sales have been continuously increasing.??

Whereas pricing at retail was an issue in the past two years, and customers were increasingly turning to the Internet (and even Wal-Mart) to find better deals for diamond jewelry, buyers noted that the free-spending customer is back in stores ?X and spending on high-ticket pieces.

??The customer is spending again,?? said Geiser at Stanley Korshak. ??Last August, I was walking into the marketplace asking for less-expensive prices from everybody, but this year, it didn??t matter. Last spring and last fall, we saw a strong designer jewelry business, and now that business is soft, and fine jewelry is trending up.??

Robert Mednikow, ceo of Mednikow Jewelers in Memphis, explained that customers are willing to spend more again on the quality and service that local jewelers can offer ?X and that??s often missing with online jewelers.

??What is fueling the sales now are quality, design and service, much more so than price only,?? Mednikow said. ??The customer is getting more educated, because the jewelers have learned how to compete against the Internet and can offer service and the same price as the Internet.??

There are a few clouds in the sky, however. Expressing concern about the ongoing weakness of the dollar against currencies such as the euro, many U.S. buyers conceded they carefully considered purchases from vendors abroad, often sourcing locally or turning to those European jewelry makers willing to keep prices in check and take a cut in margins at their end.

??I sensed the European manufacturers adjusted prices because they hadn??t seen that much business in Basel [Switzerland],?? said Richard D. Eiseman, president and ceo of Dallas-based jewelry retailer Eiseman Jewels. ??We saw more flexibility. I didn??t want to buy and present our clients pieces that had the weakness of the dollar included in the price, because then we can??t give our clients value. We were very careful on our European purchases.??

Jim Rosenheim, owner of the Tiny Jewel Box store in Washington, noted: ??It??s more expensive to get merchandise [from Europe now], and that will affect [our] judgment. We still buy strongly in the European market, but we are being quite careful. The Europeans who are not making compromises and adjusting their prices will find this to be a tougher year. But we are looking at domestic production and finding some strong domestic companies we are happy with.??

Among the key trends at Couture and JCK:

Pearls, from South Sea to Tahitian and keshis, often mixed with 18-karat gold and diamonds.
Long linear stiletto or button earrings.
Open-work bubble-like circular shapes for earrings, necklaces and bracelets.
Fancy briolette sapphires, dangling from rings, pendants and watches.
Tactile rings and bracelets that rattle when shaken.
Swirly, vine-like tattoo motifs.
Color in metals and stones, from yellow gold to pink and yellow sapphires and semiprecious stones in all available hues and often used for one piece.
Cabochon moonstones in a variety of colors, from gray to chocolate brown, green, peach and black.
??For us, the strength of color is continuing,?? said Sue Ann Newberg, vice president and divisional merchandise manager at Saks Fifth Avenue. ??Big, bold color in stones will continue for fall, like those we have seen from Rodney Rayner. We still feel strongly that for fall it will be a range of pinks and greens, from pink tourmaline to morganite, and greens, from aqua to peridots. In pearls, it??s pinks and peaches.??

Pearls, long shunned in favor of other precious stones, were a prominent feature with many exhibitors. But whereas in the past, designers offered pearls in traditional strands, now they are using them as an accent to jewelry pieces, mixing them with gold and diamonds and other precious stones, including Mikimoto, Prince Dimitri for Assael and Mimi. Others integrated shells into their fine jewelry pieces, including John Hardy, which launched the Cinta Shell collection, featuring shells from Indonesian waters cut into bold rings set with precious and semi-precious stones. Each piece is a one of a kind, and prices range from $2,000 to $15,000.

??Pearls will be the fashion statement for the season,?? said Aida Alvarez, vice president of merchandising at jewelry chain Mayors Jewelers. ??They are hot everywhere, in every classification, combined with precious gems and diamonds.??

Newberg at Saks concurred: ??The pearl business will be very important. Designers are having fun with pearls, particularly with colored pearls and freshwater pearls like those at Mimi. Before, this was at the low end, but now it??s at the fine jewelry level. It plays into the ladylike, Miss Manners trend.??

Tim Greve, president of Carl Greve & Jewelers in Portland, Ore., explained: ??Pearls are now a design feature rather than the central focus of the piece. Perhaps it??s one of those cases where the industry is a bit ahead of the public, though. The industry is having fun designing with them; now it??s our responsibly to teach [customers] how to wear them, or else we will sit on a pearls inventory.??

Many buyers praised David Yurman for his pearls collection, which he had previewed at Baselworld and showcased at Couture and JCK. The collection features necklaces, bracelets, rings and earrings made with fine South Sea pearls and combined with 18-karat gold, silver and diamonds. There are also one-of-a-kind pieces. Prices range from $1,000 to as much as $250,000.

??By translating his yellow gold collection into pearls, David Yurman reached a new pinnacle,?? said Sande Finkel, director of marketing and advertising for London Jewelers, adding that other top lines include Stephen Webster, H2 at Hammerman, Di Modolo and Meyers, a watch collection featuring an interchangeable bezel set with dangling sapphires, emeralds or rubies. ??I loved and bought pieces that were tactile, movable and dangling?Kwearable pieces of art,?? said Finkel.

Earrings continue to be a key classification, though chandelier styles are on the wane, replaced by a sleeker stiletto design. With ladylike looks expected to top sales this fall, many jewelry designers brought back the button earring. ??The long earring will still be strong for fall, but I feel we will see a return to the button on the ear again,?? said Saks?? Newberg.

Pins may have featured prominently on fashion runways, and they play well into fall??s tweed and boucle suits, but jewelers are divided on the trend.

??We can say it??s a pin year, but only pin ladies will buy pins,?? said Lauren Kulchinsky, vice president and fine jewelry buyer at Long Island jeweler Mayfair Diamonds & Jewelry. ??Every jeweler will be stuck with them in their showcase, because 99 percent of American jewelry clients will buy a necklace, earrings and a ring before they buy a pin, unless it??s from bridge [a less expensive category]. The ones who would buy a pin have them already.??

Kulchinsky cited Elizabeth Rand and Rodney Rayner as being among her favorite collections, but she also lauded Stefan Hafner for Bernard Grosz, Antonini, Stephen Webster and Orlando Orlandini.

It wouldn??t be a proper jewelry buying season without a slew of grand galas, parties and awards ceremonies. Now in its 10th year, the annual Couture Design Awards Gala honored founder and VNU Jewelry Group??s group brand director, Nancy Robey, with a Lifetime Achievement Award.

Also honored were Hyde Park Jewelers of Phoenix, which picked up the newly created Retail Design Award; Penny Preville, who won the Outstanding Achievement in Advertising Award, and first-time Couture exhibitor Erica Courtney, who took home the Outstanding Achievement in Marketing/Public Relations Award.

Winners of the Best of Design Awards were Rodney Rayner for colored gemstones; Leo Pizzo for diamonds; Calgaro for gold; Schoeffel for pearls; Michael Bondanza for platinum; Memoire for bridal, and Stefan Hafner for Bernard Grosz for haute couture. The Editor??s Choice Award went to Anthony Nak, the line designed by Anthony Camargo and David Nakard Armstrong, which features bold gemstones wrapped in fine, delicate chains. The awards were presented by Town & Country.

Meanwhile, the JCK Show selected five designers as ??Rising Stars?? and gave each the opportunity to showcase their designs in the exhibition??s Design Center area. This year??s choices were Cyrille Jeantet, Matt Bezak, Lata K., Suzy Landa and Enric Majoral
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