Making the Most of the Holidays

RAPAPORT... It's been a tumultuous year, and the upcoming holiday forecast has not eased concerns. Although sales are still expected to increase over last year, the margin is slim, according to AlixPartners. The consulting firm estimates that revenues for October through December will be only 1% to 2.6% higher than they were in 2019. Even with online sales expected to grow by 25% to 30% year on year, according to Deloitte, jewelry stores not already comfortable selling digitally will likely be unable to take advantage of that surge. Covid-19 has been a significant factor, certainly, but along with the year's civil unrest and political instability, these numbers only confirm a retail upheaval was already in place.'It's a roller coaster'Fortunately, there's also reason to be cautiously optimistic. Pandemic-related travel restrictions have shifted luxury dollars from vacations into jewelry, according to a recent De Beers study. "I have long suspected that the pool of money from which people draw to buy jewelry is the same pool from which they draw for travel experiences," says Babs Noelle, owner of Alara Jewelry in Bozeman, Montana. "Now I have confirmation. People who were supposed to go somewhere are now buying a diamond bracelet instead."Despite a four-week closure, Noelle's 2020 sales were up 5% year on year by mid-September. Vacation-home owners in Bozeman have also elected to stay on through the fall and winter. "Our streets are lined with cars that have out-of-state plates," she says. "So at least for me, we're going to have a pretty darn good Christmas."Other store owners are less certain. "To us, everything looks pretty good," says Patrick Larkin, general manager and owner-in-training at Burri Jewelers in Cheyenne, Wyoming. "But every year is always a never-know. It's not looking bad now, but anything could change."The presidential election also has retailers on edge. "It's hard to see the future and how it's going to be, because it's a roller coaster right now," comments Erik Shimunov, owner of Crown Jewelers in New York. "Everything changed because of Covid-19, and before an election, people always feel uncertain because they don't know what's going to happen."The right inventoryTo bring in customers and get them excited for the season, store owners are looking at products designed to appeal to a wide range of people. "We're trying to stick to the basics and [to] things that sell every day," says Joe Gehrke, president of Kesslers Diamond Center, which has six stores in Wisconsin and one in Michigan. "At the same time, we're doing new product development. Our clients look to us for innovation, so we're launching a new collection for this upcoming holiday."Stores should boost their inventory levels well in advance of the December rush, says Ellen Fruchtman, president of Fruchtman Marketing in Toledo, Ohio. Her company, which specializes in the jewelry industry, is "advising our clients to not only make sure they have enough inventory to fulfill their sweet spots, but to consider bumping up some inventory above their average sales from 2019."Shimunov expects high-end goods, particularly Rolex, to remain in demand at his store. "The price of watches went up 15% or 20%," he says. "More people start buying them, so it's hard to obtain them. And there's no shows, so it's hard to get merchandise. Rolex has almost doubled in price. And in Cuban chains, there's been a shortage, because inventory has been sold out. So prices there went up, too."Larkin, whose best-selling watch brand is Citizen, says he's expecting bridal and smaller gifts to be big sellers. "We're being somewhat conservative with buying, but still buying a bit of stuff. We're doing really good with engagement, and I can get high-end lighters and cigar cutters and stuff like that. Customers are buying all the small stuff." He's also excited about colored stones. "We have natural-colored, non-treated pink sapphires. And we always get odd stuff and nontraditional rings with tons of blue topaz and blue sapphire."Rethinking supply chainsDespite some early 2020 delays, Fruchtman says the supply chain is rebounding, albeit with a few changes. "For example, marketing departments have been depleted, and some are obviously not producing as much inventory," she elaborates. This has been a particular problem for watch brands, she adds, but many suppliers understand the situation and are being flexible about payments and buy-in levels. "Reps are working from home. And several are getting creative and offering up virtual trunk shows."For Noelle, whose online business has grown during the pandemic, supply chains haven't been a significant problem, but shipping has. "We're already rural and away from the major shipping hub, so we became very accustomed to some delays," she relates. "But now that's broken down to more than just an additional day. Now packages take a week. And so we're switching back to FedEx, even though we like the US Postal Service."Marketing on all frontsWhen it comes to marketing, store owners such as Gehrke are doing a mix of online and traditional ads. "We've been a longtime radio advertiser, and it's deep in our roots," he says. "But our single biggest store front is our website. So we're experimenting with digital strategies and with social. Ninety-nine percent of our spend used to be in radio, but now we're doing more balanced spending."Some stores are sticking to more traditional methods. "We've gotten away from online completely," says Larkin. "The whole internet thing with hits and clicks is a major scam. So with us, it's radio and a little television. And print still kind of works here. People still get the paper, and it brings in the older crowd, which has the money."Digital will be front and center this year, according to Fruchtman, but traditional advertising still matters. "People are home more and on their devices," she says. "And the older ones are watching more television. So if you have the dollars to do some broadcast, do it." Noelle says her marketing strategy is the opposite of her local competition. "They pulled their [print] ads, but we stayed, and we got really good rates and very good treatment." She also redid her window displays. "People are walking our downtown who don't normally walk our downtown. I'm also getting touchscreens installed, so you can touch the window and see every item. I'm taking advantage of my windows, which is advertising."Whatever the medium, the message should be emotion-driven, Fruchtman stresses. "Jewelry has always been an emotional purchase. It's not about the product or price. It's the way it makes youfeel. So this year, more than ever, you have to tapinto that."A safe atmosphereOne of the biggest challenges for store owners in 2020 has been to make sure customers feel comfortable shopping. To that end, Noelle has set up hour-and-a-half time slots in which she closes to the store to all but one customer. "No one who sets an appointment doesn't buy," she declares. "I also decided that in this store, we would require masks. Because of that, I was threatened with a gun. I had people screaming at us. But by taking a stand, it made people feel safe shopping here." In fact, she adds, many new customers have come to her from her competitors, who have been "wishy washy" about requiring masks. "One store lost its entire sales staff because of their lax mask policy. They were closed until recently, because they didn't have enough people to open the store."Covid-19 isn't the only concern as Christmas approaches. Retailers need to innovate if they want to stay relevant, warns Gehrke. "People are looking for something different," he says. "Don't rely on your past. Excite your clients. And don't run out of inventory. A lot of people took a heavy hit when they had to shut down, but in this instant-gratification society, people want it now, so don't run out of everyday stuff. That's what people want. And don't be afraid to fail and try different things."This article was first published in the November issue of Rapaport Magazine.Image (from left): Mastolini Signature Eclisse ring in 18-karat rose gold with a black Tahitian pearl and diamonds; Carbon & Hyde Gemini ring in 14-karat yellow gold with diamonds; Andreoli Elephant brooch in 18-karat yellow gold with mother-of-pearl, diamonds and emerald; Kesslers Diamonds Moon & Back sterling silver pendant with diamond; Leigh Maxwell Amani Peace pendant in 18-karat yellow gold with diamonds. (Background: Shutterstock)