Articles and News

Merrick, NY—While the Wall Street Journal this week reported consumer confidence collapsed to its lowest point since 2009, reports from luxury retailers show renewed strength in spending.

In the latest of what’s now routine schizophrenia in the marketplace, the Conference Board’s consumer confidence indicator plunged 14.7 points in August, from 59.2 in July to 44.5. At the same time, this article in the Palm Beach Daily News last week shows luxury sales—including jewelry—surging upward, and this report from Wells Fargo on August 12 shows retail sales are up in general.

Meanwhile, Tiffany reported this week that same-store sales for Q2 2011 rose 22% globally—and 23% in the Americas. Despite global economic turmoil, the retailer is increasing its full-year earnings forecast, and CEO Michael Kowalski pointed to noteworthy strength in the Americas. At the mass-market level, Sterling Jewelers also reported a strong quarter last week, with same-store sales up 12% and online business surging.

While the Conference Board report isn’t good news, it’s not exactly a surprise. Between the U.S. downgrade and roiling European finances, both of which sent the Dow downward, consumers clearly are worried. Added to this gloomy scenario, consumers’ assessment of the overall employment situation is pretty pessimistic, according to Conference Board findings. Even though a report issued in early August showed a slight increase in nonfarm employment for July, and the employee confidence index from SFN Group, a nationwide recruitment firm, shows both temporary hiring is up—a positive indicator—and employees’ confidence in their own situation hasn’t declined markedly, politicians starting to stump on the campaign trail are hearing “jobs” as the number-one issue of concern among voters.

Yet at the same time, factory orders increased 2.4% in July after a slight decline in June. Also, corporate profits are way up, and hiring of new college grads has jumped 10%, according to this article in the Huffington Post.

Will uncertainty force a downturn in spending? Not necessarily.

It’s not encouraging that consumers feel so negative, but the Journal says it’s not automatically guaranteed to translate into lower spending. Of course, in an economy that’s 70% predicated on consumer spending, shopper sentiment matters a lot, and a mental recession can be almost as painful as an actual recession. But consumers have been known to shop through their gloom before, and many have gotten tired of austerity. As these reports show, those who have money definitely seem inclined to spend some of it, proving that when the going gets tough, the tough go shopping.

For jewelers, it means giving those who have money a reason to spend it. Ramp up the excitement in your store with promotions, trunk shows, and charity-based events, call your customers in for a party, and most of all, have something to show and tempt that they don’t already own.