Market Trends: Recession style - Fashion & Fine Jewelry

December 2008


When the economy behaves as tempestuously as it has this year, the fashion market is sure to feel the pinch

Bold geometric necklace from Lanvin’s fall 2008

Did you notice the return this past summer of the floor-sweeping maxi dress and the omnipresent pitter-patter of all those pancake flats? Whatever you may think of “the hemline effect” or its modern corollary, “the heel hypothesis” — the notion that as the economy declines, hemlines get longer and shoes get shorter, and vice versa — there’s no arguing that fashion and the financial system are inextricably, if inexplicably, linked.

In retrospect, some might see the combination of lengthy frocks and sensible shoes as sartorial harbingers of fiscal crises to come (cue the Lehman Brothers collapse and subsequent meltdown); others as the accidental convergence of two cyclical markets. But regardless of your leaning, try for a moment to indulge the former point of view, the one that draws a straight line between stock shares and silhouettes. Then answer this question: What are we to make of the bold, avant-garde heels clomping down streets this past fall?

Rhonda Faber Green,diamond-accented Verde bangles

In retrospect, some might see the combination of lengthy frocks and sensible shoes as sartorial harbingers of fiscal crises to come (cue the Lehman Brothers collapse and subsequent meltdown); others as the accidental convergence of two cyclical markets. But regardless of your leaning, try for a moment to indulge the former point of view, the one that draws a straight line between stock shares and silhouettes. Then answer this question: What are we to make of the bold, avant-garde heels clomping down streets this past fall?

Like postcards from outer space, the freakish, embellished shoes of the moment allude to something unprecedented. It’s a fitting metaphor for the global marketplace. Not even during the Great Depression did we see a financial crisis of such scale, owing largely to the fact that mortgages, credit cards and interconnected, indeed, interdependent, markets weren’t around 70 years ago to wreak havoc like they are — and do — today.

Miu Miu’s space-age heels

The upshot is obvious: Most consumers don’t have the financial wherewithal to fully indulge their collective penchant for fresh fashion. The good news? They continue to sate their desire with accessories, which are key to capturing the season’s quintessential look. “Notice how outlandish the shoes are,” says Jason Campbell, editor in chief of the JC Report, a biweekly e-newsletter of fashion’s comings and goings. “You can have the same jacket and throw on an unbelievable scarf or pair of shoes and make it stand out. They’re the focal point of the look, which is detracting attention from last season’s dress.” Call it recession style or depression fashion. When you can’t splurge on the whole outfit, you treat yourself in less expensive yet equally dramatic ways. In the run-up to 2009, for example, that means jaunty scarves, chunky and colorful platforms and, last but not least, statement jewelry, “the more outré, the more alchemical and interesting,” Campbell says, “the better.”

COSTUME PARTY

Given the soaring costs of precious metals and stones, however, style comes at a hefty price. That explains why costume, or fashion, jewelry is playing a more significant role now than during any season in recent memory. It’s a straightforward equation: Take X number of ounces of gold and multiply them by the current gold price (as of early November, down to $725 per ounce, but still quite volatile).

The costly result makes clear that in order to support all those trendy layered chains, draped like armor in homage to Run DMC, Mr. T and other icons of ’80s ghetto style, only faux will do. The most successful of these costume efforts are “strange and odd-looking, but they tell a very compelling story,” Campbell says, citing Lanvin’s Alber Elbaz and Balenciaga’s Nicolas Ghesquiere for their “really brilliant and really odd” creations. For fall ’08, Ghesquiere opted for “a sinewy blend of faux stones, strass and pearls that have a vintage appeal,” according to the blog The Luxe Chronicles, adding that “the delicateness of the pieces was an unexpected but appealing complement to the austerity of [his] fashions.” Elbaz, lauded for engineering a costume jewelry comeback on par with the resplendent designs of Chanel and Dior circa 1950, went in a different direction. By layering his models with bold, geometric necklaces big enough to look like breastplates for the high priests of fashion, Elbaz’s ’80s fixation came through loud and clear. No era has a greater resonance for him, as evidenced by his prodigious use of grosgrain ribbons and tapes of fabric, adding “a sense of geometry without screaming 1980s architecture,” wrote Suzy Menkes, fashion columnist for the International Herald Tribune.

Barry Kronen pendant

1980s NOSTALGIA

The Lanvin designer isn’t alone in his passion for jewelry harking back to a decade that has spawned more than its fair share of nostalgia. The twosome behind New York’s Bylu (pronounced “Blue”), Ken Leung and Dana Chin, spent their summer decorating handcuff-style bangles, twofinger rings and multiple-chain necklaces with vivid splashes of cold enamel in order to create their 145.60 (onefortyfivesixty) collection of brass jewelry.

Bangles from Bylu

Inspired “by the raw expression of the hip hop and graffiti movements taking place in NYC during the ’80s,” the collection’s name is a clever reference to the section of the New York State penal code that makes the act of “graffiti” a Class A misdemeanor. Having already launched two fine jewelry collections, Bylu, Leung says, was ready to “expand and diversify.” “Our core philosophy is about making more confident and bold jewelry,” he says. “With precious metals, it’s just not possible to do that, so we started playing around with brass.” To Leung and Chin’s surprise, the pieces have struck a chord with fine jewelry buyers. At the recent D&A show, a boutique fashion event held at the Chelsea Art Museum, Bylu made inroads with a store in upstate New York that carries an upscale mix of fine jewelers, from Anthony Nak to Cathy Waterman. “145.60 offers another price point, an impulse purchase,” Leung says.

ARM CANDY

Bylu’s collection has something else to recommend it: It’s stacked with bangles and cuff bracelets, the styles most in vogue thanks to the way they lend themselves to being piled on and mixed together in a spirited blend of materials, not the least of which is sterling silver in a trendy blackened finish, the fashionista’s fallback to 18-karat gold. “The person who wants to buy and wear five to 10 bangles doesn’t want to go crazy,” says Los Angeles-based Rhonda Faber Green, whose two-year-old “Verde” collection of engraved, finely detailed sterling silver bangles is designed for women who like the look of excess yet shun the corresponding price tag. To wit: A 5-millimeter sterling silver fleur de lis bangle from the Verde collection retails for $690, while the corresponding bangle in 22-karat gold sells for nearly five times thatamount: $3,150.

“Some retailers buy both the silver and gold and have them all in one case,” says Green, whose competition in thehigh-end silver category includes designers as diverse as Stephen Webster, Gurhan and Emily Armenta. “Some buy just the sterling silver, and some buy just the gold. But a few who said they would never want the sterling silver are now really excited about it.”

METAL MANIA

It’s not rocket science. The metals market has seen its most active year since the investment bubble of the early 1980s — so active, in fact, that graphs of gold and platinum prices in 2008 look like the heart rate monitor of a very unstable patient. Platinum, for one, surpassed the $2,000 mark in February before scaling down, up and back down again. As of early November, it rested uneasily around $820, a mere trifle more than gold, which is, in and of itself, a bizarre scenario.

With currency markets behaving just as erratically, the jewelry industry has shown a newfound zeal for alternative metals. One apparent beneficiary is palladium, a member of the platinum group now being touted as “the metal for the 21st century” because of its white cast, rarity and relatively inexpensive price: Since the beginning of the year, palladium has dropped dramatically to around $200 per ounce.

Karat Platinum’s vintage-style diamond drop earrings

Another new entrant to the metals market is Karat Platinum in New York, which has pioneered an innovative “14-karat platinum” alloy that combines a 41.5 percent cobalt-copper blend with 58.5 percent platinum.

“It’s got a wonderful color, a luxury feel, strength and durability, and it’s hitting a price point directly between 14-karat gold and platinum 950,” said Michael Ottaway, director of merchandising (before, that is, metal prices went haywire). Although the company’s hopes are pinned on the bridal market, its range includes a wide selection of fashion jewelry, including tennis bracelets, chandelier earrings and bangle bracelets, some studded with gemstones. Karat Platinum’s top selling item on Amazon, however, “is a plain, plain, plain, 2-millimeter wide, never-take-it-off hoop earring for $139 retail,” Ottoway says.

THE LUXE FACTOR

But if it’s true that one segment of the jewelry market is keen to try affordable, everyday platinum, up until this fall it was equally true that another segment of buyers, the ultraluxury set didn’t care one iota about affordability, for these are billionaires who may have lost some money in the credit crunch but probably not enough to make a dent. Indeed, luxury consumers spent most of the year helping the surprisingly resilient high-end market to defy all expectations. They wielded their considerable purchasing power at the auction houses, where colored diamonds, large colorless rocks and signed contemporary jewels fetched record-breaking prices.

“Today, $100,000 per carat for a 10- carat diamond is normal,” said Rahul Kadakia, senior vice president of Christie’s Americas, at a September conference. “What changed the market? Forbes estimated more than 1,000 billionaires for the first time. Their money has spread across the world. The dollar was down, and large rocks had great sparkle for investors worrying about inflation.”

For a while, it seemed that one of the only markets to transcend the economic crisis was India’s, and though the truth of that assessment remains to be seen, it helps explain why jewelry evoking its exotic heritage is gaining acceptance around the world. Not since Cartier and other European luxury houses made a name for themselves crafting extraordinary parures for the maharajahs during the 1920s and ’30s has über-expensive, Indian-inspired jewelry been so popular. For decades, the look was simply too ethnic to play on the postwar, postindustrial, postmodern fashion stage. Suddenly, inspired by India’s star turn on the global scene, jewelry connoisseurs are again citing the country’s 5,000- year-old design heritage, newly co-opted by a rising cohort of luxury jewelers besotted with traditional Indian craftsmanship and locally sourced precious stones. Chief among them are Mumbai’s Viren Bhagat, Jaipur’s Gem Palace and two Hollywood red-carpet favorites, Amrapali and Bochic.

Kate Beckinsale wears yellow rose-cut diamond earrings by Amrapali

INVESTOR CONFIDENCE

Looking ahead to 2009, there’s no denying that the economic outlook is fraught with uncertainty, with forecasters such as Gerald Celente, founder of the Trends Research Institute, warning of an impending “economic 9/11” (he describes the sub-prime mortgage problem as merely a “crack at the bottom of the foundation”). But the idea that jewelry is a sound purchase continues to build. “The whole market has declined sharply overall, but jewelry is holding on better than others because it really does have intrinsic value,” says Pam Danziger, founder of Unity Marketing, a boutique market research firm based in Stevens, Pa. “Jewelry is perceived as a better place to indulge your money than handbags or clothing.”

Plenty of retailers can testify to that phenomenon. Paul Schneider, co-owner of Twist, a Portland, Ore., jewelry boutique known as a bellwether for trends, says that after more than 20 years in the fine jewelry business, he and his wife/business partner had their best Christmas last year, just as the recession began to build, and that his high-end business continues to boom, with customers embracing 22-karat gold, rose-cut diamonds, organic shapes and anything that boasts a green or eco-sustainable tie-in.

“You’ve got to be cautious about panicking about the economy,” Schneider says. “We’ve developed a quality core customer base and a great position in the marketplace, and we don’t want to abandon that. Our wealthiest customers are buying the highest-end pieces, and they still need us. It would be a shame if we weren’t ready for them. Let’s not let our fears dictate what we buy and what our customers want.”