Skip to main content

Las Vegas: nothing, and everything, has changed

I have been going to trade shows for nearly 40 years.  That is a mind-bending long time when I stop to think about it, but it does have its advantages.  It allows some stripping away of artifacts, distractions that can mask reality.

We all speak of how much the "world" has changed, and it has.  Over those years we have acquired the PC (and lost secretaries?), cell phones,  hi-def TV, digital photography.  The Internet has revolutionized our lives. We have Amazon, Youtube, Ebay and Facebook.  We have a billion sites offering a trillion products and services.  We have blogs - like this one.  The software selling business is going away, and so are many newspapers.  Privacy is a thing of the past.

In our industry, whole channels of distribution have disappeared (think traditional distributors, catalog showrooms); others have shrunk in number to a handful of giants (think mall chains, discounters and department stores).  The Internet has given us countless on-line jewelry stores and diamond dealers.  It has also been liberating for small manufacturers who have found a public for their goods spread out all over the world.  And that transformation has only begun.

The nature of business has shifted.  Gold chains used to be a huge business.  Now, the number of producers in Italy (once the largest by far) has declined to barely a half dozen, and even they produce very little.  Diamond jewelry used to easily carry a couple of carats of goods.  Today, other than in the high end, we have been squeezed down to half-pointers and low total weights.

Still, for all the disruptive forces besetting our trade, one would think all was fine, judging by the just concluded shows in Las Vegas.  There were many visitors and orders were being written.  Most vendors did not complain about the show results at all.  The jewelry business is definitely not dying and the public has not lost the desire to own precious adornments.  But some things were clear.

In years past, the jewelry business was a major factor in gold consumption.  That is no longer the case.  Investors and central bank purchasers are the major factors, which inherently introduces volatility that complicates our lives.  For the foreseeable future, there is little reason to think that prices will decline significantly.  On the contrary, it is more likely we will see $2000 gold soon, and perhaps $2500 gold next year.  More and more, gold will become a metal for the elite, and for bridal rings.  But it will also compete more with platinum and palladium.  The bottom line is that we saw much less carat gold jewelry.

Buyers at the show were writing orders, but they were writing cautiously.  But the more they live on inventory, and use sales revenues to cover overhead, the more their capital will erode, and the more the business will concentrate into fewer hands.

Vendors are being creative in using alternative materials, in some cases in a wonderfully inventive way.  It is clear that many, if not most, retailers have capitulated when it comes to buying gold.  Where they fought shifting to silver and other materials for years, many have now adapted to them.  The public has shown that it will accept the new direction - out of necessity as well as preference.  The competition in these lower price ranges is becoming fierce as more and more companies start producing these new lines.  Some of the fat margins that were available even a couple of years ago are getting thinner.

In this market, retailers are becoming more aware of the importance of differentiation in the fashion area.  That means finding new vendors is important, and that means that the shows will continue to be important.

The shows demonstrated that for all the changes we have seen, the business is still here, face to face, vendor to retailer, retailer to consumer.  With all the changes, the basic facts remain the same.  Consumers want jewelry.  Find a way to give them what they want.

Comments

Really, really loved it, Ben - we all needed the long perspective -- and the truth, rather than hype, which has crowded out so much truth... Bravo...
Hedda Schupak said…
One of the things that's really interesting is your point about the majors having shrunk to a handful of giants. The jewelry industry certainly isn't alone in that respect so I wonder if it's just a retail trend in general and not specific to us?
Anonymous said…
Ben, we have seen everything! The good days and the bad. I miss seeing you and those of us who were lucky enough to enjoy the glory days! I was reading some old articles I wrote for JQ years ago. Pushing things from 14 to 18K. Wonderful designs and such talent coming out of the US, Italy, France and Greece. Perfection in craft, delight in design. We were lucky! I was always upset by lighter, cheaper but you have to do what the market will bear. I could always find a way to cut a bit here and there but the demand to make something wonderful the public will buy is really out there. I remember pricing gold at $500. It could never go that high! It kept me from changing the retails every week! Oh, those were the good old days for quality chain. I miss looking at the bottom of a ring to see how it was made, I miss a business where a handshake was your bond, and I miss the sweet friendship of our industry. Jan Calass Nuckols Montgomery (JanMontgomery8@aol.com)
Anonymous said…
Hedda, I think you have made a very good point and a sad one at that, I remember when it started. It started with a merger, then a buy-out. Next came a branding war and quality went down and down. The brave few who stood alone deserve our respect and thanks! I agree it is a retail trend in general. Until people look at every label to see where things are made and what it is made of, they may actually be paying much more for an inferior product. I like the phrase "Made in America"! For jewelry, I love, "Made in America or Italy"! Thank you for your years of expertise to this wonderful industry, Jan Calass Nuckols Montgomery
Hedda, consolidation has always been a powerful force in all commerce. We used to have dozens of computer manufacturers, drug companies, and luxury product manufacturers. Now we have Dell and HP, Pfizer and Merck, LVMH and Richemont. But as for guild retailers in local markets, consolidation will not occur in that way. It has manifested itself by seeing the business fall into a few hands in each market, but they are still independents. With the good stores, a $2 million business twenty years ago, is now a $15 million business. Will they remain innovative and well-versed in jewelry? That is the question.
Yes, it has changed a lot. But I still see designers, and even some volume manufacturers, producing great product. Cheap jewelry, often badly-made, boomed with the huge expansion of the mass market. Many of those consumers wouldn't or couldn't pay the price for what you and I might call "real" jewelry. Now, oddly, we see high-tech, high quality inexpensive jewelry using alternative materials serving that market.

Popular posts from this blog

The New De Beers

This past week we saw De Beers introduce Lightbox Jewelry, a full-bore, direct to consumer (DTC) retailer that will exclusively use man-made diamonds (MMDs) produced by their Element 6 division.  The concept is neatly packaged to offer a basic selection of body jewelry at moderate prices.  The DTC approach is intended to circumvent the entire traditional channels of distribution established by De Beers over the last century, in an effort to demonstrate that this is just a low-end, low-value product aimed at an under-served public.  De Beers claims that it will only benefit its existing clients by demonstrating how much more valuable "real" diamonds are. This move cam as no surprise at all to me. There are many gaps and holes in this plan, and I will try to outline them in future blog posts. To begin with, I posted three times in 2015 with my views on the subject.  Here are the links to those blog posts, as it would save me time repeating the points I made back then!

Top 10 Issues for 2015 - #5. The New Consumer

Well, the summer break is over, and we are facing a Fall season that does not seem to have much momentum.  Last time, I wrote about retailers' issues, though there is much more one can say on that subject. Now, let's think about the consumers.  Where are they?  Who are they? And will they show up this season? There is plenty of evidence that the public we have grown so accustomed to in the Consumer Age has evolved, or is evolving, into a very different public, one that has reset some values and taken a hard look what it takes to earn a dollar, and just how to spend that dollar. Maybe the best way to begin to describe this transforming mindset of the public is to make a list of what we see. Keeping up with the Jones's is dead.  Acquisition for its own sake, and to show off what we own is no more, though personal satisfaction is still there.  So that means that what you own means less than what you've done and where you've been.  (I exclude the super-rich, who

The Diamond Crisis

I was prepared to write my next big issue for 2015, number 5, but this week's news in the diamond business has diverted my attention.  Conditions have reached the boiling point, and the future is foggier than ever. Without repeating all the details that I assume most concerned people have already learned, let's look at the upshot.  (A well done update is this week's column by Edahn Golan, issued just before the latest twist.  Look at his column at http://edahngolan.com/how-sightholders-take-care-of-business-a-market-report/)  In essence, the pipeline is stuffed with diamonds.  Some sightholders have been borrowing to buy goods, but using cash flow from under-priced sales to fund investments in other, more profitable ventures.  But many of those ventures have turned sour, and there have been some bankruptcies.  Apparently, there are many dealers under great pressure, and the market is seizing up as there is fear about selling anyone.  While I do not know the details, ther