Independents

Jewelry Business Closures Pick Up in Q2

IndependentsAug 11, 2016

Jewelry Business Closures Pick Up in Q2

The number of jewelers, wholesalers and manufacturers that ceased operations totaled 442, up from 335 in Q1 and more than double the number seen in Q2 2015.

Warwick, R.I.--The pace of closings in the jewelry industry increased considerably in the second quarter, the latest data from the Jewelers Board of Trade shows.

The industry saw 442 jewelers, wholesalers and manufacturers in the United States and Canada cease operations in the second quarter, up from 335 in the first quarter and more than double the number of closures seen in the second quarter 2015.

So far this year, 577 jewelers have decided to close up shop, which is a 55 percent increase over the first two quarters of 2015.

The number of wholesalers and manufacturers that have shut down also is up this year.

Wholesale closings rose from 68 to 121 while manufacturer closings tripled, increasing from 26 at this point last year to 79 this year.

The reasons for the continued closures, which began in earnest in 2014, have been well documented.

Baby boomer-generation jewelry store owners are aging and many don’t have family interested in taking over the store. Retail has changed and there are fewer physical retail stores across the board, not just in the jewelry industry. The economic recovery has been slow in the United States, and the middle class is shrinking.

Anthony Capuano, who succeeded Dione Kenyon as JBT president, said while the contraction of the industry is not new, he was taken aback by the spike in the number of businesses that ceased operations in the second quarter.

He said, however, that he does not expect the closures to continue at this rate for the rest of 2016, though they might spike again at the beginning of 2017 if the industry does not have a strong fourth quarter.

Other highlights from the JBT’s second quarter statistics include the following.
--Consolidations, defined as a sale or merger, numbered 21 in the second quarter, compared with 53 in the first quarter and 30 in the second quarter 2015. Year-to-date, consolidations total 74, up from 58 last year.

--Bankruptcies continue to drop. They’ve totaled four so far this year, compared to 16 at this point last year.

--There are now 21,541 retailers in North America, 20,666 excluding Canada; many of those are independent jewelers.

While Capuano acknowledged that it is shrinking, he does not see the number of independent jewelers contracting as severely as, for example, the number of independently owned hardware stores because of the personal nature of the business. “There is a place for the independent retailer who caters

to a local market, knows what their market wants, can be adaptable and present an enjoyable, meaningful shopping experience,” he said.

He would not, however, hazard a guess as to where the number will bottom out.

--Both the number of claims placed with the JBT and the average claims amount are down year-over-year. Year-to-date, there have been 521 claims, compared with 593 at this point last year. The average claim amount has dropped from $8,728 to $7,288.

--The number of new jewelry businesses in the United States and Canada is up about 3 percent year-to-date, from 152 last year to 156 this year.

--There were slightly more increases in JBT ratings (1,413) than decreases (1,393) in the second quarter and year-to-date (3,092 vs. 3,035, respectively). “People who can pay their bills are still paying their bills,” Capuano said.
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

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