Cubic zirconia: a girl's best friend? Maybe, had Marilyn Monroe cooed the catchy Robin & Styne song about diamonds in the '90s instead of the '40s.
The deepening recession and long-term changes in consumer behavior have combined to deal the retail jewelry industry its hardest blow in 20 years. Doing fine, however, are stores offering imitation jewelry such as cubic zirconia rings and polished gold overlay necklaces.
Evidence of the industry's ill health abounded this Christmas, when jewelry sales sank to a devastating low and affected large and small retailer alike.
At year's end, Zale Corp., the nation's largest retail jewelry chain, announced the closing of roughly 400 stores in the United States. The company filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code earlier this month.
Ratner's Group PLC, the world's largest jewelry retailer, experienced a 15% drop in sales in 1991. And more recently, Engagement Ring Inc., the owner of seven John Crandall Jewelers stores in the Southland, filed a Chapter 11 bankruptcy petition.
The dismal situation can be attributed in part to the recession, analysts say, but also to changing attitudes about jewelry. While retailers profited from consumer extravagance in the '80s, they are now struggling to adapt to more conservative buyers.
"We're going through a different outlook on jewelry," said Robert Kahn, a retail analyst in the San Francisco Bay Area, who said consumers were changing before the recession. "Over the last 20 years, people are being less ostentatious," he said. "We outgrew the yuppie generation. The '80s was the tail end of it."
Industry analysts report that sales at most jewelry retailers rebounded from the 1981-1982 recession with steady annual increases, peaking in 1988. Since then, however, sales have decreased annually. It is estimated that they will drop an additional 6% this year.
Williams Guevara, manager of Culiacan Jewelers in Huntington Park, said his store felt the squeeze last year. The store, which sells fine jewelry, suffered a 50% loss in sales during Christmas, compared to holiday sales in 1990. Customers generally are avoiding purchases such as watches and wedding rings, he said.
"We've offered more discounts to bring in customers," Guevara said. "We hope things get better this year."
In times like these, consumers are more apt to buy products that resemble fine jewelry but are priced reasonably. Filling that niche are fashion retail jewelry chains like Impostors and Ciro Inc. that offer faux jewelry in designs similar to those of Cartier and Bulgari. Both Impostors and Ciro have proved recession-proof.
While most chains and individual stores found Christmas sales disappointing in comparison to 1990, Impostors topped its holiday sales last year by almost 16%.
"Despite the recession, our business is gaining momentum," said Ali Hashemian, chief executive at Impostors, which is based in South San Francisco, Calif.
The company opened in 1985 when the retail jewelry industry was at its peak. In its first year it grossed $330,000. Since then, it has expanded to 115 locations nationwide, and sales jumped to $34 million last year.
"The trend is shifting away from high-priced products to value shopping," Hashemian said. "In essence we provide the same look and merchandise for about one-tenth of what you pay at a jewelry store."
As one of the oldest costume jewelers in the nation, Ciro Inc., which owns Ciro and Kenneth J. Lane retail stores, is also showing resilience. Jack Levine, president and chief executive of the Florida-based company, said the appeal of the merchandise has become international in scope.
"Before, people were not wanting to be seen as having imitation jewelry," Levine said. "Now, people are not wanting to be seen with expensive, fine jewelry in these times."
However, some leaders in the industry argue that value is still more important than appearance. "Fine jewelry at whatever price is a better value than costume jewelry because fine jewelry is real," said Jack Gredinger, president of the Independent Jewelers Organization. "It's like when two people first date and they get married. The luster wears off, and what's left is the substance."
End of a Golden Era
Attitudes toward jewelery have been changing in the past 20 years. Consumers are moving away from extravagant shopping which peaked in the mid-80s and assuming a more conservative stance. That compounded with the recession has given the industry its hardest blow in 20 years. The following are retail jewelry sales adjusted for inflation.