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Retail Jewelry Industry in the U.S. 2016
Industry Report - In this Special Report, we have brought you a report ‘Retail Jewelry Industry in the U.S. 2016’.
By: Diamond World News Service
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Apr 29 2016 6:28PM
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Reference: 12965  

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U.S. Jewellery business discontinuances increased sharply in 2015

BANKRUPTCIES AND MERGERS

Mergers and bankruptcies are also on the rise in the U.S. retail jewellery industry. Jewellery businesses that have gone bankrupt, ceased operations or have been sold or subject to a merger are counted together under a metric called Business Discontinuances. In 2015, a total of 1082 jewellery businesses were discontinued, versus 973 in 2014, an increase of 11 per cent.

Anglo-American PLC announced that it would lay off 85,000 employees.

RETAILERS, MINING COMPANIES DOWNSIZING

Major retailers are also scaling back their operations: In November 2015, Pandora announced the elimination of 116 retailers from the company’s global distribution network, most of which were in the U.S.; in September, Macy’s announced the imminent closure of 40 stores and announced plans to lay off 4500 employees. At the top of the supply chain, the world’s largest producers of gems are also cutting costs through mine closures, asset sales and massive layoffs. In December, mining giant Anglo-American PLC announced that it would lay off 85,000 people and sell around 60 per cent of the company’s assets in an effort to remain profitable. Anglo-American’s sales fell by 17 per cent in the first half of 2015, representing a loss of nearly $2 billion, while the company’s share price had dropped 72 per cent from previous highs by December 2015, mainly due to low commodity prices.

Two prominent Jewellery chains in the U.S. ceased operations in 2015.

U.S. Jewellery CHAIN CLOSURES

Among the retail jewellery store closures that the U.S. market absorbed in 2015, several chains also shuttered operations. At least one chain closed as the result of tax problems and/or illegal activity.

G.M. Pollack & Sons

Maine-based retail jewellery chain G.M. Pollack & Sons had been selling jewellery for more than 60 years, and operated 13 stores at the chain’s peak, before going out of business in 2015. In 2010 the chain was ranked #37 by National Jeweler Magazine in their list of the Top 50 Jewellers in North America. G.M. Pollack had remained a family business until it was sold to the store’s employees in 2009.

Romano’s Jewelers

Romano’s Jewelers in California was forced to declare bankruptcy due to unpaid taxes and other bills. As well, the owner of Romano’s and two employees were charged with identity theft and fraud after a customer was caught selling stolen financial information to store employees in exchange for payments from the owner; the owner used the information to make fraudulent purchases from his own stores.

Gold prices have actually declined in recent years, from highs reached in 2011.

GOLD PRICES

While gold is currently enjoying an upswing in value, it is important to note that the price of the precious metal has actually fallen considerably over the past 5 years. In late 2011, gold reached a high point of over $1800 an ounce; compared with the current price of just over $1200, we can see that the real gold rally began quite some time ago before falling to lows that are just now being recovered from. According to the World Gold Council, demand for gold remained robust in 2015, with demand for gold jewellery increasing by 6 per cent Y-O-Y for Q3 2015. The WGC notes that China and India are the strongest drivers of gold purchases in the world, with the two countries accounting for about 45 per cent of total global gold purchases. However, the United States experienced strong growth in gold purchases in Q3 2015, where sales of US Mint Eagle gold coins increased to their highest level since the 2nd quarter of 2010.

Online purchases made from desktop and mobile devices continue to increase.

ONLINE RETAIL SALES

ComScore analysis of online retail commerce in 2015 shows strong growth in purchases being made from both desktop and mobile platforms. In the first three quarters of 2015, retail sales made via desktop purchases grew 7 per cent Y-O-Y to reach $179 billion. For the 3rd quarter alone, combined online ecommerce sales reached $69.7 billion, including $11.4 billion in retail purchases made exclusively from mobile devices. Blue Nile, the dominant online retailer of jewellery, reported a 1.4 per cent increase in Y-O-Y sales for 2015. Net cash from operating activities was $8 million for the year ending January 2016, compared with $17.2 million for the year ending January 2015.

CONCLUSION

The retail jewellery industry in the U.S. continues to adapt to the rise of online retailing, downward price pressure from economic trends, and unpredictable geopolitical events that impact the global supply chain of gems and precious metals. Retail and wholesale jewellers in the United States are struggling to compete with foreign suppliers, who are willing to accept razorthin margins or even losses to convert stones and metals into cash. Banks are requiring more transparency from jewellers, particularly at the top of supply chain, and better loan guarantees from dealers in Europe and North America. Retail jewellers in the U.S. would do well to invest in efforts to retain their existing customers, improve their online ecommerce abilities, consider smaller retail spaces to reduce overhead, and invest in quality employees who know how to make a sale, can keep customers happy and are savvy about trends and innovations happening in the industry.

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