Une intéressante analyse américaine du marché des ultra-riches, que leur fortune met à l’abri de la récession économique : ce n’est pas parce qu’ils sont toujours aussi furieusement consommateurs qu’on peut leur proposer n’importe quoi ! A travers les réactions des boutiques joaillières qui font plus de 10 millions de dollars de dollars à elles seules, des éléments à méditer sur l’évolution du marché de la montre très haut de gamme.


Luxury leaders : The eight-figure independents

A review of jewelers doing $10 million or more in business in a single store.

It's tough to put a good spin on what has, without doubt, been a very bad year for the U.S. economy. January saw record-breaking home foreclosures, up 57 percent over the same month last year. The Consumer Confidence Index dropped to its lowest level in five years in February. And in March, all hell broke loose : Gold crossed the $1,000-per-ounce threshold for the first time, gas prices soared to $3.25-plus per gallon and Bear Stearns became the largest and highest-profile victim of the global credit crisis, precipitating concerns that the whole darned banking system was on the brink of collapse. At the time of this writing, April was, indeed, shaping up to be the cruelest month.

It doesn't take Ben Bernanke to recognize that based on these economic indicators and more, prospects for luxury sales in 2008 look considerably less than stellar.

And yet, this year's Eight-Figure Independents, an elite club of American jewelers doing $10 million or more in a single store (provided they don't own more than seven stores, with one or two exceptions), are reporting in with unexpected results.

The first few months of the year were "surprisingly strong," says Hank B. Siegel, president and chief executive officer of Lawrenceville, N.J.-based Hamilton Jewelers. "I am quite happy to say that we are enjoying strong sales growth so far in 2008."

Others, while acknowledging the market is noticeably softer now compared with the same period last year, are in expansion mode.

"We don't just look ahead to the next 18 months," says Michael Pollak, CEO and co-founder of Denver-based Hyde Park Jewelers. "Our outlook has a five-year horizon."

Among most of Pollak's eight-figure compatriots — an unscientific, self-reported list of jewelers selected and ranked through independent research and conversations with suppliers and members of the Jewelers Board of Trade — concern about the direction of the economy is tempered by the conviction that given a strong differentiation factor, shoppers will continue to spend.

"Nobody's going gangbusters, and we'll have to work harder," says William "B.J." Nichols, president of Reis-Nichols Jewelers in Greenwood, Ind. "But the discretionary luxury consumer is carrying us all."

Protected but not immune
The quintessential luxury consumer is, by all accounts, still investing in watches and fine jewelry. According to a recent survey of 627 affluent individuals commissioned by Elite Traveler, a magazine for private jet owners, 80 percent of super-rich consumers (defined as those worth more than $30 million) and 58 percent of rich consumers (defined as those worth between $10 million and $30 million) anticipate an increase in their luxury goods spending in 2008.

That sentiment was borne out by sales over the 2007 holiday season, which saw a combination of higher-ticket sales and reduced store traffic (though it bears noting inflation has affected the former).

"Where we're seeing decreased volume is in the middle-price-range shoppers looking for gifts in the $750 to $3,500 range," says Michael Finn, co-owner of Boston's E.B. Horn.

While sales of high-end watches and designer or one-of-a-kind jewelry—the categories that appear most resistant to recessionary pressure—remain buoyant, it would be naive to suggest that America's wealthiest consumers are immune to the seesawing economy.

"The better off you are, the better you're doing," says Milton Pedraza, CEO of the Luxury Institute, a New York-based research firm focused on the top 10 percent of America's wealthy. "But there is some softening at every level. Even the guy with the $100 million yacht can postpone the purchase, and some have."

Some eight-figure jewelers reckon that the market for large diamonds is a house of cards, ready to tumble at the first hint of panic, while others say the enormous prices being paid for significant stones, like Al Molina's 76.45-carat "Archduke Joseph" diamond (anchoring the necklace above), are built on sound supply-and-demand principles.

Investment diamonds heat up The same seems to be true for purchases of large diamonds. According to suppliers, prices on stones of five carats or more have increased about 20 percent over the past six months, causing sticker shock at the retail level.

"Big stones were up for the year but dried up around November and December," Nichols says. "All year long, prices went up, and then it was like somebody flicked a switch."

"Sales of bigger diamonds have completely dried up," echoes Denis Boulle, owner of deBoulle in Dallas, a newcomer to the list. "A 10-carat diamond for $700,000? A five-carat for $300,000? It's crazy."

The madness shows no signs of slowing. In fact, diamond industry analysts are convinced that a graph plotting large diamond prices into the next decade will show a line pointing straight into the upper right-hand corner.

Good old-fashioned supply and demand is to blame. Rough-diamond production will peak at "300 million carats, tops, in 2016, unless some major diamond finds come up," says Martin Rapaport, Rapaport Group chairman. "At the same time, demand for diamonds in dollar terms is going up, based on new wealth and new consumers in India and China. You have a gap between the two such that you know diamond prices are going up."

A speculative climate may have already settled upon the trade, Rapaport says, noting that there are "not a lot of goods around" because "people are holding them back." But speculation notwithstanding, the incontrovertible truth is that big stones are not likely to drop in price, now or ever.

Which is to say nothing of rising metal prices or currency swings, nor their impact on watch prices, scores of which were revised by Swiss firms at the beginning of this year to account for the increase in gold and steep decline of the dollar.

"The workload to manage all these price increases, with 100-plus vendors, is monumental," Nichols says.

One bright spot of rising prices, at least in the watch business, may be the willingness of some consumers to buy pieces now to avoid paying even more later on.

"We're not seeing any resistance at all," says Boulle, citing Patek Philippe as the kingpin in the watch category. He says the difficulty of getting product from Switzerland, where watch firms are now fielding cash orders from hungry buyers in emerging luxury markets such as Russia and China, has created a perception of rarity among his clients that has also spurred sales.

"As soon as it comes through the door, it's sold," he says of coveted timepieces. "I don't see an end to that."

Boston's E.B. Horn stages an annual citywide scavenger hunt for a 2-carat diamond ring. Here, participants review clues and, below, one half of the winning couple hears her name called.

Differentiate or die
This underscores a core belief among America's finest jewelers: When it comes to overcoming the uncertain economy, offering consumers unique products they can't price-shop down the street is the only viable solution. For most eight-figure retailers, that means a selection of designer brands from vendors who offer regional exclusivity or, better yet, a private-label collection that exists nowhere else.

"While everybody's moaning or groaning, there are some jewelers posting double-digit increases," says Ken Gassman, a jewelry industry analyst. "They tend to be AGS American Gem Society] jewelers, and they tend to have a proliferation of brands, whether it's Hearts On Fire, which is doing very well, or David Yurman. The brands are either national brands or private-label brands. They also have a lot of designer names that give them a competitive differential from the guy down the street."

One-carat diamonds, reduced to commodities, now sit on shelves, he adds.

"Consumers want to spend money on something that's different. It's an ego-driven thing," Gassman says. "Jewelry has always been used to denote power and status, and that's true for today."

That unique products are in demand isn't news, at least not in the high-end jewelry business. What is new is the degree to which they're being sought after by eight-figure retailers, who say that at the Las Vegas shows they will focus on hard-to-get jewels and watches, and likely trim their open-to-buy budgets for everything else.

"It's the most important time in the last two decades for jewelers to manage their inventories and finances in a very proactive manner," says Hyde Park's Pollak. "It's imperative to find a proper blend of proprietary merchandise. That's the most profitable part of a jeweler's business."

Even retailers who say their businesses haven't been impacted by the economy are vowing to buy cautiously. Bruce Yamron, president and CEO of Yamron Jewelers in Naples, Fla., an eight-figure independent who declined to be added to this year's list, says he'd rather offer a wider selection of Patek Philippe timepieces than a wider selection of brands.

"We have nine watch lines, and we might go to eight," Yamron says. "Jewelry is a different story. For sure, I'd concentrate on fewer vendors. Traditionally, we always bring in two to five new looks from Basel and/or Vegas. But we will probably condense and try to do more business with those I support and who support me."

Maintain your marketing One thing most eight-figure independents won't be cutting back on is marketing, citing an economic downturn as the perfect time to gain market share.

"Pulling back is only an opportunity for someone else to advance," Pollak says, noting that he intends to maintain his marketing budget both in terms of advertising the store brand and holding events.

With regard to the latter, while trunk shows and designer events are key, so is originality and commitment. Just ask Finn of E.B. Horn. For the past two years, the company, in conjunction with public relations agency Conover Tuttle Pace, has sponsored a citywide scavenger hunt called "The Great E.B. Horn Diamond Hunt." Advertised through the jeweler's Web site and local media, the event has 200 teams of two searching the Boston area for a $25,000 diamond.

"The people who participated became E.B. Horn fanatics," Finn says, adding that the winning couples from each year have used the two-carat E.B. Horn diamond prize to become engaged.

However, not all successful events require an entire city as the backdrop. In some cases, the smaller the gathering, the more room there is to impress. Yamron Jewelers, for example, recently planned an event for just two couples.

"We're taking a private plane, picking them up in a Town Car, taking them to the best restaurant in the country and a New York show," Yamron says. Why? "To treat them to something special."

According to the Luxury Institute's Pedraza, Yamron has nailed the two most important questions: "How well are you treating your customers?" and "Do you make them feel special?" Jewelers who feel confident about their answers might not only withstand a crashing economy but thrive in it. Alfredo Molina, founder of Phoenix-based Molina Fine Jewelers, is proof of that.

"We had a record 2007. We had the best December we ever had, and we had over 10 transactions in December of $1 million or more," says Molina, whose by-appointment salon maintains an average sale of $75,000. He attributes the success of his business to owning large diamonds and impressive colored stones, aggressively marketing his store and creating a sense of urgency among his clientele by focusing on one-of-a-kind pieces.

"The baby boomers are in their peak spending years," Molina says. "There's plenty of money out there. But sitting around waiting for things to happen? Those days are over."


[Couture International Jeweler