Industry sees spike in business discontinuances

Warwick, R.I.--Aging owners lacking a next generation waiting in the wings, the falling price of gold and a slow economic recovery contributed to the increased number of jewelry business that merged with another company or simply decided to close up shop in 2014.

According to Jewelers Board of Trade data for 2014, the number of businesses that ceased operations, consolidated or went bankrupt (recorded collectively by the JBT as business discontinuances) reached 1,010 in the United States and Canada last year, a 32 percent increase from 2013.

In the U.S. alone, there were 973 business discontinuances, including 612 retail jewelers who ceased operations, a 29 percent change from the previous year.

Though it has recorded bankruptcies for years, the JBT only began tracking non-bankruptcy business discontinuances--companies that ceased operations or consolidated due to a sale or merger--in 2009, during the most recent recession.

JBT President Dione Kenyon said while the number of business discontinuances recorded last year is an increase from the past couple of years, it is not the highest she has seen in the six years the JBT has kept tabs on this category.

There were 2,077 business discontinuances in 2009 and 2,012 the following year. That number fell to 943 in 2011 and has been sliding since, until last year’s spike.

Kenyon said there are a number of reasons why so many companies in the jewelry industry are opting to close up shop now, even though they weathered the worst of the recession.

To begin with, even though the economy is recovering it is doing so slowly--the U.S. is recording only 2 to 3 percent GDP growth each year--and many simply aren’t finding it worth it to stay open.

As jewelers, manufacturers and wholesalers would attest to, and many have expressed to National Jeweler, business is difficult these days. They have to work twice as hard to produce half the results.

Jewelers, for example, have to update their marketing, their stores and their inventory and grapple with thinning margins on top of the other concerns they have confronted for years, such as the risk of robbery and commodity prices.

“Our business contains a lot more in the way of risk than your typical independent small business,” Kenyon said. “It just makes the whole question of staying open that much more challenging. This is a high-risk business.”

There’s also demographic shifts--many in the industry