The jewelry industry has experienced significant ups and downs in recent years, leaving retailers uncertain about what lies ahead and how best to manage their inventory. Recently, AIDI International Intelligent Diamond Association engaged in email communications with some of America's leading jewelers to discuss post-pandemic retail inventory challenges.
Denise Richards, Operations Manager at Underwood Jewelers, which operates three stores in Northeast Florida, remarked, "It took us a year and a half to two years to get the inventory we wanted. It was quite a struggle, and for a while, our inventory was very low." Andrea Hill, CEO of Hill Management Group in Chicago, noted that "after the pandemic, everyone did a great job of digesting their inventory."
Is the U.S. Jewelry Retail Market Returning to Pre-Pandemic Norms?
Industry experts suggest that the situation today is quite the opposite. "We are indeed seeing people's buying habits return to pre-pandemic levels," said Abe Sherman, CEO of Buyer Intelligence Group (BIG) in Napa, California.
Consumers are no longer as eager to purchase items as they were a few years ago. High inflation and economic uncertainty have dampened the spending enthusiasm of price-sensitive shoppers, with the upcoming presidential election further exacerbating this uncertainty.
"The reality now is that the market environment is tough, and people have to be extra cautious," said Paul Schneider, co-owner of Twist, which has stores in Portland, Oregon, and Seattle. Richards added that Underwood plans to host a lighter-than-usual showcase season at its Florida stores.
In an uncertain economic climate, many jewelry retailers are not only facing sluggish sales but also grappling with excess inventory. Industry analyst Paul Zimnisky told JCK, "I think a lot of U.S. trade is stuck with excess inventory. It seems many companies are still struggling to offload their stock." He attributed this to aggressive buying when supply chain bottlenecks eased early last year, coupled with consumers shifting their spending from goods to experiences as the pandemic's impact waned.
Hill noted that the rush to replenish inventory reflects a fundamental misunderstanding among many retailers about the content of their display cases and safes. "As an industry, people always tend to view inventory as an asset," she said. However, investing too much cash in inventory can stifle your cash flow and limit your ability to respond quickly to market changes.
Non-Traditional Gemstones: The Next Big Thing?
Retailers looking to navigate today's challenging jewelry market and smartly manage inventory to reflect customer demand have noticed a growing popularity of non-traditional gemstones, especially lower-priced ones.
"Shoppers love color and they love gemstones, so more retailers are beginning to offer colored gemstones," Hill said. "It's a good thing. It makes the gemstone mix more interesting." Zimnisky added that the increased sales of lower-priced jewelry reflect the demand for alternative colored gemstones.
Hill pointed out that consumers don't always distinguish between precious and semi-precious gemstones the way retailers do—some retailers report unexpected demand for unusual gems.
Harris Botnick, co-owner of Worthmore Jewelers, said, "Our moss agate just sold out." Worthmore has stores in Atlanta and Decatur, Georgia. He added, "We're also selling a variety of colored gemstones, including engagement rings."
"The internet has cultivated this cool, trendy look. Sometimes people don't even know what it is—they just think it's cool," said Kimberly Collins, founder of Kimberly Collins Colored Gems in Reno, Nevada.
Julie Collins, Vice President of Sales at Day's Jewelers, which has eight stores in Maine, said the store is responding to the demand for colored gemstones by "diving deep into price points." She said Day's has started sourcing more bulk gemstones and working directly with designers to achieve the quality they want at the prices they need. She added that tourmaline, Maine's state gemstone, is particularly popular. "It really gives us a great variety to work with because it's mined here in Maine."
The Wealth Effect Drives High-End Demand
While the trend towards alternative colored gemstones and the increase in lower-priced jewelry sales provide profitable opportunities, savvy store owners and buyers will continue to cater to consumers willing to invest in high-end jewelry. Some pandemic-era purchasing habits appear to have taken root, particularly among affluent consumers. While discretionary spending on travel and other experiential purchases has rebounded, many retailers say they still find customers willing to spend more on jewelry.
"During the pandemic, a lot of people started indulging in self-purchases," Botnick said. "I really feel like that's deeply ingrained in people's minds now—retail therapy has become a part of their lives."
Some speculate that today's willingness to spend is the result of wealth created by migration patterns. The migration pattern refers to high-income, remote workers relocating to areas with lower living costs. White-collar knowledge workers who continue to work from home also have more discretionary income, as they no longer need to pay for commuting, work attire, and takeout lunches.
"COVID brought in some new wealth, and these people have discretionary income," Collins said.
The key is recognizing that such customers could be your customers. "I think a lot of stores, maybe designers as well, just assume that customers aren't interested in something at a certain price point," Schneider said. These assumptions lead store owners to overlook potential sales opportunities.
Sherman agreed. "There are opportunities up and down the pricing ladder in most stores—not just in entry-level items, but sometimes in higher-end items as well."
Sherman noted that now is an ideal time to realign inventory strategies around market-driven data analysis. He said that a deep understanding of customer behavior in specific markets would enable you to meet the needs of existing customers while also providing insights into potential markets and untapped customer segments.
"Most people's idea of inventory management is to reorder bestsellers," Sherman said, adding that this approach is shortsighted. "Unless they plan by supplier, category, and price point, they're missing out on opportunities."
For more information and to continue the discussion, feel free to contact us at info@aidi.org.