Fashion designer Mark Montano featured pearls, including this necklace by Gumuchian Fils, at his Spring 2002 show.

Pearl's Retail Rank Skyrockets

By Suzanne Wade

Move over Big Three: You've got company.

One constant in retail jewelry sales over the past decade has been the supremacy of sapphire, ruby, and emerald. They've been topping the charts for as long as Colored Stone has been surveying retail jewelers on their jewelry sales, with the exception of 1999, when tanzanite nudged emerald out of the number-three slot.

The survey for 2001 saw a serious shake-up, however. While blue sapphire remained firmly rooted in the number-one position, pearl rocketed up from the number-nine position on the charts to number two, followed by tanzanite at number three. Ruby and emerald rounded out the top five, missing the number two and three slots by a thin margin.

This year's strong showing by gems outside the Big Three demonstrated convincingly that consumers are discovering that color comes in a rainbow of shades, not just blue, red, and green.

"Our customers seem to be more educated in what to look for in color and even more about the exotic stones," said John Desjardins, owner of Desjardins Jewelers in Rutland, Vermont. "Grape garnets, for example, have been very good for me, as has tanzanite."

"Our customers are coming in with a better knowledge of color," said Michael Haines, owner of The Diamond Shop in Lewiston, Idaho. "I've always been pro-color, and the neat thing is to try and sell the value of the tourmalines, the garnets, the gems that are not 'precious.' Garnets are my favorite because they're affordable, and you can get a large gem for a price that you couldn't do if it were sapphire or ruby."

Pearls of all types were more popular in 2001. Kimberlee Teti’s nature-inspired designs with 18K gold and white pearls.

Nowhere is that consumer awareness more evident than in the sudden surge in the popularity of pearls. A combination of widespread media exposure, a flood of new shapes and colors, and increasing affordability have sent pearls flying out of stores in the past year.

"Pearls have just been on fire," said Jim McCormick, a principal in McCormick Jewelers in Charleston, West Virginia. "There are just so many different things available on the market, with Chinese freshwater pearls and the larger, colored [salt water] pearls. . . . [In addition], prices are just tremendous: [The introduction of Chinese freshwater pearls is] making some larger pearls very affordable."

Customers are coming in and asking for pearls thanks to the gem's frequent appearances in the fashion media, said retailers. "Pearls are being shown everywhere," said Haines. "There has been a huge, continuing effort by designers and jewelry manufacturers to show something new and fun. You don't pick up a fashion magazine where you don't see South Sea and golden pearls."

Some of the new interest in pearls, tanzanite, and other gems may also reflect fashions finally making their way out of trend-conscious urban areas and into the rest of the country. "It seems as though what's popular in New York and San Francisco one year hits here about three years later," observed Kevin Castro, owner of Castro & Co. in Cedar City, Utah. "We've carried [pearl and tanzanite] all that time, but it's like [our customers] just woke up to it. I think that's typical in rural areas where people are not as fashion oriented."

Such growing consumer awareness of pearls helps explain why 16 percent of respondents cited pearls as the gem that increased the most in popularity this year. The sudden interest in pearls apparently caught retailers by surprise, however. No one mentioned pearls as a gem growing in popularity in 2000, while only 4 percent predicted pearl would increase in popularity in 2001.

Tanzanite continues to perform strongly as well, with 18 percent citing the gem as growing in popularity. "Most people, when you show them tanzanite, are struck by this beautiful, periwinkle-blue color," said Castro. "They've never seen it in any other gemstone, and they're quite smitten with it."

 

Top Ten Sellers
1999	2000	2001
Blue Sapphire	Blue Sapphire	Blue Sapphire
Ruby	Ruby	Pearl
Tanzanite	Emerald	Tanzanite
Emerald	Amethyst	Ruby
Pearl	Tanzanite	Emerald
Tourmaline	Tourmaline	Amethyst
Amethyst	Garnet	Green Tourmaline
Garnet	Fancy Sapphire	Rhodolite Garnet
Opal	Pearl	Fancy Sapphire & Pink Tourmaline (tie)
Blue Topaz	Blue Topaz	Blue Topaz

Economic Caution
Even before the events of September 11, retailers were starting to worry about a weakening economy. By the time Colored Stone's survey was completed at the end of September, the economy, along with the impending war on terrorism, had surfaced as one of the biggest problems facing the industry, with a lot of uncertainty as to how it would affect people's outlook.

Adding to retailers' economic concerns were consumers who were looking to spend less than they might have in the past. Almost a quarter of survey respondents reported customers were buying at lower price points than they had the previous year, up from 6 percent who reported a downward trend in 2000. Twenty-five percent reported customers buying at higher price points, compared to 54 percent in 2000, while half said that customers were buying at the same price levels.

Those shifts brought low-end price points of under $500 to the fore, with 28 percent reporting that price point as most popular in 2001, compared to just 18 percent in 2000. Most of the consumers who were buying in a lower price range were those who previously bought at prices of $500 to $1,999; the very high end remained stable.

With price points dipping, it comes as no surprise that 29 percent of retailers reported a decline in their colored stone sales in 2001, compared to just 16 percent who saw such drops in 2000. Colored stone jewelry fared better than overall store sales, though, which saw a 37 percent drop.

Still, not all the news was bad. Those with wealth continued to spend: There was virtually no change in the number of retailers reporting $2,000 and up as their most popular price point in 2001. And 30 percent of retailers saw their colored stone sales growing in 2001, while another 39 percent said they stayed the same.

Even in the wake of the terrorist attacks on September 11, some retailers remained optimistic about prospects for 2002. "Since September 11, [traffic has] been really quiet, but the people who have come in have spent money like they always did," said Robert Hallett of Robert Hallett Goldsmiths in Oakmont, Pennsylvania. "We've seen a lot of business from engagements and anniversaries, which happen regardless [of world events]. And I wonder if this Christmas may be better for me because people won't be traveling. I've had cases where I haven't sold a piece of jewelry because somebody decided to take a cruise or a trip [instead]."

The tragic stories of September 11 have even encouraged some people to go ahead and make a contemplated jewelry purchase, said Haines. "After September 11, a lot of us realized that we don't have a lot of problems, that we all have a bit more to be thankful for," he said. "[Our salespeople] wouldn't take advantage of [the tragedy], but people have become more emotional [and begun thinking], 'Why not buy a piece of jewelry to show that you love her?' "

The More Things Change . . .
While retailers are watching the economy with anxious eyes, other primary concerns included the impact gem treatments and low-end discounters were having on the industry.

Thirty-two percent of respondents cited misrepresentation of gemstone treatments or synthetic stones as one of the biggest problems facing the industry in this year's survey, while 8 percent said the problem is that people don't disclose gemstone treatments and 4 percent named gemstone treatments in general.

Jewelers who have a Web site	96%
Jewelers who sell jewelry online	18%

"My worst nightmare is a customer years from now coming back and something has gone wrong [with a treated gem]," said Desjardins, who added he tries to stay away from treated stones. "Even if you tell them about [the treatment] when they buy it, I've been in this business long enough to know that people have a tendency to forget about that. They may bring a ring somewhere else to be sized, without telling the guy who does the work [the stone's been treated], and that's a nightmare for [the bench jeweler]."

Worse yet, treatment disclosure still isn't routine in too many places, said some respondents. "Even just in the course of conversations with people, when we disclose gem treatments during the sales process, everyone is shocked to find out [how common treatments are]," said Castro. "That's an indication to me that nobody is talking about it."

Low-end discounters, a key concern in 2000, continued to worry retailers in 2001, with 33 percent of the survey's respondents citing them as a major problem.

"Consumers don't understand our industry, so the only thing they can judge from is price," said David Craig of David Craig Jewelers in Langhorne, Pennsylvania. "They go into one of the finer stores and see a ring for $2,500 or $2,800, then they go to a low-end discounter who tells them they can get the same diamond or colored gem for $899. They think they've found the source, and they don't realize there's a big difference between what they saw and what they will receive."

Tanzanite staged a recovery last year, climbing back into the number-three slot. The tanzanite ring above, designed by Karin Stirnemann, win a Spectrum Award in 1999. Photo © AGTA/John Parrish.

When the customer realizes that the ring is of a lower quality than they thought, Craig continued, "That damages the consumer's confidence. And when their trust has been violated - and it doesn't matter whether it was you or the guy down the street - they feel vulnerable, and they may never want to go back."

The Internet, once considered a competitor for traditional retailers, is beginning to decline as a source of worry. Although 12 percent of survey respondents mentioned the Internet as one of the biggest problems facing the jewelry industry, the fear that clicks will soon replace bricks seems to have subsided.

"You find from time to time someone bought a ring or a stone off the Internet, but it's a tenth of 1 percent," said Castro, who noted his company does not have a Web site. "To this point, it hasn't been a problem. There's a lot of things the Internet doesn't have to offer that a real, live jeweler does. I think people want to be able to see [jewelry], feel it, and touch it, and that's something the Internet will never be able to provide to people."

Castro was clearly not alone in his sentiments. For the first time since Colored Stone began asking about Internet use in 1996, the number of respondents who said they use the Internet in their business has declined, falling to 59 percent. Of the 41 percent of respondents who aren't using the Internet, only 25 percent said they expected to start in the next year - down from 58 percent in 2000. "It seems like the mortar and brick thing works for us," said McCormick, explaining his company's decision to stay offline.

Of those that do use the Internet, most use it for communication-focused activity, such as promoting their stores via a Web site (96 percent) or using e-mail to contact customers (80 percent).

Comparatively few jewelers either buy or sell merchandise online. Just 18 percent of those who have a Web site said they make sales over the Internet. "I hope not to do any credit card Internet sales," said Hallett, who has a new, improved Web site in the works for his thriving custom business. "I think of the Web site as an adjunct to our [print] advertising. A lot of people who see our magazine advertising want to see more, and we hope the Web site will help them get to know us a little better so they come in a little quicker."

Retailers with such informational Web sites often say their customers are computer-savvy, and expect to be able to find out about a company online, but don't necessarily want to purchase from electronic retailers.

"There's an information generation of guys that grew up with computers. They come into the store with a printout [of something] they saw on the Web," said Haines, whose company currently has a Web site under construction. "I think that's a good customer to have, because they're informed. They've done their research. What we as independent retailers can do is to ask them, 'Who do you talk to at the computer [jewelry retailer], and how long have they been in business?' " questioning the reliability of the electronic retailer. "Then I can pull out our professionalism and the benefits of dealing with an independent jeweler. There are a million reasons to buy from someone who has a [brick and mortar] business and [who has] a reason to want to get you back in the store."