The Future of the Jewelry Industry in 2016
5 Minute Read
Editor's Note: This following is an excerpt from Looking Ahead, which appeared in the December 2015 issue of MJSA Journal. To obtain a copy of the full article, contact MJSA at 1-800-444-6572 or via e-mail at firstname.lastname@example.org.
Industry leaders share their thoughts on where the industry is headed in the coming year
Planning for the future is never easy. It's expected to be even more difficult now that we're heading into an election year, a time when business tends to slow down as people wait to see what happens. We spoke with a variety of industry experts recently to get their take on where they think the industry will be heading in the coming year.
Overall, the expectation is that things will be continuing as is, at least for the foreseeable future: Although there will continue to be some consolidation, the industry should expect to continue to slowly grow. As you read through their forecasts, think about what you can do to line up your business for maximum success in the New Year.
- Next year is an election year, and consumers and the stock market tend to get conservative during the election cycle. These tend to be soft years, but there's usually a rebound after the election and things get back to business in time for Christmas.
- There's a lot of uncertainty about the holiday season as well as 2016 because it's an election year. People will be holding off on committing to huge financial investments, which could make things challenging for the manufacturing side of the business.
- I see a healthier consumer and U.S. economy, but I'm also seeing people being very cautious about spending. For many jewelry businesses, this September and October were quieter than a year ago. We seem to be in a pause that I foresee continuing into the coming year. I think there's an anticipation of an election year. Many people are holding off until they know about the next leader.
- Presidential election years are always interesting with the noise of the media and the candidates. I think the economy is slightly better overall; it is improving year over year. But Washington has a tendency to want it to look bad so [one] political party can blame the other. (Let's hope they don't make the economy worse!) We could have legislation put forward (tariffs, taxes, incentives, and more) that would help drive the economy (and consumer confidence) to improve, but it might get stalled within the chambers so each party can blame the other for hurting the economy.
- My feeling is that we're not going to see jewelry sales grow at a higher rate than our economy can grow. That rate is around 2 percent right now, and nobody is predicting that we're going to get out of that range going into next year. It's hard to see how fine jewelry is going to get above that level. But that doesn't mean some retailers won't do well. The ones taking market share will be the ones doing new things. They'll be the ones who understand the idea of experience versus product. Consumers want experiences, and the industry needs to stop thinking just about product.
- We keep a lot of statistics on the industry. Our latest stats show a continuing trend of consolidation in the industry. The contraction among both retailers and manufacturers is about 2.8 percent year-to-date. I think this trend is going to continue.
- The average retail store falls into one of three categories: The Dusties (this is where inventory is old, messaging is old, the sales pitch is old; everything is outdated and the owners either don't know how or have the desire to change), The Innovators (they're not perfect but they're always willing to try new things; they're involved in their communities, have events and younger, bilingual salespeople), and The Progressives (these stores know that brick-and-mortar stores are under threat and give as much attention to their online presence as they do their physical store; [they] tend to be brand-based). The Dusties will be gone before we know it. These stores have been closing in dribs and drabs over the past few years but I think it's going to start to snowball.
- I expect to see the closing of more stores. It's a contraction of jewelry retailing that's been going on for decades. It's due in part to consumers not buying like they used to. When I ask jewelry retailers about average ticket, it is down. It's not going to be a great Christmas, and there's no reason to believe that's going to change, especially coming into an election year. It's going to be a tough year next year; people just aren't going to be extravagant in how they spend their money. But there will always be businesses that will do well because they've positioned themselves in the market correctly.
- Pay attention to the industry's health as indicated by business growth and business failures. Typically, when an industry is shrinking, you want to look at lateral markets to go into. The number of jewelry specialty retailers has been shrinking. This doesn't mean that the dollars are necessarily down, it just means that the number of customers to sell to is fewer than before. The market continues to shrink every year, and companies need to start cultivating and thinking about other markets to sell to. We have an environment where everyone is fighting over the same resources. We're becoming cannibals. When your customer pool stops growing, look at other pools. Look at where consumers are buying their jewelry. Are they buying it at high-end boutiques? Bag shops? Looking at these types of lateral markets is going to be more important than it's ever been.
- I'm cautiously optimistic about the coming year. Strong companies that are well capitalized with great ideas will take business from others that aren't. I don't see the pie getting a lot bigger. Companies are going to have to fight for their share of it, and they do that by being good at what they do.
The award-winning Journal is published monthly by MJSA, the trade association for professional jewelry makers, designers, and related suppliers. It offers design ideas, fabrication and production techniques, bench tips, business and marketing insights, and trend and technology updates—the information crucial for business success. “More than other publications, MJSA Journal is oriented toward people like me: those trying to earn a living by designing and making jewelry,” says Jim Binnion of James Binnion Metal Arts.
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