As a firm, we have many diverse long-term clients, so we thought instead of just highlighting what are sometimes abstract economic ideas, we would harness the knowledge and firsthand experience of those we know. Below is an excerpt from a late March 2023 interview with one Los Angeles-based jewelry manufacturer.
Thanks for taking the time to speak with us.
Q: What types of jewelry do you manufacture, and what materials do you typically use? How is it made?
A: We use base metals of brass or sterling silver. The bulk of our products are made in China, with a portion made in India and Italy. Products are generally sold in big box department stores and mass merchants for price points under $20.
Q: Does your firm have their own brand names, or do you produce private labels for someone else, like a Kohl’s?
A: We do both. We have a brand which you’ll find in a Macy’s. We do production for Disney; we have smaller brands, usually limited to one store, such as JCPenney, or Kohl’s. We also have our own brand in some of the off-price channels.
Q: How do you ensure the quality of your products?
A: We are known for exacting standards, using a testing regime run by third-party labs. We have long-time factory partners—we understand what their limits are, and what their strengths are.
Q: Can you describe your customer base, and how you ensure that you are meeting their needs and preferences?
A: I would call it “mid-tier”. Some people might say “discount” because we’re in Walmart and TJ Maxx. They both offer extraordinary value, but they are not trying to be the lowest price point. We’re not luxury. We have a niche in that $15-$20 range—it’s a nice “sweet spot”. In 2008, the precious metal markets went crazy, so everyone shifted to precious metals as a plating. The average retail sale hasn’t changed in the last twenty years—the value has improved.
Q: What are some of the challenges that you face as a jewelry manufacturer, and how do you overcome them? How has inflation in recent years affected your business?
A: Inflation is affecting us on the demand side, not so much on the supply side. We had issues two years ago—freight costs skyrocketed; now they are back down.
On the demand side, you could see an overnight drop in demand when the stimulus checks stopped. That’s been a challenge for us. We have been able to continue growing, mostly by both opening new accounts and developing existing accounts that were underdeveloped for us in the past.
Q: It sounds like you find ways to keep evolving, as market conditions change.
A: Once you stop doing that, you start dying as a company. You must innovate constantly.
Q: How is the jewelry industry handling recent economic changes?
A: Retailers are reacting to the current economic situation; there is a lot of caution, there’s a lot of control of their inventories. The retail sales numbers aren’t looking great for people.
The scare that people had going into the fall 2022 season caused retailers to really pull back on their inventories before the Christmas season. When they came out, there was not a lot of excess there to be marked down. These moves make it difficult to sustain growth now.
Q: What are your plans for the future of your business?
A: My plans are to set up the organization so that it’s not so dependent upon me being there. A lot of the disciplines are easily learned by other people, and they can carry on, on their own. I think it’s possible—businesses…reform around an organizational model, versus one individual model, and they survive (and hopefully thrive!).
Thanks so much—we very much appreciate your time today!