Friday, July 12, 2019

The Future of Jewelry, Part 1: The Gig Economy

It is about a year since I last posted to this blog.  Have you noticed any changes in the jewelry market?  I have been preoccupied with planning a possible book about the state of the jewelry business in the US.  I have no publication date - possibly because it seems that everything is changing faster than I can handle!  In any case, if you are interested in knowing about such a book, please do just drop me a quick note and I will e-mail you if and when it arrives.

We all know that our world is profoundly changing and at a pace that keeps us breathless.  As we move into new paradigms, people and companies that are in the vanguard are leaving most of us further and further behind.  We are in a moment now where a majority of the population lives in resistance and confusion, seeking to maintain the patterns and infrastructure built over the past century or more, even as we see that mode of life collapsing in front of us.

We only need to imagine for a moment for example, just how we would build our cities, roads and airports today, were we able to start from scratch.  Our populations are now struggling with the problems of concentration in big cities, a failing and outdated infrastructure, an agricultural and manufacturing base that has seen radical transformations and a steep decline in the level and opportunities for employment.  All of it is compounded by growing serious problems in our climate, a level of problem that will demand sacrifices we can barely understand and properly foresee.

We cannot for even a moment think that somehow all this will bypass the jewelry business, and we will be able to merrily go our way.

These days, we spend a lot of time looking for good news.  Yes, the US economy seems to be continuing the long, bumpy, slow growth it has experienced since 2009, and yet there is uncertainty and anxiety prevalent in most of the country.  Consumerism, the hard core of our economy, seems to be rolling along, put it seems to be doing it by reaching levels of debt, both public and private, that has to give us great pause.  And some undercurrents of how people spend, and on what they buy, has changed in a way that does not seem cyclic.  It seems permanent and deepening.  In one recent analysis I saw on ranking the popularity of different product ranges, jewelry came out to be 58th out of 60 categories of products.  Why that is so, and how we got there is a question we have to ask.

The issues are complicated and it would not be for me to even try and take a full shot at it here.  But there are prevalent factors at work that we can see pretty clearly and are worth noting as we think about the future.

This is the first in a series of posts that will cover these issues.  Some of these are long term problems that will be difficult to resolve.  Others are positive factors that could help the jewelry business.  Our business is very fragmented and stratified, but there are core aspects that effect everybody in some way. It is critical that we adapt, at our own pace and in our own way, to how we are affected.

Here is a short list of trends that are changing the face of our future.  Some are global, some are specific to the jewelry business.  None of them (or others I will touch on) are static, dying or fully comprehended and managed.  All of them will, in relatively short periods of time, affect how we think, live, work and survive.
  1. The Gig Economy
  2. Millennials
  3. Climate change
  4. Consolidation and/or decline
  5. Natural diamonds vs lab grown
  6. Banking
  7. Image 
  8. Demographics
  9. Retail evolution
  10. Industry structure
  11. etc, etc, etc...
*  The Gig economy.  The unbundling of labor has been going on for many years.  Think of the auto industry, which once manufactured the bulk of components. Now, much work is contracted out all over world, and with that has come the undoing of labor power and progressive wages.  Contractors now dominate many businesses, offering the possibility of greater income if one possesses strong skills, but also contains the uncertainly of very irregular income.  That has made people very careful about how they spend money.  This trend will intensify in the years to come.

Some thoughts on how this directly affects the jewelry business.  In the US, we have to acknowledge that we have a very mature business.  Growth is slow (this year we have seen declines according to the US Department of Commerce), and we feel lucky to see it rise at low single percentages.  But both suppliers and retailers tell the same story - business is tough and is requiring us to work much harder to maintain volume.

While there are many reasons for all this (as I will try and enumerate in later posts) the Gig economy has a role.  Companies are not adding payroll.  They want flexibility that allows them to respond more easily to the vagaries of business, and they want to avoid the ancillary costs (such as health) that comes with full time employees.  As a result, many people see that their working lives will be one of a series of temporary employment as contractors.  Contractors quickly learn that irregular income means great care in how they spend.  And that, in turn leads to tempering the purchase of luxuries, both in quantity and price points.

I recently watched the Gig at work.  I was a mentor here in New York at a session run annually by WJA (the Women's Jewelry Association) aimed at young aspirants in the jewelry business.  In past years, the conversations would most often focus on what to expect in the employment world and how to best be prepared to enter a job search.  This year, almost everyone came in presuming that jobs will be near impossible to find.  Instead mentees came in with plans, some very advanced, on how to develop their own businesses or services.

The Gig economy will only grow.  The days of long term employment are ending, and with it will go the sense of lifetime financial security and pensions, an aspect of American employment that has significantly receded already.  There is little loyalty between employers and employees any more, though we have say that if there is any it can usually be found in small family businesses like those found in the jewelry business!  Too often, though, in those cases the benefits are thin, and there is little or no room to advance in a family business.

If you are in retail, you will need a compelling pitch to sell a Gig-er when they show up in your store.  And that applies in both the Internet store and brick and mortar store.

Nevertheless, as our industry contracts, as it continues to do, the future will will need to increasingly deal with the inherent income gaps - and insecurities - that are an integral part of the Gig economy.


The Diamond Guy said...

Well thought out Ben, (as usual). I agree that our industry is in a very peculiar and troublesome spot currently. Change is a dynamic principle that too few have control over and yet it is always inevitable. What these changes will be and how slow or quickly they appear is anyone's guess. So like that old boy scout motto, " be prepared".

Peggy Jo Donahue said...

Powerfully written, Ben, and so insightful. I find that the people I know who are in safe secure jobs (often in the public sector) really can't comprehend what's going on or why many people don't feel more optimistic about the future. This may be an issue for Baby Boomer owners of jewelry companies (retail and wholesale), too -- their income feels secure as they near the end of their careers -- but they cannot fathom how different reality is for their customers. Thus, it's hard to put into place changes to meet those challenges. Those newer entrants to our industry that seem to be doing well are either privately funded (usually by a wealthy family) -- or they are brilliant ones who have a great idea that hits younger gens squarely where they live. The industry today is in a phase that reminds me of the 1930s -- new innovations were being started, but it would take a while to see what would succeed. When I was writing the 24k club history -- a whole 1920s gen was swept away by the Great Depression ... by the late 1940s - it was clear that a new gen was on its way.