Jewelers brace for bad holiday season

Posted: October 03, 2008

Ordinarily, Philadelphia jeweler Matthew Sulby said, he'd be "feeling butterflies" about now, laying in inventory ahead of the exciting Christmas season that for decades made his cash register overflow.

Not so this year.

"I'm going to have a poor Christmas and I know it. Twenty years, and I never said that before. Christmas was always gravy for me. Now I need Christmas just to bail me out," said Sulby, 48, whose shop, Unclaimed Diamonds, glitters on Eighth Street near Sansom.

In a nation traumatized by uncertainty over the government's $700 billion economic rescue plan, Sulby's plea for relief is more Main Street prayer than Wall Street wish. With business down 50 percent, he can only hope that his holiday sales offset the five-figure sum Unclaimed Diamonds borrowed this year to make ends meet.

Retail industry analysts predict the season will post the weakest overall sales in 17 years.

That forecast may hit the 350 jewelry and precious-metals-related businesses in and around Philadelphia's Jewelers Row particularly hard. The niche market concentrated on Sansom Street between Seventh and Eighth bills itself as America's second-largest jewelry mart after New York City's diamond district.

Though jewelry is a luxury associated with wealth, many jewelers cater to the middle and working classes, said Joseph Datika, 58, owner of Kozin Jewelers, an Eighth Street shop that recently suspended its jewelry sales.

Six months ago, with business worse than flat, Datika emptied his display cases and stashed the merchandise in a safe. "Nobody had any money to buy," he said, "and they were just wasting my time."

Now he's buying - used gold and silver - from his increasingly hard-pressed clientele. He sells these castoffs, which jewelers call scrap, for a 2 percent profit to a smelter in Abington. Complicating these transactions, he said, is the volatililty in the price of gold. Although near $900 an ounce, a historic high, gold prices have been fluctuating wildly. From Monday to Tuesday this week, he said, the per-ounce price dropped $28. Yesterday, it closed at $836.60 an ounce, down $7.70 from Wednesday.

Sulby described his typical customer as maybe "living paycheck to paycheck" but nevertheless wanting some "status-affirming" luxuries.

Some who go to Datika bearing old bracelets, necklaces and rings "don't have money to fill up the tank, that's how bad the situation is," he said. "They take chains off their necks to pay the rent."

Felicia Williams of Germantown, a medical courier, on Tuesday sold a small gold-and-diamond-chip ring to Datika and walked away with $32 to keep her car running.

"It's just something I bought for myself years ago," she said of the ring. "And I needed a quick dollar."

Other merchants on and near the row said that although business wasn't wonderful, it was not that bad.

Diamond dealer Steven Singer, of those eye-catching "I hate Steven Singer" billboards, said his business actually was better today than a year ago and he did not intend to retrench because the economy is soft.

"When things are bad, that's the worst time to cut back" on advertising and promotion, he said.

Besides, he knows that the strongest appeal of diamonds is not a practical one.

"My product is useless," he says, exaggerating for emphasis. "You can't eat it. You can't do anything with it. . . . The only thing it does for you is emotional."

The perpetual demand for bridal engagement rings helps prop up diamond dealers to a certain extent, but the market to upgrade those rings, and for anniversary gifts and other special-occasion keepsakes has softened considerably, Sulby said.

He added that even wealthy clients who typically splurged on gold and diamonds were cutting back, including the ultimate "high-end consumers" who might pay $140,000 or more for a single ring or diamond-encrusted timepiece.

Those ultra-swank, often one-of-a-kind items are not Sulby's stock in trade. But he keeps track of them through industry shop talk and publications. Such "collector pieces," he said, have traditionally sold for more than face value because they are in such demand. Now, he said, it is rare to see such premiums paid.

Sulby's store, at the other end of the customer continuum, specializes in gold and diamond jewelry that people put on layaway. If they don't keep up the monthly payments, other customers can buy the items by paying only the balance due, he said.

He plans to add modestly to his inventory in the coming weeks and prepare holiday ads. He will use gimmicks, including the offer of a $10 gas card with every purchase of $200 or more, he said. But none of it, he said, will be with his usual élan.

Singer, the indefatigable marketeer, said he planned to go full speed ahead.

Then, acknowledging the public's widespread anxiety, he joked, "OK, I know. Your 401(k) is now a 201(k). . . . But the flowers at the wedding are going to die in a few hours. Why skimp on the diamond which you'll have forever?"


Contact staff writer Michael Matza at 215-854-2541 or mmatza@phillynews.com.

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