Tuesday, September 12, 2017

All you need is Love

It is fair to say that the last year or so has left us at a loss trying to understand where the business is headed.  There are the obvious changes, which I have noted in the past - a steady stream of store closings, the continuing growth of on-line sales, and a real weakness in diamond prices.  We know that some retailers are doing well, but many are struggling, trying to figure out just what to do to stimulate sales.

By now, nobody thinks we are simply going through a slow period, and sales will rise as the economy continues to grow, even though it is at a slow pace.

For starters, jewelry will continue to be an important expression of love, status, and achievement for many years to come.  But is not alone in satisfying those psychic needs, and the competition is growing.

We read a great deal of commentary on what needs to be done, most of it focused on much better marketing, creating experiential environments, wooing millennials, and becoming far more innovative and creative in merchandising.  I think that those thoughts are not new, but seem so because the tools for implementing all of that have changed and expanded so radically.  These are, after all, the basic aspects for all successful retailing.

I think it takes a macro view to begin to grasp the size of this storm.  For a change, a look at the forest instead of individual trees.

Society and economics are not just different from where we were a decade ago.  It is profoundly changing and the old formats are dying, never to come back.  We recall wholesalers, catalog showrooms, cataloguers (think Wards, and now Sears and Penney as they fade), discounters (too many to count), department stores (the entire format has collapsed into a few operations), and discounters (two or three now beyond Walmart and Target).  And, of course, mall jewelers, who disappeared by the dozens.

Was this a healthy consolidation?  Maybe for some retail categories, but in jewelry it resulted in a homogenization of most of the market, one that runs counter to the very heart of what jewelry is really all about.  And that is wonderful, innovative variety and personalization.

How did this happen?  And what does it say about where we are today?

Without going into an economic treatise (not my specialty anyway), here are some mile markers:

  • After World War II, the US owned the world.  Not only was it the biggest economy, but the rest of the world was a shambles.  Business boomed for us, and the middle class rose with a vengeance - something we believed would never end.  A chicken in every pot, two cars in every garage.
  • With that came rapid development of infrastructure.  The interstate highway system, air conditioning, and an acquisitive, newly moneyed public led to 25 years of rapid growth.  Main Street yielded to the mall.  Sleepy parts of the country boomed.
  • By the early 90s, it started to dawn on people that we were stalling, though the Y2K phenomenon masked what was happening.  Wages stalled as the rest of the world fully rebuilt and began to compete with our domestic manufacturing.  Big business built factories overseas, the only way they could compete in the world market, and that led to satisfying our domestic demands as well.
  • The American middle class started to collapse.  Millions of jobs disappeared as automation and foreign manufacturing became the major solutions for lowering costs and raising productivity.  (Jewelry is the best example for us.  It only took a few years for American jewelry manufacturing to largely evaporate.  Today, most American based manufacturing is at the high end, or in commoditized products.)
  • By 2006, the last of the malls was built in the US.  Now, over 50% of those built during the boom are closed or converted to other uses.  The only truly viable ones are the top luxury malls.
  • The US had way overdone retail expansion, but added to the woes was sharply increased competition fostered by the Internet and social media, student debt that went from practically nothing to a trillion dollars in barely a decade, and, maybe most damning, a public that has turned to disposable or shared products (e.g., costume jewelry and Uber), a sense that they own enough "stuff", and a realization that relationships and experiences are more important anyway.
We are now at a moment in which the country's very spirit is being challenged.  The two benchmark moments of our day are the near catastrophic collapse of the economy in 2008, which shocked and frightened all of us, and the election of Donald Trump.  The economy has recovered, but it now seems a very good bet that growth will be slow and fragile.  And the fears of many people that the future is shaky has led in part to Trump's election.

In all industries, and certainly in the jewelry business, companies are heavily invested in established modus operandi.  They are fearful of restructuring and rethinking their businesses, and so many will sink.  We are already seeing the devastation in retail, but it is occurring throughout the value chain.

Two hurricanes have just shown that we still react well and together when facing major disasters.  The spirit of innovation and improving our lives is very much alive.  But the middle class will never be what it was, wage gaps will get bigger, and the costs of renewal and modernization will be huge.  Still, the transformation will occur whether we like it or not, and we could very well have a new boom in the US.

With such a New Age will come the need for people to seek reward, recognition and, as I started out saying, expressions of love.  We will still be here, but the landscape will be very different.


4 comments:

  1. Thank you as always for your thoughts and visions. Totally agree that our industry has had a major change and will continue to do so. There are no immediate panaceas for these times; I do know that much.

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  2. Ben, your post is such a great commentary. Thank you. This is an epoch changing time -- and history shows us it will not be easy. It never is. But I am heartened by small examples of designers, jewelry makers, and retailers who are riding on this new frontier and innovating successfully. It has ever been thus. And note that I said "who" not "that" -- the impersonal and big will (and are) struggling more. Innovation is coming from smaller enterprises, from what I can see. The most adept of the "bigs" will make it, of course, but I still mourn the great jewelry companies that faded at the time of the Great Depression (it was staggering to see when I was writing the history of the Twenty-Four Karat Club). But a whole new set of smaller companies rose from the ashes and became the bigger companies of the post-war era.

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    1. As ever, PJ, you put the right spin on it. I too am pleased and impressed when I see young people working hard to make their way in the jewelry business in spite of their awareness of what they need to confront. I too saw wholesale destruction (I did not have to read about it - I experienced it) that started with the oil embargo in the mid-70s, followed by insane inflation, the dropping of all import duties on diamonds, the manic run-up of gold and diamond prices and then the explosion of the biggest bubble ever.
      All of that damaged the established US jewelry business so badly that it never recovered the breadth of its former glory.
      Past glories are just that, past. And new epiphanies are very rare, as are truly talented jewelers. But it still happens.

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  3. Love Comes from diamonds like lab grown diamonds, lab created diamonds, man made diamonds etc. That's the perfect make jewelry. Thanks for post.

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