SUMMER 2009 EDITION
JOBS»
As economy stays down, businesses strategize
to stay on top
Scott MacDonald/MUJW
Andrew Littlefield holds his newly bought engagement ring at Buchroeder's Jewelers in Columbia on Tuesday. Littlefield says that the economy did not affect his purchase.
COLUMBIA — He smiles with a subdued pride.
The man is gazing at the glittering diamond ring held between his thumb and index finger. He’s proposing soon, and one can only imagine that this night will be the most agonizing, nerve-racking, sleepless night of his life.
Mills Menser sees this every day — the would-be groom in his store, heart racing at the sight of these pieces of metal and carbon that might change his life.
It might be expected that this scene is becoming less common with the global economic meltdown as young men looking to tie the knot find their wallets emptier than ever and are therefore unable to buy such “luxuries” as a diamond engagement ring.
"This isn’t happening," says Menser, president and owner of Buchroeder’s Jewelers in downtown Columbia. “Luxury is the first thing that goes (in hard economic times), but an engagement ring isn’t that. It’s tradition.”
It’s a tradition Andrew Littlefield wasn't going to give up. Littlefield, a doctoral candidate at MU, wasn't moved by the recession or dire economic news when it came to picking out a ring for Amelia, his significant other, at Buchroeder's. And that's good news for jewelry merchants like Menser.
By basing its business on diamond rings (Menser says engagement jewelry accounts for about 70 percent of sales), Buchroeder’s has managed to stay afloat — and even set all-time annual sales highs — during the current recession.
“The average ticket amount for each sale is slightly down with the recession,” Menser said, “but customer traffic is (as) normal as ever.
He also credits his store's long history, having been in business since 1896.
Diamond sales, fueled by tradition and cultural expectation, might be bright news in a year when sales of luxury goods had been forecast to fall 3 percent to 7 percent from 2008 levels, according to a Bain & Co. Consumers study, surrounded by incessant alarms of recession, are becoming more cautious, and economic reports show fewer credit-card purchases and increased savings levels.
The air of instability, fueled by dire media reports, has had a direct effect on consumers, particularly regarding expensive goods, says MU personal finance professor Rui Yao.
“People tend to be affected by current news and events in the market and their social network," she said. "Confidence increases spending.”
But there's some evidence that not every luxury purchase gets crossed off consumers' lists.
Elly’s Couture, a clothing and jewelry boutique on Broadway, hasn't seen a downturn in sales. Owner Elly Swetz says broadening her inventory from expensive brands such as Betsey Johnson to include affordable yet quality clothing lines such as Rubber Ducky has allowed the boutique, in the heart of The District, to establish itself in less than three years.
“I still carry a few high-end brands, but everything here is mostly affordable,” Swetz said, citing average prices of $90 to $120 for outfits.
Lowering the average price in her boutique has resulted in more customers, Swetz says, and focusing on customer retention through e-mail newsletters and Facebook has resulted in a constantly swelling customer base for the shop, which received a “Best of Columbia 2009” award from Inside Columbia magazine.
Upscale national chains generally have not flourished like this. The recessionconfirmed expectations in the last half of 2008, when stocks of high-end companies such as Whole Foods, JoS. A. Bank Clothiers and American Eagle Outfitters plummeted and discount retailer Walmart soared to its third-highest dividend.
This and similar trends would seem to imply troublesome days for gourmet coffee shops. But Jeremy Brown, store manager for Kaldi’s Coffeehouse on Ninth Street, said customers have generally maintained their espresso habits.
“People are still getting their normal drinks,” he said, “with a few people cutting back to drip coffee or (take-home bags of) beans.”
Accordingly, Kaldi’s, a St. Louis-based chain that opened in Columbia in October 2006, has seen an increase in whole-bean sales, though the popularity of grind-and-brew your own "may or may not be due to the recession,” Brown said.
Brown gives a reason for the persistence of the gourmet-coffee industry despite the recession: “It’s an inexpensive luxury. If they buy that $4 latte, it makes them feel good. It feels expensive. It fills their spending fix.”
Even though Kaldi’s — where a Caramela Con Panna "molto size" costs $4.20 — hasn't needed to adjust its inventory or marketing, other traditional luxury businesses are finding new ways to reach customers. Pela Cura Spa Clinic, inside the Advanced Radiology center in east Columbia, is one of these. Manager Elisabeth Trumbower says that their numbers have improved in the past year and credits the medical, “results-oriented” nature of the spa as the cause.
“When people are going to spend money, they want to see results,” she said.
Now the spa is seeing “more educated customers." Spa clients are more value-savvy, she said, replacing regular day-spa waxing treatments with laser hair removal for the greatest economic value over time.
The spa's marketing strategy, which Trumbower says is “trying to make people realize how affordable skincare is,” includes regular specials and publishing prices online. And in a recession, the spa might provide some intangible results, too, she says.
“The world’s a stressful place,” Trumbower said, “and when people look good, they feel good.”
Yao agrees: "Maybe they can't afford the boat, but they can afford the drink. It allows them to keep their living standards."
Menser of Buchroeder’s and Swetz of Elly’s Couture agree high-end items have not completely disappeared from Columbians’ shopping carts.
“If a girl still loves a Betsey (Johnson line) dress, she’s still going to buy that dress,” Swetz said.
Menser has discovered a special benefit from the recession that helps customers buy typically out-of-reach diamonds at affordable prices: he can buy stones directly at liquidated prices from the diamond cutters themselves rather than from a “middleman.”
“It’s a very good time to buy a diamond,” Menser said, “like (it is to buy) a vehicle or real estate.”
Littlefield understands this. As he continues to fixate on his beautiful new ring, he says he “was hesitant to buy from a brick-and-mortar store” when online jewelers seemed more affordable. Once he realized the economy has done great things for diamond customers, he started focusing on the real topic: Amelia.