When the clock struck midnight on New Year's Eve, marking the start of a new year, many industry players surely heaved a huge sigh of relief. Goodbye, 2009.
The economic crisis challenged companies at all points along the pipeline, from mining companies to manufacturers to mall jewelers, Michelle Graff says in her article in National Jeweler.
Here's a look at the players who rolled with the punches in 2009, and those who got knocked out. We'll call them the leaders and the stragglers of the year.
Leader: Sterling Jewelers
Among the large jewelry chains that remain, Sterling Jewelers, U.S. operator of Jared the Galleria of Jewelry and Kay Jewelers, stood out from the rest.
So what helped Sterling - which posted a same-store sales increase of 7.6 percent during the critical holiday season after a drop of only 2.4 percent in U.S. same-store sales in the third-quarter 2009 - survive with so few recession-inflicted scars?
In a November earnings call, Terry Burman, head of Sterling parent company Signet Jewelers Ltd., detailed the company's competitive advantages: The gold-star list included excellent customer service, good real estate and superior merchandising.
Industry analyst Jeff Taraschi cites Sterling's development of differentiated product lines - particularly the "Open Hearts by Jane Seymour" Collection - as just one factor that helps the chain stand apart, giving mall shoppers and other consumers a reason to bypass competitors and steer into Sterling's stores instead.
It's a lesson from which anyone in the jewelry industry can learn.
"I think people that have done interesting things from a brand perspective clearly have helped themselves perform above their competitors," Taraschi says.
Straggler: Zale Corp.
Zale Corp., the largest chain jeweler in America in terms of store number, struggled for sales in 2009, and after a disappointing holiday season in which same-store sales slipped 12 percent, Zale Chief Executive Officer Neal Goldberg and several other top executives resigned. Reports surfaced that the chain was asking its suppliers to buy back inventory in exchange for cash.
The news came on top of other woes. In late October, the company announced it was being investigated by the Securities and Exchange Commission after twice delaying its fourth-quarter and fiscal-year financial reports due to past accounting problems. The company later ended up restating its financials for 2005 through third-quarter 2009. A few weeks later, shareholders slapped the chain with a class-action lawsuit, claiming it deliberately deceived investors.
In its late-October conference call, Goldberg said Zale's 2009 results reflected "the most difficult year in retailing in memory."
Leader: Resourceful retailers
While some retailers struggled through 2009, others had the financial wherewithal to scoop up customers left behind by faltering competitors.
One jeweler, Scot Congress, bought back his family business from its new owner, who had filed for bankruptcy.
After the bankrupt company, Finlay Enterprises, started liquidating its jewelry store holdings, Congress emerged from the wreckage to open S. Congress Jewelers, and buy back the original Congress Jewelers store in Sanibel Island, Fla., at the November auction of Finlay's remaining assets, which included the entire chain.
"Most people think I am nuts," Congress says.
But in the end, he just couldn't let the business go, he says.
Berkshire Hathaway-owned Ben Bridge Jeweler and Helzberg Diamond Shops paid $310,000 for the customer lists of Carlyle and Co. and Bailey Banks and Biddle, while Murphy Jewelers, Fink's Jewelers, Govberg Jewelers and Hamilton Jewelers Insignia and Corporate Gifts similarly feasted on Finlay's remains.
Meanwhile, Robbins Bros.' woes afforded Spence Diamonds, which operates eight stores in Canada, the opportunity to enter the U.S. market.
Spence Diamonds CEO Sean Jones says its three Houston-area stores feature front-opening showcases containing semi-mount prototypes set with cubic zirconia.
Customers are free to try on as many models as they like without assistance and then choose a real diamond from a selection of loose stones.
Once they find what they like, Spence makes the ring to order in a nearby studio.
Jones says the chain is looking at opportunities to expand into the Dallas and Austin, Texas, markets.
"The three stores in Houston will certainly keep us busy, but we do plan to grow in the coming year," he says.
Straggler: Chains that lacked liquidity
Retailers that didn't have much cash on hand as they headed into 2009 found it difficult to survive, as beleaguered banks tightened up lines of credit and fewer consumers bought fine jewelry.
Anyone who read through the thick bankruptcy files of 2009 found a common theme among those jewelry retailers that found themselves in bankruptcy court: lack of liquidity.
Finlay Enterprises filed for Chapter 11 bankruptcy protection in August and soon after began going-out-of-business sales at all of its 106 stand-alone stores, which included Bailey Banks and Biddle, Carlyle and Co. and Congress Jewelers.
The aforementioned Robbins Bros., a 16-store chain, filed for Chapter 11 in March and was broken up into two parts. It bought back its own California stores and sold its three Houston stores to Vancouver, British Columbia-based Spence Diamonds.
Shane Co., with 20 stores, headed to bankruptcy court in January 2009. As of mid-December, however, the chain continued to do business with all 20 stores intact.
"Through and including November, we have met or exceeded our budgets and forecasts all year and anticipate filing our plan of emergence [from bankruptcy] in early 2010," Shane Co. CEO Tom Shane told National Jeweler via e-mail.
The 20-store Fortunoff chain filed for bankruptcy in February.
Its original owners, the Fortunoff and Mayrock families, bought back the Fortunoff name at auction after all the stores were liquidated.
Leader: "Virtual" jewelry
Tired of trying to guess what customers might like, and then being saddled with non-selling inventory when designs don't delight? Try stocking computer-generated jewelry.
In August, Stuller's consumer-facing iPhone application went live. Users design an engagement ring right on their phone, take a picture of their hand and then "try it on" without even putting the phone down. The "app" includes a "find-a-jeweler" function, leading users to the nearest dealer of Stuller's branded Red Box Diamonds. And the company didn't stop there.
In October, Stuller, in conjunction with CAD/CAM company Gemvision, launched its CounterSketch Studio (CSS), a three-dimensional jewelry design program created for retailer use only.
It allows retailers to sit down with customers to create exactly the ring they want (the program eventually will be expanded to include necklace and earring design), even trying it on a virtual hand at the end.
Stuller then manufacturers the desired piece, a system preferable to gambling big bucks on inventory, says Kerry Hand, Stuller marketing director.
"You can't do business that way anymore," he says.
Another company upping the ante on virtual jewelry is Paragon Lake, which offers a Virtual Display Case, where designs are created on the computer screen right before the user's eyes.
College student Matt Lauzon created the company in 2006 after his friend - surprise, surprise - found the jewelry shopping experience to be intimidating and overwhelming.
Straggler: Memo
Memo, particularly long-term and/or high-volume memos, was a hot topic for the jewelry industry in 2009, sparking much debate.
A number of suppliers got burned when retailers holding large amounts of memo goods filed for bankruptcy and the memo merchandise was used to pay back the bank.
Industry veteran Martin Rapaport urged diamantaires to "just say no" to memo at his annual address during the Las Vegas jewelry shows, and the Jewelers Vigilance Committee held numerous forums on how companies can do business on memo without going broke.
Perhaps the future industry leaders will be those who have found ways to run their businesses without relying completely on stocked showcases.
Companies like Stuller and Paragon Lake are showing the way to a virtual tomorrow.
And Spence Diamonds, which did well enough expand into the U.S. market in 2009, employs a system where the ring isn't made until somebody wants it.
CEO Jones says it's a strategy that frees the chain from costly inventory missteps.
"With our system, one of the biggest challenges in costs to traditional retailing is totally eliminated," he says.
