Diamond margins are…where? Don't ask diamond dealers: "For the first time in company history, we skipped a six to eight week buying cycle," says Eric Mor of Abe Mor Diamond Cutters in New York. David Levine of William Levine Fine Jewels, Chicago, says he "couldn't paint a gloomier picture. It's like two days after 9/11, six months later."
Or upscale retailers: "Our first down year in three decades," says Jack Hartger, of Wyckoff, New Jersey's Hartgers Jewelers. "Margins are super-close, and we're throwing mountings in at cost."
Or the small town mom and pop: "I wish I could see light at the end of the tunnel," says Virginia Paterson of James Locke Jewelers, 54-year-old mainstay of East Liverpool, Ohio. Paterson is booking the store ads for the first time in 10 years, after letting go of the associate who'd handled it. "For a store that never discounts," she says, "it's hard to see sunshine in negotiating six billboards for $350 per month total, rather than standard signs at $450 each, or trimming newspaper ads to two columns to get costs to $120 per week."
Or the specialty and custom shops: "December was a disaster," says Craig Slavens of Appleton, Wisconsin's Earth Resources, who'll often weave fancy colors into one-of-a-kinds. "People say diamond prices are down, but if a pink goes from $60,000 to $50,000 a carat that's no answer."
And what is? "The only way through," says Slavens, "is to play to your strengths, keep an open mind, and remind yourself why you're in the game. Then, one Tuesday, in comes a customer for a mokume gane ring, $25,000 with nary a stone in it."
ADAPTING TO THE NEW REALITY
"We've found a path going back to things we hadn't done for awhile," says Paul Cassarino of retailer The Gem Lab in Rochester, New York, which adapted its way up 20 percent in the first quarter by no longer relying on new sales. "Repairs and custom work--$500 jobs that keep seven jewelers working six days a week. With metals up and people going green with old gold. Rather than buying the rings people everywhere are bringing in, we'll reuse it in new pieces. A man in for a $50 repair had a handful of broken earrings. I offered $70 or a $100 store credit. A second customer saw the transaction, and came back in with a sandwich bag with $6,000 of 1980s jewelry."
A fine make specialist, Cassarino has also found a path to profitability in dull round brilliants in over the counter. "This week, I got back 24 stones from my recutter," he says. "What was a carater is now a three-grainer but also an ideal cut. In a down market, that's an ideal engagement ring stone."
Cassarino also points to his location in a corporate town. Jewelers in university towns are also thankful. "I see it at jeweler association meetings," says Tom Light of Lights Jewelers in Hattiesburg, Mississippi. "My colleagues on the Gulf Coast, where condo prices are plummeting, are reeling. Christmas was hard for me: Jewelry--even with the kind of custom work we specialize in--is all about stock, and a down season is hard to stock for. But Valentine's Day was great. Largely engagement rings, but also because you adjust, and learn to make sales when foot traffic is down."
"Someone's having hard times? Sorry to hear it," jokes Ronnie Ware of Ware Jewelers in college town Auburn, Alabama. Sales were down, but beat expected shortfalls by 50 percent, largely from big ticket sales to alumni as far-flung as Los Angeles. "In a recession," he says, "it's nice for a small town southern jeweler to be pricing up against Graff."
Ware sees a close connection to those sales and his other sweet spot, engagement centers, and a possible way through hard times. He'd made those clients through the engagement ring sale: "Engagements are always big in a college town, but when you make a new friend in times like these? That's going to last forever."
I FOREVER DO, FOR NOW
Ira Kramer of Rockville, Maryland's Diamond Exchange had his best year in a decade after the veteran transitioned himself into a diamond engagement ring specialist. "And that's with diamond studs and bracelets down 35 percent in December. Maybe it's time to regard Valentine's Day to May 31 as the season? It does die off during the summer, but with kids doing research on-line, they're often pulling the trigger earlier, so October and November can be big too."