When Andrea Jones decided to buy a birthstone to mark the birth of her son, she didn’t make the decision lightly or with credit.
She saved.
Now that her son, Nicholas, is 3 months old, she’s ready to buy.
These days, the jewelry industry is a mixed market. Customers like Jones are buying more cautiously. On the other end of the spectrum, customers are more interested in selling jewelry, converting unused pieces into much-needed cash when gold is trading at or near record highs.
Buying scrap gold often has been seen as a task of the pawn shop jeweler, but Peggy Jo Donahue, spokeswoman for Jewelers of America said – given gold’s rising prices – more of the traditional, specialty jewelers are using the business to offset sales decreases.
Gold closed Wednesday at $977.70 an ounce. Compare that to the roughly $700 an ounce it was selling at about two years ago.
Gold’s rising price and the sour economy have lured enough cash-hungry customers through the door that some jewelers are saying, “No.”
Joel Clarke, whose two Jackson jewelry stores carry his name, said his stores have gotten too many small diamonds. Now he’s only buying diamonds that are at least three-quarters of a carat.
“As gold rose, so did the people coming in,” said Bill Mosley, owner of Bill’s Coin & Jewelry Exchange, whose business has seen so many customers trickling through the doors that he’s only buying things that are valued at $25 or more.
“It just takes so much time to write up a purchase order and we have to do police reports on on all purchases,” Mosley said.
Jerry Lake, owner of Carter Jewelers, hasn’t set up rules about what he won’t take, but he’s had to tell a few customers their jewelry is only worth scrap gold. He has delivered the bad news to those who seemed to need the money most.
“A lot of them tell me they need it to make their mortgage payment,” Lake said. “Some have been laid off from their job and they need it for living expenses.”
In the last three or four years, Lake has seen the number of customers wanting to sell jewelry increase from two or three a month to the current average of 10 to 20 a month.
Just as consumers have been hit by the economy, so have jewelers. Nationally, jewelry sales in all stores are expected to be down 4 percent, when final 2008 numbers are tallied, Donahue said. Among retailers who only sell jewelry, sales were down 16 percent alone in November, according to the latest figures available.
Mosley has seen a 35 to 40 percent dip in jewelry sales.
It’s not just a loss of shoppers. Single ticket sales are also down. While it may have been typical to see individual tickets total $800 to $900 as late as 2007, the numbers have been on the slide, now resting in the $200 to $300 range, Clarke said.
“Us being a luxury business, we felt it first and business went down, down, down,” Clarke said. “From ’07 forward, our sales dropped from 20 to 40 percent a month (when compared to the same time the previous year).”
Lake said during the holiday season, he sold just as many pieces as he had during the previous year, but the sales were for lower-priced items.
“When you get over $10,000 for a piece, (sales) slow down,” Lake said. “We haven’t been selling as many $10,000, $20,000, $30,000 items as before.”
To meet consumer demand, jewelers also are ordering more jewelry from lower price points, Donahue said.
Donahue said gold prices typically rise during a recession when investors move from stocks to commodities such as gold, ultimately driving prices north.
“The economy started going south around August of 2007,” Clarke said. “At the same time, gold went up. So we started buying it to offset our sales (decreases).”
The upside is those who bought a piece of jewelry at least 20 years ago may be getting what they paid for it when they sell it these days.
Despite the recession, Lake said the engagement ring business has been steady.
“An engagement ring is not a luxury,” Lake said. “It’s a necessity. Women expect a ring, and men want to give one.”
Unlike some in the metro area, Jones chuckles at the idea of selling her jewelry, but she has been uneasy about the economy and has compared prices at three or four jewelers.
“If nothing else comes up, this is where we’ll spend the money, unless we blow a tire,” Jones said with a smile as she shopped at Joel Clarke’s Tuesday morning.
Source: www.clarionledger.com
