Preparing for Economic Volatility with Confidence

By Shawna Kulpa

Running a jewelry business has always required a delicate balance—between creativity and craftsmanship, tradition and innovation, and, perhaps most critically, risk and reward. In today’s fast-changing world, economic shifts, fluctuating raw material prices, and changing consumer behaviors can make or break even the most established businesses. But uncertainty isn’t something to fear; it’s something to prepare for. With the right strategies in place, jewelers can not only weather the storm, but also come out ahead.

In an unpredictable economic climate, it’s easy to get caught off guard, but staying alert to key economic indicators can provide valuable foresight. Among those to watch:

Consumer spending. When it comes to a discretionary product like jewelry, consumer spending is a top indicator to monitor. “The ability of households to spend on jewelry is critical,” says Bernard Baumohl, chief global economist of The Economic Outlook Group LLC in Princeton, New Jersey. “But consumers are currently holding onto a record amount of debt—nearly $18 trillion.” He warns that if interest rates remain high while debt levels climb, servicing that debt will become more expensive, leading to potential pullbacks in discretionary spending, including luxury goods like jewelry. The Bureau of Economic Analysis (bea.org) publishes updates on consumer spending at the end of every month.

Retail sales data. Published monthly by the U.S. Census Bureau, retail sales data can also provide insight into broader spending patterns. “There’s a jewelry store category within retail sales data,” notes Dr. Bill Conerly, principal of Conerly Consulting LLC in Lake Oswego, Oregon. “While it doesn’t give a perfect picture, it’s useful for tracking discretionary spending trends. It shows whether people have disposable income and if they’re inclined to spend it.”

Employment trends. “While overall employment remains stable, the white-collar job market has struggled since recent tech layoffs,” says Cliff Waldman, CEO of New World Economics in Arlington, Virginia. “That kind of instability affects discretionary spending. If people feel uncertain about their income, they are far less likely to make luxury purchases.” Conerly suggests monitoring both employment trends and inflation; with that combination, he says, “you’ll have a good idea of how retail sales are likely to perform.”

Local signals. Don’t just look at the big nationwide picture. For jewelers in small, tight-knit communities, it can be beneficial to also focus on looking for local signals—such as layoffs by a major employer or changing demographics—for a clearer picture of potential disruptions.

“Anything related to unemployment in your area should be near the top of the list,” says Bart Schick, former president of Dobbs Boston and a Score branch manager in Gloucester, Massachusetts. He emphasizes that many jewelers have a narrow marketing radius, meaning that shifts such as aging populations or an influx of younger, tech-savvy buyers could signal whether foot traffic or online orders will dominate.

Stock market. Baumohl and Waldman also emphasize that stock market performance and consumer confidence surveys are crucial indicators. A strong stock market can fuel a “wealth effect,” where people feel richer and more willing to splurge on luxury items. On the flip side, negative market trends or uncertain economic policies can temper that confidence. “Even if indicators look positive, uncertainty about the future can cause consumers to be cautious,” Waldman says.

“The market has done well recently, which gives people a sense of security to spend on luxury items,” adds Baumohl. “But if tariffs are introduced, it could create a ripple effect that impacts how much people are willing to spend on jewelry. We don’t yet know how new economic policies will affect the industry, but jewelers should prepare for a range of scenarios.”

But… focusing too heavily on economic indicators without considering internal business factors can be a mistake. “It’s easy to get caught up in economic data, but jewelers shouldn’t lose sight of what matters most—running their business efficiently,” says Ann Arnold, chief strategy officer of Buyers Intelligence Group in Napa, California. “Keeping a close eye on aging inventory and evaluating pricing strategies regularly is just as important as watching inflation trends. Jewelers need to balance economic insight with practical business strategies.”

Resilience is key in uncertain economic times, and that starts with preparation. One essential step is conducting hypothetical stress tests to evaluate vulnerabilities. Running these types of scenarios—from supply-chain and credit disruptions to the effects of tariffs—allows businesses to prepare contingency plans in advance and avoid being caught off guard.

Arnold stresses that jewelers need to dedicate time to these ‘what-if’ scenarios. “I read about one company, pre-COVID, that asked, ‘What if there was a pandemic?’ Everyone laughed. But when it happened, they were prepared. No idea is too crazy to consider. The more extreme the scenario, the better prepared you’ll be if something unexpected happens,” she says.

Of all the scenarios to consider, experts says that jewelry manufacturers and designers should ensure they can maintain strong supply chains, especially given today’s geopolitical risks. “A lot of jewelry companies rely on imports from Africa and Asia, but these regions can be unstable,” explains Baumohl. “It’s worth diversifying your sourcing and making sure you have alternatives if supply lines are suddenly cut off. Be flexible and always have a backup plan.”

Abe Sherman, CEO of Buyers Intelligence Group, provided an example of this in one of the company’s recent e-newsletters. He shared that many jewelry retailers put too much emphasis on one or two major brands, such as Rolex or Cartier, to drive their sales. “Losing one or two key brands can spell serious financial trouble,” he warned.

To prevent this, Sherman recommended jewelers evaluate their businesses as if their most profitable brands suddenly disappeared. They can begin by removing those brands from the balance sheet and seeing what’s left. If a jeweler would struggle to remain profitable without its top-performing brands, it’s time to start diversifying.

When conducting such exercises, don’t just focus on dire what-if scenarios. It can be just as valuable to prepare for booming economic times as it is to prepare for those worse-case situations.

When “sales are growing, the company may not have the resources to expand, whether its equipment, space, or personnel, to take advantage of it,” Conerly says. “Preparing for both downside risks and upside growth ensures that you’re ready for whatever comes your way.”

Times of uncertainty often lead to changes in how consumers shop. Diversification of product lines is one strategy that can help stabilize revenue.

“Think of it like a grocery store,” says Waldman. “They sell steaks, but they also sell hamburgers. Jewelers should offer a range of price points, so when consumers pull back on spending, they still have affordable options to choose from.”

Arnold expands on this concept, recommending that jewelers assess their inventory across multiple categories. “Having a balance of high-end, mid-tier, and budget-friendly pieces ensures that you’re not putting all your eggs in one basket,” she says. “This strategy can make all the difference during an economic downturn when consumer spending slows.” Providing flexible financing options can also help customers make purchases they might otherwise postpone.

Establishing consumer-friendly price points can be especially challenging when the costs of raw materials fluctuate. Because of this, Arnold advises jewelers to update the prices of their products based on current costs—i.e., what it will cost to replace the raw materials for new product—not what they paid for the materials months ago.

“Don’t price based on historical cost—if you haven’t updated your inventory pricing in a while, you could be losing money,” she says.
Conerly acknowledges that price volatility is a tough problem, but he believes many businesses, especially small businesses, underestimate their ability to raise prices when necessary. “Test the waters,” he advises. “Try being more aggressive with price increases and see how it affects your sales volume. Many businesses have more flexibility than they realize.”

Technology can also provide jewelers with valuable tools for weathering economic storms. “A website is a given, but technology is about more than just selling online,” says Arnold. “Are you using digital tools to manage your inventory? Are you analyzing trends effectively? Technology isn’t just for marketing—it can help make your entire business run more efficiently.”

One of the most impactful tools is enterprise resource planning (ERP) software, which integrates business functions such as production, inventory, and accounting into a single system. These systems allow businesses to make data-driven decisions and run through various financial scenarios—an invaluable feature in today’s unpredictable market.

For example, Andrea Hill of Hill Management Group in Chicago shares that she has worked with clients to use their ERP systems to run scenarios of various levels of tariff changes. “We were not only able to see what the impact would be on costs and therefore pricing, but also the trickledown effect of that,” she explains. “We were able to model if the tariff from China was 25 percent, would the company have to pass on the whole 25? If they passed on 20 percent, what would that do to their bottom line? When we have that technology in place, we can model it.”

She adds that now she’s working with clients on modeling the business impacts if the U.S. dollar starts to drop due to trade wars. “You can’t do that kind of proactive anticipation without this technology,” she says.

Beyond modeling and cost analysis, ERP systems also help companies track granular shifts in expenses and streamline operational processes. “Every business decision—from production changes to warehouse logistics—impact costs,” says Hill. “ERP systems record these decisions, providing visibility that traditional spreadsheets can’t match.”

Jewelry businesses of all sizes can benefit from ERP solutions, with options ranging from comprehensive systems such as Microsoft Dynamics, Oracle’s NetSuite, and Sage to smaller, flexible platforms such as Odoo and Infor CloudSuite. Hill notes that today most ERPs on the market can handle jewelry systems without requiring customization and that the big differences between the larger systems and the smaller platforms is price and support. She says that larger companies investing in a comprehensive ERP system should plan on an implementation cost of around $200k, while companies opting for a smaller platform should expect a cost of at least $50k.

“It’s hard and expensive to implement an ERP system,” admits Hill. “It requires training and learning new ways of doing things, but if you don’t do it, that’s hard too because you won’t be competitive.”

Most ERPs have integrated AI into their systems. Some of these tools will analyze data, model production, or predict consumer behavior.

Arnold also stresses the importance of using technology to monitor business risks. “From preventing fraud to tracking customer buying patterns, technology can help jewelers make smarter, data-driven decisions,” she says. “Businesses that embrace technology will be better equipped to handle whatever economic challenges arise.”

Another reason to focus on bringing in technology is because of the potential for a looming worker shortage. According to Conerly, “the current decade (2020 to 2030) will have the lowest growth of the working-age population since the Civil War.” Instead of companies worrying only about where they’ll find more workers, especially if business is going well, they need to focus on using technology. “It’s not a way to lay off people, but employees are going to leave—whether it’s in retirement or for another job—so see how technology might replace them,” he says.

In an industry where outdated systems can lead to inefficiencies and missed opportunities, adopting current technology isn’t optional—it’s essential. As Hill puts it, “If you’re not on modern technology, you can’t take advantage of AI or adapt to rapid market changes. And in this environment, missing the boat could mean missing out entirely.”

Economic uncertainty may be a fact of life, but jewelers who stay adaptable can weather the storm. Baumohl emphasizes the need for businesses to continuously reassess their strategies. “The most dangerous thing a business can do is assume stability,” he cautions. “Geopolitics, tariffs, and technological disruptions are changing the landscape faster than ever.”

Arnold agrees about the speed of change—and adds that “the world is changing too fast for any single strategy to last forever.

“Don’t focus on ‘future proofing’ your business, focus on making it as adaptable as possible,” she encourages. “Businesses that survive are the ones that are ready to pivot when the unexpected happens. Keep an open mind, monitor the data, and don’t be afraid to make changes when needed.”