“People will always find a reason for bad business,” says Deborah Nicodemus, chief executive of high-fashion ecommerce business Moda Operandi. Some in the industry are blaming political uncertainty, others economic drag. But as the trade fairs of Las Vegas Jewellery Week get under way, designers and retailers are reflecting on the poor performance of traditional retail and conceding that there is a need to innovate and diversify.
Las Vegas Jewellery Week includes the JCK trade fair, which organisers expect to attract 30,000 (June 5-8); the Couture Show, a higher-end fair (June 2-6); and the Las Vegas Antique Jewelry and Watch Show (June 5-8).
There is no doubt that business could be better. Although US jewellery sales grew 2.5 per cent in 2016 to $61.8bn, according to Euromonitor, this compares with an average growth of 7.5 per cent across the world’s top 10 markets. The Jewelers Board of Trade (JBT) reports that, in 2016, 1,564 retail jewellers, wholesalers and manufacturers closed down in north America, a rise of 64 per cent on 2015’s 956.
This in part reflects a growing segment of customers willing to buy jewellery online or who reject old-fashioned retail. “We’re seeing many owners of the traditional independent family jewellers choosing to quietly liquidate their businesses and retire,” rather than pass them on to the next generation, says Anthony Capuano, president of the JBT.
The news from department store chains has been poor, with Macy’s, Nordstrom and JC Penney all reporting falls in sales in the first quarter. In March, retail giant Signet Jewelers, which owns Kay Jewelers and Zales, became the S&P 500’s worst performer so far this year. It blamed poor mall traffic, ecommerce problems and flat sales across the industry over the critical Christmas period.
Ms Nicodemus says companies need to find an advantage in the market or try something radical. Moda Operandi reckons that its customers value exclusive access to high fashion and fine jewellery before it hits the stores, so its strategy is now to give first dibs on jewellery collections being unveiled at the Couture Show to its clients.
“We want to make it exciting for the returning visitor,” says Ms Nicodemus who adds that returning customers spend on average 44 per cent more on their next purchase. The company’s fine jewellery sales have increased 170 per cent in the year to date so far, compared with 2016, she says.
Online, we sell a big piece every month, over $30,000
Mark Emanuel, co-owner of jewellers David Webb, says it is exhibiting at the Couture Show for the first time to engage with independent US retailers, having focused previously on relationships with department stores: “We hope these stores can help us reach customers in many parts of the country that Neiman Marcus and Saks can’t reach.”
While the company has experimented with ecommerce for its lower-price Tool Chest collection (from $2,600), Mr Emanuel believes that online technology still lacks the sophistication to sell higher-end products, at $50,000 and above. He recognises that emerging technologies like virtual reality will make selling online easier, but “for now we are committed to more traditional ways of retailing.”
Ms Nicodemus disagrees: Moda Operandi’s no-returns policy has not deterred customers from buying expensive pieces. A recent sale included a pair of $80,000 Martin Katz diamond and ruby tassel earrings.
Jay Hartington of Marissa Collections in Florida says lower-price jewellery may represent the bulk of his store’s online sales but “we sell a big piece every month, something over $30,000.” Since the multi-brand fashion boutique started selling fine jewellery eight years ago, the category has grown to more than 50 per cent of revenue.
One area of growth lately is what Mr Hartington describes as “more fashion-driven jewellery”, priced under $2,000, by brands such as Dana Rebecca and Shay Jewelry. The store initially invested in this category believing it would work well for ecommerce but customers in-store also responded. One recently came in and bought 20 $800 necklaces as office gifts.
Sally Morrison, director of sales and marketing in the Americas for miner Gemfields, says experience, a current luxury watchword, is key. She believes the industry still has a long way to go in giving customers, particularly young ones, a memorable experience when shopping. “There’s not a Sephora [a lively make-up chain] for jewellery yet,” she says. “There’s not a place where people can go and play.”
As well as a continued collaboration with Muse, a showroom in New York representing independent designers, and a new luxury collection with former Tiffany designer Maria Canale, Gemfields comes to Las Vegas to broaden sales of its smaller, accessibly-priced coloured gemstones. Ms Morrison points to fashion fine jewellery brands like Wwake and Zoë Chicco, “whose smaller-scale jewellery resonates with younger consumers, in a combination of both aesthetic and price point”, she says. “We want to be a part of that.”
Some designers are taking the opposite approach. Fernando Jorge returns to the Couture Show for the fifth year with his first diamond collection, priced at $10,000 to $100,000, a higher range than his coloured gem collections. He has received strong pre-show interest from his US partners, which include higher-end departments stores like Barneys New York.
“People are buying high jewellery or very simple, low-priced fine jewellery,” he argues. “The middle ground seems to have plateaued.”
The recent results from middle-American department stores would support this theory, although consultancy McKinsey argued in late 2016 that “the luxury end of the [watches and jewellery] category suffered an especially hard blow” after a decade of growth.
As challenging as these times may be in US jewellery retail, it remains, says Euromonitor, the second strongest jewellery market after China, which grew by 9.6 per cent last year to $103bn.