The Jewelry Industry and the New Era of Frugality

Lingering memories of the current recession are likely to feature gloomy statistics on job losses, bankruptcies, and foreclosures. Less memorable may be the passing of many family-run stores, including jewelry retailers, as consumers have turned frugality into an all-American virtue, bypassing local businesses in favor of big sales at malls, big sales at major discount chains, and big sales at Internet shopping venues. Indeed, jewelers, perceived by many as purveyors of luxury items, are more likely to pass away unnoticed than, say, independent bookstores, hardware stores, bakeries, or dress shops. Yet dozens of small jewelry outlets, most in downtown locations for decades and in cities big and small all over the U.S., have sold their stocks and vacated their premises as a result of the economic slump. Whether it is the loss of resources for discretionary spending, a sentiment that conspicuous consumption at this time is in poor taste, or shock at the steeply rising price for gold, an important component of fine jewelry, the steep decline in jewelry sales has had a profound impact on the industry. Of course, couples are still purchasing engagement rings, folks are still looking for keepsakes to commemorate anniversaries, and the wealthy are still seeking out investment vehicles, including expensive bling.

While a big chain like Zale's has recently closed many lower-performing outlets and Signet, operator of the Kay Jewelers and Jared chains, has struggled to improve quarterly sales figures, industry leaders like New York City-based Tiffany have navigated the inclement sales environment relatively smoothly. Expansion in China in the next few years is on the drawing board for the Fifth-Avenue legend; and new outlets have recently welcomed gem and precious-metals admirers in Amsterdam, London, Las Vegas, and even Roseville, California. Tennis star Maria Sharapova's appearances wearing earrings available exclusively from Tiffany have certainly helped maintain the glamorous aura of the brand. Italy's Bulgari, with boutiques in Beverly Hills, Las Vegas, and San Francisco, has also seen an improvement in prospects, especially with profits from operations in Asia. Interestingly, sales in Japan for both Tiffany and Bulgari, as well as other luxury retailers like Cartier and Van Cleef & Arpels, have taken a turn for the worse as consumers in that country, hit hard by the recession, adopt thriftier lifestyles or at least sharply cut back on discretionary purchases. Conversely, jewelry sales in India, especially items featuring diamonds, have never been better.

The diamond industry, dominated by De Beers in African countries and Alrosa in Russia, has curtailed mining operations or has begun stockpiling rough gems due to the slowing of demand, particularly in the U.S., currently the world's biggest market for bling, but also in Europe. Even gem grading labs have laid off workers, merged with similar operations, or simply shut down. The gold industry is in an entirely different position, what with nations like India buying bullion from the IMF and individual investors seeking out gold bars and coins at Harrod's. Lately, prices for gold jewelry have skyrocketed, leading shoppers to consider cheaper metals like silver or titanium when looking at engagement rings and other pretty trinkets. People have even begun rifling through old jewelry chests to find gold items to sell at the remaining local jewelry stores.

Remarkable in this global situation is the decision by Faberge, the famous Russian jewel-maker noted for creating fabulous, gem-encrusted eggs prior to the 1917 revolution, a decision to relaunch the brand as a producer of fine luxury items, such as the black tulip ring, eglantine earrings, or charmeuse bangle displayed on its new website. Though there will be a store in Geneva, the company plans to handle most of its merchandising via its IBM-designed Internet portal.

While everything Faberge may be tasteful and elegant, taste is not necessarily a hallmark of fine jewelry. For evidence of this, check out the holiday or online catalog for Victoria's Secret for a glimpse of a gold-and-diamond embellished bra, one with an astronomical price tag and dubbed the "Harlequin Fantasy Bra." For a more subdued display, there's the newly mounted, 50th-anniversary exhibition of the Hope Diamond at the Smithsonian. This lovely, blue-colored stone is being shown alone, not in a typical jeweler's setting, for the first time.

"Fabergé Relaunches after More Than 90 Years", Al Bawaba News
Nelson D. Schwartz, "Inside the Global Gold Frenzy", New York Times
Michelle Graff, "After tough year, gem labs scout for business", National Jeweler