Jewelers adjust to gold prices, changing dynamics

As the number of specialty jewelers across the country continues to decline, and the price of gold rises, jewelry shops that have diverse product lines and services are best suited to combat the changing marketplace.

While the wholesale price of gold dipped below $1,600 per ounce on Dec. 14, those who buy, sell or manufacture gold pieces have seen the cost of the precious metal more than triple from around $500 since spring 2007, according to the Kitco gold index.

Jennifer Choi, co-owner of Rose Diamonds Custom Design & Repair, which recently opened its second Springfield location on East Republic Road, has responded with a flexible business model after owning jewelry shops in Florida since 2004. Choi, a graduate gemologist from the Gemological Institute of America, opened her first local shop in 2009 on South Campbell Avenue with her husband when gold was about $800 per ounce. Their stores have pieces that range from $5 to customized jewelry worth tens of thousands of dollars.    

With gold prices climbing to new heights in recent years, Choi has developed custom services to stand apart from the likes of high-volume retailers such as Wal-Mart that focus on lower price points.

“The big-box stores have buying power that we just don’t have,” Choi said. “Our business plan is to try and work around what’s going on in the economy. So, with the high price of gold, we offer a gold trade-in. With big-box places churning out a bunch of jewelry at really crazy low prices, we offer the service work for that. So, I’ll size the ring instead of selling the ring, or I’ll customize it.”

Rose Diamonds conducts its repair work in-house, which helps to keep costs down, and this year, the company has started offering pawn services on jewelry pieces. Choi said it’s not a service that’s advertised, but it can help some customers who otherwise might not be comfortable going to a pawnbroker.

“It’s a very quiet thing, but I’m actually listed as a pawnbroker, and I can offer people cash, credit or even a loan on the items they bring in,” Choi said.

The proliferation of megaretailers such as Wal-Mart and Target selling jewelry in recent years has made it tough for some small specialty shops to survive, according to Russell Shor, senior industry analyst for the Gemological Institute of America.

“It’s not so much that fewer people are going into the field, it’s that the field is changing,” Shor said. “Even Costco is selling jewelry.”

There are more options available to customers these days, both in brick-and-mortar retail stores and online, Shor said. Also, he said customers are often knowledgeable about the products that capture their interest due to online resources, which means jewelers have to stay abreast of latest trends.

“When you go into a store, if the salespeople don’t know anymore than you do, it creates a real competitive problem for local jewelers,” Shor said.

According to Ken Gassman, president of the Jewelry Industry Research Institute, the number of specialty jewelers is roughly 22,500, down from a peak of 28,500 in 1995. Gassman said during the recession, the number of specialty jewelers shrank by about 10 percent.

“Specialty jewelers have lost market share during the last 30 years. It didn’t just happen in the most recent recession,” said Gassman.

In recent years, a few notable names have disappeared from the local jewelry scene. Most widely known among them is arguably Woody Justice, founder of Justice Jewelers, who died Oct. 24. C.W. Hocklander, owner of Hocklander Jewelry, died July 14 at the age of 91. Hocklander’s 62-year-old shop and Chicago-based Whitehall Co. Jewellers in the mall are among recent local closures, Choi said. Justice Jewelers management officials declined to comment for this story.

For those that have been able to hold on, there has been a payoff. Gassman said specialty jewelers’ sales are up 12 percent through October compared to the same time in 2010. Though Choi declined to disclose revenues, she said the national increase is consistent with her experience.

Another shift in the market is tied to credit. Gone are the days when jewelers received inventory from wholesalers or manufacturers on credit, Choi said.

“The credit crisis didn’t affect just the housing market. It affected banks and lending and the diamond market,” Choi said. “It used to be you could call a supplier and say, ‘I need this and this’ and they could give you up to a year to pay for it. They can’t do that anymore.”

Larry Rosenbaum, owner of Rosenbaum’s Jewelry on Park Central Square, said his antique and estate jewelry store has been largely insulated from the fluctuations of the market. “And that’s no accident,” he said.

His niche has allowed the company to grow from $800 worth of inventory when he opened in 1978 to more than $1 million today, and Rosenbaum said he doesn’t owe any money on any of his pieces.

“If I was a regular jeweler who bought gold on credit for $1,900,” he said, “I might be in some trouble.”[[In-content Ad]]