By Glen A. Beres

 

The jewelry industry is, in many ways, in a constant state of flux - it is being transformed by major economic and geopolitical events; new technologies and alternate retail channels like catalogs, TV and the Internet; and ongoing consolidation that has created retail behemoths as financially powerful (or even more so) than some Third World countries. Yet one thing is unchanged: it is still mainly a “mom & pop” industry driven by family businesses. Just what are family businesses doing to provide jewelry consumers with a shopping experience unlike that of the generation before them?

 

The newest wave of executives taking over established businesses bring a financial, technological and marketing savvy that is transforming these operations.

 

IDEX meets three young, successful jewelers who are making a major impact on the jewelry business.

  

From Frontier to Fortune: Solomon Takes Store into the 21st Century

When it comes to running a jewelry business, Rex Solomon is not afraid of change.

 

The 39-year-old is executive vice president of Houston Jewelry & Fine Gifts, a household name in South Texas since 1953. Under Solomon’s guidance, the business has been transformed from an archaic catalog showroom format to a state-of-the-art, upscale jewelry store with a strong online bridal division.

 

Solomon, a third-generation jeweler, says the family’s retail roots in Texas go all the way back to the 1850s, when they sold a variety of dry goods on the frontier.

 

For 40 years, Houston Jewelry was one of the leading retailers in the region, with a catalog showroom format that included everything from jewelry to appliances to toothpaste and shotguns. The retailer operated out of a two-story, 80,000 square foot building. Although jewelry sales were always strong for the company, some of the other departments began to falter in the mid to late 1980s, putting the store’s sales and margins in jeopardy. Solomon says his father was convinced of the need for change, but it was a tougher sell to some of the older members of the founding Donsky-Solomon family - who were reluctant to abandon a multi-category format that had been so successful for so many years.

 

The turning point, Solomon recalls, came during a road trip in 1990 to pick up his brother from college in Boston. On the way back to Houston, the brothers stopped off at many catalog showrooms along the eastern seaboard to see what other companies were doing. Solomon says that all of the stores he saw were “in bad condition, with few or even no customers in them.” Also, many had closed, and a number of them had phased out their catalogs. “This gave me all the proof I needed to see that the catalog showroom business was a dying industry, and we needed to convert to a more conventional retail format to survive,” Solomon says.

 

Ultimately, the company turned its former location into a shopping center and moved into a new 6,500 square-foot store in 1993. While jewelry and giftware continued to be core businesses, other unprofitable categories were dropped. Although Houston Jewelry’s $1.6 million in sales are just a fraction of the volume the company used to have, it is a more profitable business today, by far.

 

Solomon has been running daily operations since the transformation and has tinkered with the business model even further. Giftware, which was always a huge part of the business, was cut back significantly and now represents only about 10 percent of square footage, while an entire jewelry island was added about two years ago to beef up the retailer’s core category. Other categories, like fragrance, have been minimized and moved from the front to the back, making room for lower-end impulse items like sterling silver, fashion jewelry and freshwater Chinese pearls. Solomon’s latest in-store category addition has been furs, a joint venture with noted Houston furrier Samuel Spritzer launched in November 2004.

 

Solomon said the experiment has been a great success. There is only about a 20 percent crossover with his jewelry customers and fur customers, and the well-heeled fur customers that come into the store have been willing to spend much more on jewelry than most of his existing core customers.

 

As for the Internet, Solomon launched a series of wedding band e-commerce sites in 1997 (including weddingbandsuperstore.com and 1weddingband.com). With little advertising, the sites have grown steadily, and now bring in more than $100,000 per year. Solomon says he will focus on increasing sales in this division in 2006.

 

Younger Abell Updates Technology At Sarah Leonard; Looks to Boost Brand

Although Dean Abell has been helping out in his family’s store, Sarah Leonard Fine Jewelers in Los Angeles, California, for as long as he can remember, it wasn’t until he moved to Atlanta in 2002 and experienced working in another AGS jewelry store that he was able to return to the family business in 2004 and take a real leadership role.

 

“One of the most difficult things for me was going from the ‘bosses’ kid to the boss,” said Abell, 30. “Long-time employees and vendors had known me from the time I was very small. Going to work in Atlanta for two years was important because it gave me some perspective - and the physical break allowed me to come back in a more mature, managerial role and not as a kid.”

 

Abell, who holds a Graduate Gemologist degree from GIA and is also an AGS Certified Gemologist Appraiser, wears numerous hats at Sarah Leonard. Some of his responsibilities include serving as human resources manager, conducting new product education for staff, selling jewelry, handling window displays and conducting appraisals. He also is involved in buying and inventory management.

 

Sarah Leonard Jewelers (formerly known as Crescent Jewelers) was started by Abell’s grandparents, Lenny and Sunny Friedman, in 1946. Although they are still active in the business – Abell says they are in the store four times a week – the store is primarily run by Abell, his father Jeff Abell; his mother Linda Abell (Lenny and Sunny’s daughter); his uncle David Friedman (Lenny and Sunny’s son) and his aunt (and David’s wife) Gail Friedman.

 

Over the years, the company has developed into one of the best-known and most-respected independent retail jewelry operations in the country. Although this $3 million+ store is considered an upscale, AGS operation that serves the Beverly Hills crowd, Abell notes that it also caters to the UCLA student looking to spend under $100.

 

One of Abell’s main goals for the business going forward includes creating a greater awareness for the Sarah Leonard brand name in the local and regional markets. He also would like to see the busy store expand from its current 1,700 square-foot space. “We have outgrown our store,” he says. “This makes it very difficult to grow the business at the rate we are capable of.”

 

Abell also says he has benefited from the extreme loyalty of the store’s customer and vendor base - some of whom remember him from when he couldn’t even see over the counter. “I really credit my grandparents and family for setting up and maintaining a store based on integrity and loyalty, and for always giving me encouragement and the tools to succeed,” Abell says. “I was brought up to be an honest person and to work hard. There are big shoes to fill to live up to the family name, but they are my size.”

 

Russell Shifts Direction of Business, Drives Phenomenal Growth

For Kimberly Adams Russell, 37, president of Frank Adams Jewelers in Albany, N.Y. since 2002, taking on the reins of her 83-year-old family business was doubly challenging - not just from a generational perspective, but also as a woman facing “credibility issues” in a male-dominated industry.

 

The AGS guild store was started by her grandfather, Frank, in downtown Albany during the depression. While other businesses were crashing at the time, the company prospered, and over the years, Frank Adams Jewelers has built a legacy as Albany’s finest jewelry store - and one of the best-run retailers in the industry.

 

Russell, who virtually grew up in the store, decided to travel the world and do some outside work in retail and advertising after college before joining the family business full-time in 1991. “I saw this as a serious commitment to my family, and I wanted to be settled and ready to make that commitment,” she explains. One of her first major contributions was to help move the business from its long-time downtown location to its current location in Stuyvesant Plaza 11 years ago.

 

“In our downtown location, we were focused on the 50-year-old classic male customer, and I wanted to make the store more fashionable, bring in new brands, and go after the female customer,” she says. “I handled the advertising and marketing campaign myself, and got involved in educational opportunities, charities and public speaking to raise awareness for our new direction.”

 

Russell also changed the merchandise mix from an occasion-driven presentation to an inventory that was “fashionable throughout the year.” Now, the store carries a mix of higher end fine jewelry, upscale watch brands and numerous designers and markets itself as a “couture” jeweler.

 

Another major contribution Russell has made is expanding the store into new channels. She launched the company’s Web site, frankadams.com, launched its upscale catalogs, and initiated a more sophisticated, extensive direct mail program.

 

As a woman trying to forge an executive career in a male-oriented jewelry industry, Russell found it very challenging to try to step up and take a significant role in the business. “When I first started in this industry, I was faced with many credibility challenges being a young woman in a mostly male career in a downtown Albany store with mostly a corporate man’s target market,” she says. “It was very difficult for the staff and customers to take me seriously - and the constant request for ‘a man who knows what he is doing’ was a little draining, yet very motivational in its own way. I quickly became very involved within the jewelry industry, broadening my product knowledge and industry reputation. Today, I have gained great respect within the industry; I have brought a sense of fashion and brand awareness to the community and our store, I have changed our overall image and target market advertising and brought new energy to the staff and our future.”

 

Russell works alongside her father David in the store, and says they work well together as a team. As in any business, however, there is sometimes a difference of opinion. One initiative Russell enacted was bringing designer David Yurman’s lines into the store. Russell says it was a “big financial commitment,” and her father, “a numbers man,” was initially very skeptical.

 

A big challenge Russell faced was a major store renovation that she initiated two years ago. The company had made the move to its current location in 1994 on a “shoestring budget,” and it was bursting at the seams from its phenomenal growth (the retailer had under $1 million in sales at its old location and is close to $10 million in sales today). After toying with the idea of moving once again, Russell says she brought in an outside architect, who created an additional 400 linear feet of showcase space. As a result, she was able to expand the store’s Rolex space from 4.5 feet to 10 feet.

 

Another area Russell says was a challenge came when she took control was getting the staff up-to-speed on the upscale, fashion-forward direction the company had taken. “I had to do some cleaning house to bring in a younger, more sophisticated staff that understood today’s market, technology and branding, and could handle the new selling approach The staff I have assembled understands and appreciates luxury, and they aren’t judgmental of a client with a big car.”

 

As the company has moved in a new direction, Russell says it was inevitable that it would have to phase out some of its long-time smaller vendors. “It’s not the same world anymore,” she says. “Reps come and go, companies get bought out. A lot of the vendors we used to do business with are no longer there. It’s sad, but it’s a reality of business today.”