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The New Normal
By Hedda T. Schupak — JCK-Jewelers Circular Keystone, 5/1/2009
One of the toughest parts of the current economic situation has been simply not knowing when it’s going to hit bottom—or even where the bottom is. Once it hits bottom, at least you’ll know what you’re dealing with and you can begin to adapt to the “new normal.” Until then, all you can do is speculate about what might be the new normal and try to prepare for it.
In recent weeks, there have been some glimmers of hope that we might be at or near the bottom of this downturn. Housing starts have picked up slightly, the rate of decline of retail sales has slowed, and even the global diamond industry is showing signs of thawing out of its recent deep-freeze.
But what will be the new normal in terms of consumer shopping behavior? Right now it’s all about frugality, but what comes after frugality? And where will it leave our industry?
To date, all the signs and portents of what comes next point to a new kind of frugality. What we’ve been experiencing these past few months isn’t even frugality; it’s austerity. And it’s unsustainable in a consumer-driven, free-market industrialized society.
One might argue that the United States has in the past few decades become too consumer driven, too focused on things and not focused enough on people or on taking responsibility for the world we live in. Noted researcher and behavioral pundit Pamela Danziger of Unity Marketing observed in an interview on National Public Radio that American consumers have been spending perceived wealth, not actual wealth, and while I personally agree with those who say that we as a society have taken greed too far, the fact remains that human beings are hard-wired to want to acquire stuff and probably have been from the moment man saw that someone else had a nicer cave and a bigger fire.
So what will this “new frugality” look like? Ironically, it should look a lot like the old frugality—the kind practiced by our parents and grandparents. It means not living beyond your means. It means not buying everything you see the moment you see it, but rather saving up for the special things you really want and then feeling really, really good every time you wear them, use them, or look at them. It means not going into debt to own them. It’s the kind of spending pattern that is common for Europeans and the Japanese, and it used to be standard in the United States before the advent of cheap consumer goods and the general-purpose credit card. One nation, under Visa.
This shift is likely to be long lasting. If we as a nation do return to the kind of rampant consumerism we’ve grown used to, it’s not likely to happen for a generation—when today’s kids and teens grow up. Older baby boomers who were on the cusp of retirement and now frantically have to rebuild their portfolios aren’t going on a spending binge. Younger boomers and Gen-Xers who still have 20 years to go before retirement may not be as worried about their golden years since their savings have time to recover, but the lesson is not lost on them, either. Only the youngest consumers who haven’t been directly affected by the downturn might be spared its emotional baggage.
Still, this shift can bode well for jewelry. As we move away from a disposable society and toward one with a more long-term view of values, jewelry sits right in that spot. And, of course, the bedrock of our industry, the emotional sale, is timeless, regardless of generation, and it’s the only thing that’s somewhat recession proof. Consumers already are showing a shift away from name and status brands in other categories, be it food or handbags. This is a trend jewelers should track carefully, because it may indicate a need to shift merchandising strategies. Fortunately for our industry, it’s still the retailer that carries the primary brand recognition for the consumer, and that puts well-managed retailers in a very good spot indeed.
–Emphasis added. Is this really a seismic change in the American Consumer’s behavior, or will we get bored of our ‘diet’ of frugality? What do you think? Camille Potts
 There is a distinct longing in our economically wobbly world for the comfort of handmade, individual, locally sourced goods, especially from the younger crowd. It’s not even re-cycling to them, it’s up-cycling or re-purposing.
Of course it’s the words that are new, not the concept. I have crafty cousins who have been making jewelry, cabinet hardware, and crosses for years out of discarded silverware, doorknobs, wire, beads, etc. They are just intensely creative folks; it was never a cultural malaise like that which is building now, a backlash against outsourcing and carbon footprints, which is elegantly epitomized in etsy.com.
Woof! He’s just the kind of dog I need, or the inspiration for a summer project! Handmade, vintage, or supplies for the making thereof–that’s all you’ll find on etsy. Plus lots of nice folks! You will be amazed at the artistry and breadth of this site. I’ve found beef jerky, jewelry made from sea glass, and a graphic artist to re-do my logo. The Twilight and Manga jewelry delight my 15 year old daughter, and I’ve found a way to get rid of my husband’s pack rat collections without using the landfill!
Gold Surges From Investment
— JCK-Jewelers Circular Keystone, 5/26/2009 9:05:00 AM
In the first quarter of 2009, gold once again surged upwards. Inflationary fears and uncertainty in financial sectors gave the precious metal a total demand rise of 38 percent year on year to 1,016 tonnes, representing a 36 percent rise in value terms to $29.7 billion, according to figures published recently by the World Gold Council (WGC) in its Q1’09 Gold Demand Trends report.
The WGC report attributes gold’s investment demands to exchange traded funds, (ETFs) and bars and coins, as the major source of growth in the quarter, reaching 596 tonnes, up 248 percent in first quarter of 2008.
Although investor demand was up, the recession continues to dampen consumer gold jewelry purchases as well as industrial demand. Gold jewelry demand dropped 24 percent compared to the same period last year with high prices of gold, shrinking discretionary budgets and depressed economic conditions as the main culprits for the decrease in demand.
Total demand even in India, traditionally the world’s largest gold market, declined 83 percent compared to the same period in 2008 from record rupee prices and a major deterioration in the domestic economy. The Middle East market dropped 26 percent as well because of high gold price and a tightening of consumer spending.
The only exception to global consumer demand was China. The Mainland showed a 3 percent growth in gold jewelry demand.
Closer to home in the U.S. market, retail demand was up for investment, but jewelry demand fell by 30 percent compared to the same period last year.
“The shift in the balance of demand that we have witnessed this quarter, where the gold price has risen despite a severe drop in jewelry and industrial demand, perfectly demonstrates the robust nature of gold’s fundamental supply and demand dynamics,” Aram Shishmanian, WGC CEO, told the press.
Aram Shishmanian, WGC CEO
For more information, please visit the World Gold Council’s at www.gold.org.
A Magazine’s Troubling Advice on How to Clean Your Jewelry: “
I found troubling some advice about how to clean jewelry in the June 2009 issue of Glamour magazine, quoting the namesake and “image whiz&rdq…
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Trend Watch: Necklace Plus Brooch—Jewelry a la Queen: “
The Queen of England has long had a signature jewelry style. She has consistently favored, over the years, a triple strand of pearls and a brooch w…
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 Amazing. Who knew Victorian Mourning Jewelry could look so…now–so Twilight, so Goth, so Steampunk?
And it’s an antique, documented in Vintage Costume Jewelry by Carole Tanenbaum, making it what dealers call a “book piece”– it’s in a book. Rare and beautiful enough to survive almost 150 years.
It should be an investment, right? Makes sense to me. I could enjoy it now, sell it later if I need the money, or leave it to my family. My 15 year old daughter doesn’t care. She just wants it. So why has it languished on eBay? After a month of trying, I switched it to Etsy. Lots of lookers, no offers. Is it the economy?
Did you know that every state has procedures second hand dealers in jewelry, metals, coins and watches must follow? It’s to protect victims of crime, so they have a way to recover their property.
We have a customer, a single mom, who’s been selling small amounts of silver jewelry and getting watch repairs for a year or so–a regular. Last Friday, she came in with her mother’s silver flatware. She needed money for bills–self-employed, she had missed a week of work.
Another customer, an elderly lady, was having a watch battery changed. What she really needed was a muzzle. Old bossy boots confronted the single mom, asking her if her mother knew she was selling her silver. Surprise, anger, shame…the single mom felt them all. She told Mac to call her about the silver, and left the store.
She told me later that she only calmed down after talking to her sisters. Her mother died 10 years ago, and split her silver between her 4 daughters. As a single self-employed mom, she didn’t entertain with silver, fine china and crystal–just not her lifestyle. Her silver, her life, her decision. Not for the nosy old biddy to decide!
She had 2 patterns, Burgundy by Reed and Barton and Audubon by Tiffany. Both collectible, which gave her options. If she needed the money instantly, she would get the melt price. But Mac also called a couple of dealers, who were willing to pay more than melt, because the patterns are still popular–that green option, vintage resale/recycle. Third option, Mac could consign it on eBay, but that would take more time.
So our single mom took the dealer’s offer, and got her money Monday. She got more because she had popular patterns. That same day, another customer came in with 12 place settings of Rambling Rose by Towle. No market for it, no enduring appeal. Just value for the sterling, so we scrapped it. So check your pattern’s resale value before you sell. Grandma may have had really good taste!
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