Last fall, recession-wary Americans more concerned about basics than bling began to lose interest in diamonds and other jewelry, and now the sales slump is reverberating around the world, Washington Post and Courant write in a joint article.
Retailers are taking a big hit. Tiffany reported in late March that its profit dropped more than 75 percent in the fourth quarter.
Bernie Fields Jewelers in Westbrook — one of the oldest retail jewelry stores in the state — has announced it is shutting down at the end of the month. Christian Bernard Jewelers, a national chain, has already shuttered, closing its Connecticut stores at Stamford Town Center and at Westfarms mall in West Hartford/Farmington.
They are among more than 1,000 jewelers across the country to go out of business in the past year.
Until business picks up, many retailers are trying to make do by tapping into growth from another recession-related phenomenon: Customers, taking advantage of rising gold prices, are selling their used jewelry.
"We don't usually advertise buying," said Antonino Panebianco, owner of Glastonbury Jewelers. "But I took out my first ad yesterday. People are dumping a lot of gold due to the fact that they are a little more needy at this time. It's a guaranteed profit. You might as well take advantage of it."
Risa Becker, vice president and co-owner of Becker's Diamonds & Fine Jewelry in West Hartford, said sales of engagement and wedding rings are strong.
And in spite of the recession, there are still events that have to be celebrated such as anniversaries and birthdays, Becker said. "In some cases there has been a shift. Instead of spending $10,000 on a 25th anniversary, they're spending $5,000," Becker said. But these events "are not being overlooked."
But there's no denying that jewelry sales are down anywhere from 15 to 30 percent nationwide this year, said John Green, chairman of Jewelers of America and chief executive of Lux Bond & Green in West Hartford.
"Between the banking industry and tightening of credit, business is not as good as it was a year ago," Green said.
And customers who are planning a purchase are asking more questions before they commit to a sale, Green said. "They want to know where it's made, how it's made. And if something breaks will you take care of it?" Most important, he said, with so many chains going bankrupt "customers want to know if the store is going to be around."
Americans buy nearly half the world's polished diamonds, and when they pull back, it's noticed.
The market for jewelry slowed in September, when credit markets tightened after the collapse of Lehman Brothers and American International Group. Sales show little sign of recovery, even through the typically bustling Christmas season and Valentine's Day. And there are no signs of a resurgence anytime soon.
Jewelry "sales were down 10 to 20 percent last year — I can't imagine they won't be again this year," said Dione Kenyon, president of the Jewelers Board of Trade, a credit-reporting agency for the industry. "I hear people say, 'Oh, things will [improve] and go back to the old days.' You don't go back to the old days — there is a new order."
The jewelry market plunge has had worldwide affects. In India, drought-ravaged villagers who found salvation in the diamond-polishing factories of Gujarat have been let go in recent weeks, and thousands are migrating home. About 60 percent of diamonds cut and polished in the western Indian state of Gujarat are sold to the United States, and the region accounts for about 72 percent of the international processed-diamond industry.
In Botswana, Debswana Diamond, a joint partnership between De Beers and the federal government, last month imposed a 50-day "pause" on production there, temporarily closing three mines until mid-April. A fourth mine will remain shuttered indefinitely. The company produces 22 percent of the world's diamonds. Botswana depends on diamonds for more than 30 percent of its economy.
When workers lose their jobs in India's polishing plants or are furloughed from Botswana's diamond mines, the consequences ripple outward. Even the world's wealthiest are feeling the effects. In a recent television interview, Warren Buffett reported that his Dairy Queen holdings were fine, unlike his jewelry interests, which "just get killed."
Sales of luxury goods, everything from apparel to jewelry and leather goods, could plunge globally by 10 percent this year to about $201 billion, according to a new estimate. Sales of jewelry and watches are forecast to fall by 12 percent, while sales of high-end shoes and other leather goods are expected to fall by 10 percent, Wall Street Journal says.
The forecast, to be released by consultants Bain & Co., widens the decline that Bain forecasted just five months ago. In October 2008, it predicted a 7 percent worldwide sales drop, citing the economic downturn.
Bain now expects that luxury-goods sales will drop as much as 20 percent in the first two quarters of this year before stabilizing in the second half. Claudia D'Arpizio, a Bain retail consultant based in Milan, said luxury shoppers are switching to lower-priced items from their favorite brands. "The situation now is a little bit worse than what we thought it would be back in October," she said.
Bain produces one of the few market forecasts on luxury goods. The latest revision lowered its estimate for 2008 sales. The U.S., which accounts for roughly one-third of luxury-goods sales, is one of the worst-hit markets. Bain expects that U.S. sales of high-end clothing, accessories, tableware, cosmetics and jewelry will drop by 15 percent this year. That compares with expected sales declines of about 10 percent in both Europe and Japan.
Despite the expected steep declines in sales in the U.S., Europe and Japan, which together account for more than 80 percent of worldwide luxury goods sales, there are some smaller markets that are showing promise. Bain expects sales of luxury items to rise 7 percent in China and 2 percent in the Middle East this year.
