Keeping the sparkle in the fine jewelry business

Hit by recession, Long Island jewelers promote services, and get creative

Jewelry is the sort of purchase that promises a certain poignancy, the gift that often holds its value and can hold an emotional meaning for generations to come. Yet, in this economy, it's a luxury many consumers have decided to forgo.

"Even with clothing, you still have to put something on, but for jewelry?" asked Deborah Cohn, an associate professor of marketing at Touro College Graduate School of Business. "It's not food. It's not clothing. It's not shelter. You can just do without it."

As the recession continues to pummel the big national and regional players in retail jewelry sales, many of Long Island's independent jewelers say their revenues also have taken a hit. To stay alive, Long Island jewelry shops say they've adopted an array of strategies, from emphasizing their restyling and resetting services and buying old jewelry to flying to their best clients' winter homes to stage jewelry shows.

"It's not like we're going to reinvent the wheel, but we are trying to do as much buying of old gold, diamonds and jewelry, whether estate or vintage, that we can resell in its present form and give people a better value because the costs to create it are less expensive," said Len Margolis, owner of Le Joaillier Fine Jewelry in Garden City and Locust Valley. "And we are stressing the repair business, because I think more than ever people are wanting to maintain the value of the jewelry they do have."

Not a pretty picture
On many fronts, the picture hasn't been pretty in the jewelry retail sector. In 2008, bankruptcies among retail jewelers and repairers jumped 21 percent from the previous year, according to the Jewelers Board of Trade, a Rhode Island-based credit reporting agency specializing in the jewelry industry.

Specialty jewelers, retailers devoted specifically to fine jewelry, account for 48 percent of the $64.7 billion U.S. jewelry market. The other half of jewelry sales are generated by multiline merchants such as Wal-Mart, Kohl's, Sears and others.

The holiday season -- when many jewelers record a significant portion of their annual revenues - was disappointing but not entirely unexpected, with sales for that period dropping 30 percent to 50 percent among the several local jewelers interviewed.

The big players like Zale Corp. and Finlay Enterprises Inc. reported large sales drops -- 19.6 percent and 23.7 percent, respectively - for November and December. And others, like Whitehall Jewelers Inc. and Christian Bernard, filed for bankruptcy and decided to liquidate their companies.

But many local jewelry shops say they have been able to hold their own so far.

Toni Lea Corwin and Timothy Corwin, a husband-and-wife team, are the fourth-generation owners of Corwin's Main Street Jewelers in Southampton. The shop has been in operation since 1879, and it's not unusual for their clients to approach them on the street or in another Southampton store with questions about jewelry, they say.

The Corwins, whose 2008 holiday sales were down about 30 percent, own the building where their shop is located, so they are able to keep their overhead costs down. And like other smaller jewelry retailers, they provide repair and restoration services, which help draw in foot traffic.

"Once you have the foot traffic established, while they are getting their ring sized or repaired, they see something they like, and then I get the sale," Toni Lea Corwin said.

Many jewelers said they adopted a more proactive style, using advertising, direct calls to longtime customers and their Web sites to make sales. At the same time, they have turned to highlighting some of their less expensive options, a necessary strategy in this economy, Cohn said.

Jewelers have to find a way to offer the gift "that says 'I love you' without breaking the bank," she added.

Spending less
Geoffrey Nance, 51, of Huntington is one of those jewelry customers who is spending less but is continuing to buy.

"When it's a special event, jewelry usually has a lot more meaning than buying a sweater or perfume," said Nance, who was in Maddy's Fine Jewelers in Syosset looking at bracelets as a seventh wedding anniversary present. ". . . And you'll have a much better chance of getting her something she will like."

Negotiating an 8 percent discount in his rent for six months helped lower expenses for Emanuel Sofiev, owner of Maddy's, but he also has geared his marketing toward the price-sensitive customer.

For the Christmas holidays and Valentine's Day, he sent out mailers to customers, promoting options such as resetting and restyling older jewelry to get a fresh look, or trading in their old gold and diamonds to offset the cost of a new piece of jewelry. He said he is able to keep expenses down because much of the labor is done in-house, and his family has a diamond wholesale business.

"They were able to get a fresh look with something modern without spending thousands," Sofiev said of his campaign.

Freedman Jewelers in Huntington has a factory and a service department that does jewelry and watch repairs for other jewelers, said owner Eric Freedman. Freedman also is a partner in a ruby and sapphire trading business and is involved in a Colombian emerald mining operation, he said, so he was able to make a good profit from selling the stones.

Even so, Freedman traveled out of the state to hold jewelry parties at his friends' winter homes in North Carolina and Palm Beach and Boca Raton, Fla., to keep his 2008 holiday sales consistent with the prior year's revenue.

"They had their girlfriends over like a Tupperware party, except this was the real deal," Freedman said. "We offered some good prices to buy there, and they did."