Professional Jeweler Archive: Jewelry Sales Remain Even in 2002

October 2003

Managing/Sales


Jewelry Sales Remain Even in 2002

Part 1 of our three-part report on the 2003 Cost of Doing Business Survey


The annual Cost of Doing Business Survey, produced by Jewelers of America and Professional Jeweler, shows that overall, JA members who completed the survey reported zero sales growth in 2002 for the second year in a row. This compares to a 3.3% increase in 2000 and a 10.5% increase in 1999.

Jewelers’ Sales by Store Type

Not all JA members are growing at the same rate. Changes in median sales ranged from -6.9% to +10.1% in 2002. Looking at types of jewelers studied, chains reported a median 6.1% sales increase and designer/artist/custom jewelers a 9.1% increase. It’s worth noting that designer jewelers’ sales fell 12.5% in 2001, which should be considered in light of their dramatic rise in 2002. Chains were up 3.2% in 2001, which makes their 6.1% rise in 2002 an even better gain. In fact chains were the only category to experience sales growth in 2001 and 2002.

Independent high-end jewelers reported a sales decline of 2.7%, an even bigger hit than the 0.3% decrease reported for 2001. Independent middle-range jewelers’ sales decreased 0.2% in 2002 and were even the year before.

Category Winners

Diamond jewelry and loose diamonds continue to represent the largest category of sales for JA member jewelers – nearly half of all sales – with diamond jewelry commanding 34% of sales and loose diamonds 13%.

For the second year in a row, a decline in watch sales stabilized, as they held onto 5% of sales in jewelry stores. Colored gemstone jewelry sales were constant at 9%. Karat gold jewelry sales fell from 11% of total sales in 2001 to 10% in 2002.

Profitability

Jewelers’ profitability slipped for the second year in a row, from a median 6.1% in 2001 to 4.2% in 2002. However, jewelers maintained higher gross margins than in previous years, keeping profitability from slipping even more. Chains achieved a median 52.6% gross margin and designers notched 57.6%. Independent high-end jewelers saw margins of 46.9%, while independent midrange stores reported 49.8% margins.

The Respondents

Response to the survey has been stable over the past several years – with this year’s being the fourth best ever. A broad cross-section of businesses from all over the country responded.

Locations

Downtown merchants represented the largest group of respondents at 36%, while strip malls constituted almost 33% of respondents. But given the number of stores chains have, the sample actually covers more mall stores than non-mall stores. Most respondents rent their locations; independents are most likely to have bought their stores.

Other Key Facts

A substantial 80.5% of JA member jewelers make their own jewelry, with a few making all the jewelry they sell. Median sales of “made” vs. “purchased” jewelry approximate 10%. Also worth noting: while jewelers went through a period of growth in the use of the Internet, that growth leveled off in 2002.

The Survey

The Jewelers of America/Professional Jeweler Cost of Doing Business Survey is published each fall and offers retail jewelers comprehensive financial information to help them evaluate and compare their store’s performance with others in the industry. The survey is used also by banks, accountants, consultants and marketers as a yearly snapshot of retail jewelry store performance.

The survey is based on confidential questionnaires submitted by hundreds of JA members. It looks at many key performance measures. The study’s format, scope and content are similar in each annual edition, making it easy to compare year-to-year data.

The 2003 Cost of Doing Business Survey, now in print, is available to JA member retailers for $19.95 and to non-members for $125. JA members who contribute to the survey by completing questionnaires receive one free copy. For information on participating in the next survey or ordering the current edition, call JA at (800) 223-0673 or visit www.jewelers.org. You also can order the survey on www. professionaljeweler.com or by using the order form on page 71 of this issue.

Copyright © 2003 by Bond Communications