Thursday, September 8, 2011

Good business, and not

A late summer respite does a lot for clearing one's mind. August was that for me and I have returned refreshed ...and confused. Earthquake, hurricane (returned during that) and a public malaise that runs deep and wide. Still, while public confidence has plummeted, many luxury marketers report strong sales increases.

Is there hope? I would cautiously venture a yes.  Of course, it depends on where one sits. 

We think of the jewelry world as having somewhat different rules than the rest of the fashion and gift world, but it isn't so.  I recently attended the monster gift show at the Javits Center and saw the same range of winners and sufferers that we see at jewelry shows.  I was concentrating on visiting jewelry companies, but took some time to see what other vendors were doing.  As in jewelry, the busy booths had products that were immediately of interest, tended towards much better quality, and were well-packaged and presented.  As would be expected of a show this size, there were many booths with cheaply made goods, and those tended to be quiet.  The buyers present (and there were thousands) were searching for innovation and lasting value.  In jewelry, it was the same story.

A conversation this week with a leading independent jeweler, while anecdotal, confirms a feeling we have heard expressed over the last weeks.  Yes, the public is uncertain about the economy.  The stock market is wildly volatile, and large companies are still cutting jobs.  But this retailer had the best June and July in their history, and August looks to be the same.  Why?  The difference, according to him, is that his clientele is affluent, and no longer suffers from the shocks of 2008 and 2009.  They are buying for occasions, not impulsively, but they are spending.

To use an old real estate cliche, the three most important things to consider are location, location and location.  In jewelry, that has become particularly important, though long history, consistent marketing, good merchandising and great service all have to be there too.  This retailer agrees with all of that.  But, in his words, "I here a lot of grumbling in the business, about how bad it is.  Today, if you are not established in an affluent community, you are in trouble."

Very true, though this is not a new trend, but one made far more prominent by the economic strains we feel - never mind the surge in gold, diamond and gem stone prices. It is well documented that middle class wages have been treading water since the mid-70's.  Employers have seen a growing labor pool as consolidation, out-sourcing, automation, and rapidly advancing technologies have steadily reduced the need for employees.  New, high tech companies do not need many employees, nowhere near the hundreds of thousands that used to be employed in large manufacturing businesses.  That means that most wage-earners have little bargaining power.

I am not an economist, but it does not take a graduate degree to understand that the rich are getting richer, and a large portion of the population is getting short shrift.  This is a large problem that will take years to solve, even with the best efforts of politicians (anyone care to count on that?).  In the meantime, high material prices and limited buying power will cause the mid-market difficulties for years.  The business will be evermore with the affluent, and at the bottom of the price range. 

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