5 Things to Know About the Latest JBT Stats
Jewelers Board of Trade President Erich Jacobs breaks down the data and shares his predictions for the year ahead.
National Jeweler sat down via Zoom with JBT President Erich Jacobs to break down the results and get a clearer picture of the year ahead.
Fewer stores closed in 2020 than in 2019.
The COVID-19 pandemic took a toll on the jewelry industry in 2020, but there were fewer permanent closures in 2020 than in 2019.
In the United States, there were 605 business discontinuances (defined as businesses that ceased operations, consolidated, or declared bankruptcy), compared with 912 in 2019. In the fourth quarter, 92 businesses closed, down significantly from 324 in 2019.
In compiling its data, JBT includes retailers, wholesalers, and manufacturers.
A total of 495 retailers closed in 2020, as well as 63 wholesalers and 47 manufacturers.
Fewer closures may seem surprising given the difficult retail environment, but Jacobs had a different perspective.
“This was an environment that basically created a more forgiving situation. It was terrible economically for certain people, but it was more forgiving,” he said.
Jacobs noted that JBT cut jewelers some slack by listing a business’ pre-COVID rating in every JBT Credit Report.
He also noted that some states had both residential and commercial eviction moratoriums in place, shielding some businesses from a permanent closure for the time being.
Fewer new stores opened in 2020.
With the retail environment uncertain, JBT reported fewer new businesses opening in 2020.
In the U.S., 40 new businesses opened in the fourth quarter while 152 opened for the full year.
Looking to the year ahead, Jacobs said the industry may see “a lot more new businesses,” noting that there are some new businesses that its data doesn’t currently reflect.
He said there is a “blindspot” in JBT’s data that it’s looking to correct—at this time, it doesn’t account for those who set up online stores, like on Etsy, or those who sell through Instagram, which is becoming an increasingly significant part of the industry.
The decline in bankruptcies may not be what it seems.
The number of bankruptcies was on the decline in the U.S. last year, but that could be attributed to a backlog of filings rather than a sign that fewer businesses are filing.
“There is still a lag in the system, which is on the bankruptcy side of things,” said Jacobs.
In the fourth quarter, there was 1 bankruptcy, compared with 4 last year. For the full year, there were 23 compared with 22 in 2019.
Jacobs noted that in states with a lot of jewelers, particularly Florida and New York, the courts are months behind on bankruptcy dockets.
Filing for bankruptcy will likely take longer than it did in previous years.
Adaptability is paramount right now.
The most important takeaway from JBT’s report? “Adapt or die,” said Jacobs.
“The jewelers that typically closed down were the ones that were not very good at adapting.”
Retailers who were not able to establish an online presence or couldn’t handle remote customer interactions were the ones that closed, he said.
“The industry has basically adapted. It’s gone, from a financial characteristic standpoint, back to the way it was pre-COVID,” said Jacobs.
He said it will be interesting to see how jewelers adapt further going forward, noting many stores are still operating with a reduced staff and have a more automated shopping experience.
“As we come out (of the pandemic), I think some jewelers are going to have harder decisions than they had during COVID, trying to figure out, ‘OK, how do I optimize now that we’re back in a new normal?’”
Jewelers may find they don’t need to bring back all of their staff as customers get used to a new shopping experience and spend less time in the store, he noted.
Keep an eye on travel data.
COVID-19 restrictions have caused many to put travel plans on hold, leaving some consumers with money to burn.
With vacations not in the cards for many, discretionary income has gone toward other purchases, particularly on the bridal side, said Jacobs.
An important statistic to look at is 90-plus-day bookings of leisure flights, which have plummeted and stayed down.
“To the extent that that starts rising up, I think the jewelry industry is going to have to really pay attention to that because my guess is the pendulum is going to swing the other way,” Jacobs said.
Editor's Note: This story was edited post-publication to reflect the correct number of bankruptcies.
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