Independent jewelers in the U.S. have been closing their doors by the hundreds every year all across the country in the past few years, finding that stiff competition from online retailers on one hand, and the financial might of major chains on the other, is increasingly presenting a growing threat to the viability of their business.

IDEX Online Research expects this trend to accelerate in 2008.

One recent high profile example of this is the closing of Alpha Omega in Boston – just as the most important selling time of the year was taking place. According to reports in the local press, owner Raman Handa left the country and is currently in India.

Alpha Omega’s four locations are now closed, with reports in the press claiming growing debts and financial problems.

According to Boston Magazine, Handa and his family fled the country over the weekend, without notifying store employees.

The story underlines what looks to be a very tough holiday season for the American diamond jewelry business. While tracking firm comScore is reporting growing online sales, and executives of leading online diamond and jewelry sites are already unofficially reporting that their sales are breaking records, brick and mortar operations are expecting less than stellar results.

The world’s largest jewelry retailer Signet reported that like-for-like sales decreased about 7 percent in the U.S. in the first few weeks of November, warning that analysts’ profit expectations are “unlikely to be met.”

Zale, which decided on major organizational changes just before it started to focus on the holiday season, has unceremoniously replaced its CEO less then a week before Christmas.

Early market reports suggest that even sales of larger diamonds of about one carat and above are suffering.

While the holiday is usually a happy one for retailers, especially diamond jewelers, this season may see less smiles. If major jewelers are stuck with big inventories, they have enough market might to deal with it in a way that the smaller independents can’t. The result could be a painful outcome.

While exact details about what happened at Alpha Omega – what hurt it, how were sales, how supportive were the banks – are still unknown, it will be safe to venture that similar unfortunate developments may be repeated elsewhere.