Sapphire Retail Sales Back with a Twist

If we needed more proof that our society is obsessed with celebrity style, we have only to look at the spectacular success of pink gemstones in retail stores this year.

Last year was the year of pink in clothing and accessories, from Hollywood red carpets to Milan runways. That demand extended to gemstone jewelry, according to the 2004 survey of retail jewelers conducted by Colored Stone. Fancy sapphire, including pink, was the second best-selling stone last year, say the nation's retailers; it didn't even make the top-10 list in 2003. Pink tourmaline, likewise, jumped from off the list to the number six position.

Traditionally, the survey's list of best-selling gemstones leads with the Big Three: blue sapphire, ruby, and emerald, with tanzanite appearing in second place last year. In 2004, blue sapphire remained the best seller, followed by fancy sapphire, ruby, tanzanite, emerald, pink tourmaline, amethyst, blue topaz, peridot, and pearl. Dropping out of the top 10 from the previous year were tsavorite garnet, aquamarine, opal, and blue and green tourmaline.

There's no question that fashion trends influence what retailers stock. Thirty-eight percent of retailers said that trends and style were their primary consideration in selecting designs to sell. The only factor more important was customer taste, cited by 54 percent. The next biggest consideration was price, cited by 23 percent.

Interestingly, the more successful retailers â€" that is, those who reported increased sales last year â€" were more interested in traditional quality and good design than trends. They were also more likely to consider customer taste, and tended to carry unique, individually-crafted pieces rather than designer brands.

"We're in a small town in Vermont. I think fashion trends tend to affect us slightly. If something is popular in the city and Hollywood, it takes time to trickle down to us," says Kelsey Woodell of Freeman Marcus Jewelers in Rutland, Vermont, where customers shop because of the store's 114 years of "quality and service . . . and out of the fact they can trust us." Still, not to ignore the trends, Woodell has "definitely stocked more in the way of sapphire."

"Our area is a year and a half behind on the trends," says Kelly Buttermore of R.D. Buttermore & Son in Parkersburg, West Virginia. Buttermore is selling a few more pink sapphires and tourmalines, and has had success with the Guy Laroche line of multicolored sapphire. "But [fashion] is not a huge influence in this area," where customers still ask for emeralds and sapphires with diamonds.

Still, as the survey results show, fashion is exerting an increasing pull on the jewelry world.

It does seem like a lot of customers are getting more aware of jewelry in magazines" and on commercials for TV shows like "The Bachelor," says Tom Hart of Hart Jewelers in Grants Pass, Oregon. "It seems there's more name recognition," especially in diamonds, he adds. "I think our salespeople are up on fashion. We explain how [gemstones] are shown in fashion magazines."

To meet demand, Hart stocked up on pink gems, particularly sapphires, last year. "My wife says too much . . . 'cause it keeps coming in. We have one case that's strictly pink sapphire, one blue sapphire, one ruby, and so on. In the last two years, we doubled what we carry in pink."

Pink hasn't been in great demand in high-end jewelry, appearing more in costume jewelry and on younger people, says Rick Swank of Swank's Jewelry in Ames, Iowa.

In fact, the fashionistas are already on to the next trend, according to Mike Butterfield of Butterfield Jewelers in Albuquerque, New Mexico. "This year, the new color is going to be green. We're off pink," he says. "Albuquerque is three years behind anything."

However, he adds that most of his customers buy based on personal preference rather than fashion trends. "[Our customers] like a certain color; it doesn't have to do with what the fashion [industry] is pushing." Butterfield has always stocked pink sapphire and tourmaline; a bit more since dealers have been pushing them for last spring and this fall. "We've done it for years before and will do it years afterward. We're not doing it because of what the industry says."

Blooming Business

Whatever the impetus, overall jewelry sales were up significantly in 2004, said 53 percent of the retailers surveyed, compared to 40 percent in 2003. What's more, only 14 percent said sales were down, compared to 26 percent the year before. In terms of colored stones, 45 percent said their sales of colored stones were up significantly, compared to only 32 percent last year.

One reason may be the fact that customers are buying more expensive jewelry. More than one-third of retailers said they were selling at higher price points, with only 12 percent selling at lower prices. That's a turnaround from last year, when one-third of those surveyed said they were selling lower price points and only 18 percent were selling higher.

"We've been having record years for the last couple of years," says Hart. He attributes the success to a "variety of things," including improvements in the store's management of inventory. Although there haven't been changes in the population, he has "definitely" been selling higher-priced items. "Amethyst, blue topaz â€" we seldom sell that anymore." Customers have also been buying more expensive and more colorful bridal sets, he says. "I don't know why, but I'm not complaining."

"I know we're selling more gemstones this year," says Swank, and customers are buying at higher price points. Sales are also up for Internet retailer Michelle Rahm of www.jewelryimpressions.com, based in Mead, Colorado, and colored stones are "definitely up."

"It's hard to tell why. Personally, I think the economy is improving a bit. I noticed people are buying more expensive items," Rahm says.

Retailers overall are conservative in their marketing strategy, relying on whatever has worked for them in the past: word-of-mouth, local newspaper and radio ads, and mailings. Sixty-nine percent said they advertise in the local media, while 22 percent rely on word-of-mouth and referrals. According to the survey, the most successful retailers tended to hold more in-store events and to rely more on word-of-mouth than on paid advertisements.

Cyber Mistrust

What a difference even a year makes in the information age. A few years ago, the Internet was almost an afterthought in Colored Stone's annual survey; the biggest question was if and when a retailer was going to get a Web site.

Only a year ago, the Internet was cited as a problem by only 8 percent of retailers. In 2004, a full 45 percent called it their biggest problem. The only issues that came close were the economy, cited by 27 percent, and low-end discounters, cited by 18 percent. Interestingly, concern about the misrepresentation of treatments, a long-time industry worry, dropped from 16 to only 1 percent.

The biggest complaints about Internet sales are price-undercutting by online discounters, poor merchandise, fraudulent practices, and unhappy customers who then blame the entire jewelry industry.

"I think the Internet is one of the worst things that has happened to the economy. Congress fell over backward giving the Internet everything it could . . . killing every community's tax base," says Butterfield.

The Internet is also one of the worst things facing the jewelry industry, he adds. For example, he describes a "clueless" customer who had just left the store. The man had bought a diamond online and wanted to know, "Did I get a good deal?" He got a "raw deal," says Butterfield; he bought a fracture-filled diamond and is sending it back. "In his mind, the jewelry industry ripped him off. His entire experience is tainted."

Butterfield speculates that the ratio of legitimate Internet sales to ripoffs probably meets the 80/20 rule. "[Customers] are seduced by the price. [But] they don't trust it; they go to the store to be evaluated, and they get mad because we charge them. Then we tell them bad news, and we're the bad guys."

Running an online "shopping mall" that sells directly from the manufacturer, Rahm resents competition from large online discounters and Web sites that undercut prices.

"I try to compete with the Moms and Pops, and keep my price points like theirs. . . . You have people with no experience who get on the Internet, sell for next to nothing, and cheapen the brands. It hurts all of us," Rahm says.

On the positive side, the Internet is creating more knowledgeable consumers. They may window-shop online, but they come into a store to buy because they want to see what they're getting â€" and they trust their jeweler.

"For us, it hasn't been a major problem," says Hart. "I expected it to become a problem. We do get people who come in [who] are gathering information. We end up still making the sale. They want reassurance they're getting a good value."

"I don't see the Internet as that big a problem yet," agrees Woodell. "People are educated. They know what they want. Some say [we found this price], and we want you to beat it. It may make our job easier, [because they're really saying] they still want to buy from people they trust."

By Marlene A. Prost

February 2005

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Colored Stone is a bimonthly, international trade magazine that covers all facets of the colored gemstone industry, including new sources for colored gemstones, mining and processing, manufacturing, retail sales, consumer buying trends, marketing and promotion, gem cutting and jewelry design, and technological developments pertaining to the trade.